Illustrative photo. (Source: VNA) The total financing support from GCF also includes a 75million USD guarantee.
Some 8.3 million USD from the grant will be used to buildcapacities for the private sector to identify, appraise and execute energyefficiency projects. It will also provide technical assistance to the Ministryof Industry and Trade and relevant authorities to strengthen policy frameworksand regulations and create an enabling environment to accelerate the energyefficiency market in Vietnam.
The remaining grant funds and the guarantee will be usedto establish a risk sharing facility to provide partial credit guarantees tosupport local banks who may risk potential defaults on loans for energyefficiency projects.
By reducing lending risks, the facility is expected tomobilise around 250 million USD of commercial financing, to be provided toindustrial enterprises and energy service companies at competitive terms andwith low collateral requirements.
“Scaling up energy efficiency is the single best andlowest cost option to achieve multiple goals at once: meeting energy demand,preventing pollution and reducing greenhouses emission while also increasingindustry competitiveness,” said Carolyn Turk, WB Country Director for Vietnam.
“Against the context of limited public financing forenergy, the risk sharing facility is an innovative financial instrument tocrowd in private sector investment financing for a greater uptake of industry-wideenergy efficiency measures.”
The grant and guarantee are executed under the VietnamScaling up Energy Efficiency Project which aims to support Vietnam in achievingenergy efficiency targets set out in the Green Growth Strategy as well asemission reduction objectives pledged under the National DeterminedContributions.
According to the WB, Vietnam is actively embarking on thegreen energy transition and decarbonisation pathway.
The WB’s Low Carbon Study estimates that Vietnam couldsave up to 11 GW of new generation capacity by 2030 if comprehensivedemand-side energy efficiency investments are carried out. The energyefficiency investment need for key industries in Vietnam was estimated ataround 3.6 billion USD./.
VNA
