The European Bank for Reconstruction and Development (EBRD) has signed an agreement with the Green Climate Fund (GCF) that will see it receive funding from GCF for climate change projects, and make it the largest single recipient of the fund’s resources.
GCF has agreed to allocate US$240mn for three EBRD projects. This takes the total GCF provision for green EBRD projects to US$618mn, or 26% of total GCF resources approved so far.
The funds will be used to support renewable energy projects in Egypt and Tajikistan and a water project in Morocco. They will also be used to help transform banking sectors in EBRD regions to support green lending.
In Egypt, the EBRD is preparing to invest US$350mn in a renewable energy financing framework which will be complemented by US$154.7mn of GCF’s concessional loan and technical assistance.
In Tajikistan, the bank and other co-lenders are providing US$158mn for the climate-resilient upgrade of the Qairokkum hydropower plant, with co-financing of US$50mn 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.
In Morocco, the EBRD and its partners are extending US$207mn 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 €32mn.
The funds allocated to the EBRD consist of grant co-financing, concessional financing and technical assistance, and provide a significant boost to its global climate challenge of dedicating 40% of its annual business investments to green projects by 2020.
EBRD president Suma Chakrabarti says: “We are delighted with this huge vote of confidence by the GCF. 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.”
Funding from donors such as the GCF is crucial for driving growth for the green economy in countries where the EBRD invests.
According to the EBRD, over the past decade donors have contributed more than US$1.5bn towards its climate finance support. 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.