Workers from Vietnam Electricity (EVN) instruct a business owner in Hà Nội's Thanh Oai District on how to use power economically and efficiently. — VNA/VNS Photo

HÀ NỘI — The World Bank, acting on behalf of the Green Climate Fund (GCF), has signed a grant worth US$11.3 million with the State Bank of Việt Nam to support the development of a commercial financing market for industrial energy efficiency investments.

The total financing from the GCF also includes a $75 million guarantee.

Out of the grant, $8.3 million 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 authorities to strengthen policy frameworks and regulations and create an enabling environment to accelerate the energy efficiency market in Việt 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 about $250 million of commercial financing to be provided to industrial enterprises and energy service companies at competitive terms and with low collateral requirements.

Carolyn Turk, Country Director for the World Bank in Việt Nam, said: “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.”

“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,” she added.

The grant and guarantee are executed under the 'Việt Nam Scaling up Energy Efficiency Project' which aims to support the country in achieving energy efficiency targets in the Green Growth Strategy as well as emission reduction objectives under the National Determined Contributions.

According to the World Bank, as a country whose level of energy intensity and emission intensity is among the highest in the region, Việt Nam is actively embarking on the green energy transition and decarbonisation pathway.

The World Bank’s Low Carbon Study estimates Việt 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 has been estimated at around $3.6 billion. — VNS