WB, Green Climate Fund help Viet Nam spur energy efficiency investments
The World Bank (WB), acting on behalf of the Green Climate Fund (GCF), has signed an 11.3-million-USD grant with the State Bank of Viet Nam to support the development of a commercial financing market for industrial energy efficiency investments.
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| Illustrative image. (Photo: Thanh Nien) |
The total financing support from GCF also includes a 75 million USD guarantee.
Some 8.3 million USD from the grant will be used to build capacities for the private sector to identify, appraise and execute energy efficiency projects. It will also provide technical assistance to the Ministry of Industry and Trade and relevant authorities to strengthen policy frameworks and regulations and create an enabling environment to accelerate the energy efficiency market in Viet Nam.
The remaining grant funds and the guarantee will be used to establish a risk-sharing facility to provide partial credit guarantees to support local banks who may risk potential defaults on loans for energy efficiency projects.
By reducing lending risks, the facility is expected to mobilise around 250 million USD of commercial financing, to be provided to industrial enterprises and energy service companies at competitive terms and with low collateral requirements.
“Scaling up energy efficiency is the single best and lowest cost option to achieve multiple goals at once: meeting energy demand, preventing pollution and reducing greenhouses emission while also increasing industry competitiveness,” said Carolyn Turk, WB Country Director for Viet Nam.
“Against the context of limited public financing for energy, the risk-sharing facility is an innovative financial instrument to crowd in private sector investment financing for a greater uptake of industry-wide energy efficiency measures.”
The grant and guarantee are executed under the Viet Nam Scaling up Energy Efficiency Project which aims to support Viet Nam in achieving energy efficiency targets set out in the Green Growth Strategy as well as emission reduction objectives pledged under the National Determined Contributions.
According to the WB, Viet Nam is actively embarking on the green energy transition and decarbonization pathway.
The WB’s Low Carbon Study estimates that Viet Nam could save up to 11 GW of new generation capacity by 2030 if comprehensive demand-side energy efficiency investments are carried out. The energy efficiency investment need for key industries in Viet Nam was estimated at around 3.6 billion USD.
(Source: VNA)
