The European Bank for Reconstruction and Development (EBRD) and Green Climate Fund (GCF) sealed an accord on Saturday that underscores the EBRD’s position as the largest single recipient of GCF resources and paves the way for more joint projects aimed at combating climate change in the Bank’s regions.
An Accreditation Master Agreement (AMA) signed in Washington, D.C. by the President of the EBRD, Sir Suma Chakrabarti, and Executive Director of the GCF’s Secretariat, Howard Bamsey, will enable the EBRD to receive and deploy GCF funding alongside its investments.
The signing of the AMA marks the final step required for the EBRD to access GCF resources that have been approved but not so far disbursed. President Chakrabarti said: “We are delighted with this huge vote of confidence by the Green Climate Fund. The EBRD is well equipped to fast track green project implementation in key developing regions that suffer both from lack of adequate resources and the know-how to respond rapidly and effectively to climate change. Our green agenda is a high priority and these new funds will allow us to further substantially scale up our climate finance for the benefit of millions of people.”
Howard Bamsey welcomed the signing as a great force multiplier in the GCF’s forging of new climate finance paths. “Since its foundation in the post-Cold War era, the EBRD has established an impressive track record in marshalling market forces to promote economic development. We at GCF look forward to tapping the EBRD’s experiences and its broad reach as we work together to unlock the necessary financial forces to respond to climate change,” he said.
At the GCF’s latest Board meeting two weeks ago, an allocation of US$ 240 million was approved for three EBRD projects. This takes the total GCF provision for green EBRD projects to US$ 618 million, or 26 per cent of total GCF resources approved so far.
The GCF funds will flow into renewable energy projects in Egypt and adaptation projects in Tajikistan and Morocco. They will also help transform the local banking sectors in Armenia, Egypt, Georgia, Jordan, Moldova, Mongolia, Morocco, Serbia, Tajikistan and Tunisia to become engines of green lending, based on the EBRD’s tried-and-tested model of credit lines for sustainable energy efficiency.
The funds allocated to the EBRD, which consist of grant co-financing, concessional financing and technical assistance, provide a significant boost to the Bank’s Green Economy Transition approach, aimed at reducing CO2 emissions and responding to the global climate challenge by dedicating 40 per cent of its annual business investments to green projects by 2020.
Funding from donors such as the GCF is crucial for driving growth for the green economy in countries where the EBRD invests. Donors increase the scale and impact of the EBRD’s green investments by providing additional financing and incentives for EBRD clients to choose investment options that protect the global climate. They also make investments more affordable as well as helping in their preparation, such as with energy audits and knowledge transfer. Donors also support the Bank’s work with governments in the preparation and implementation of reforms that support green investments.
Over the past decade donors have provided more than US$ 1.5 billion for EBRD climate finance. Between 2006 and 2016, this helped achieve an estimated reduction in CO2 emissions of 85 million tonnes – equivalent to the combined emissions of Jordan and Morocco.
The GCF is the largest and newest international climate fund, created in 2010 under the United Nations Framework Convention on Climate Change. It supports low-emission and climate-resilient programmes in developing countries.
The GCF’s contribution is expected to support almost US$ 3 billion in investments across 10 countries where the Bank invests, from the southern and eastern Mediterranean to Central Asia and south-eastern Europe, to enhance the climate resilience of critical infrastructure, boost the production of renewable energy and help industries to adopt green technology. The EBRD will continue to work with the GCF to reach additional sectors and countries by further developing existing and new projects that can benefit from GCF support.
For example, the EBRD is preparing to invest US$ 350 million for a Renewable Energy Financing Framework in Egypt to be complemented by US$ 154.7 million of GCF’s concessional loan and technical assistance. The framework will help increase Egypt's energy security and diversity by exploiting the country's vast renewable energy potential.
In Tajikistan, the Bank and other co-lenders are providing US$ 158 million for the climate-resilient upgrade of Qairokkum hydropower plant, with co-financing of US$ 50 million from the GCF. The project will help address the energy needs of 2.4 million people in the Sughd region in a country which is among the most vulnerable to climate change. The GCF’s support will help introduce best international practices in climate risk management in the Tajik hydropower sector.
In Morocco, the EBRD and its partners are extending US$ 207 million for the Saïss Water Conservation Project to build an irrigation infrastructure that will benefit agricultural production and cut the depletion of scarce groundwater resources with a GCF grant contribution of €32 million.