The Green Climate Fund (GCF) has allocated $300 million to support the Asian Development Bank’s (ADB) efforts to help Southeast Asia shape a climate-resilient, environmentally sustainable economic recovery from the coronavirus disease (COVID-19) pandemic.
The Association of Southeast Asian Nations (ASEAN) Catalytic Green Finance Facility (ACGF) Green Recovery Program aims to leverage GCF and ADB funds to catalyze financing from development partners and private capital sources to support more than $4 billion worth of green infrastructure projects across the region. All projects supported by the program will incorporate innovative green finance instruments and approaches.
“The ACGF Green Recovery Program is designed to kickstart a cycle of low-emissions investments during the first few years of a COVID-19 recovery,” said ADB Vice-President Ahmed M. Saeed. “The program will help Southeast Asian countries design green stimulus packages and projects that will create climate-friendly jobs, boost economic growth, and help countries fulfill their pledges under the Paris Agreement to reduce greenhouse gas emissions.”
The program aims to help Southeast Asian countries bridge a major gap in financing green infrastructure, with the region’s annual investment needs estimated to be $210 billion even before the COVID-19 pandemic hit. The gap is likely to have widened during the pandemic, as the region’s economy contracted by 4.4% in 2020, according to ADB.
The Green Recovery Program will provide technical assistance and concessional loans to about 20 green infrastructure projects across Southeast Asia. Over a 30-year period, the projects are expected to reduce carbon dioxide emissions by 119 million tons and create 340,000 green jobs in key sectors such as sustainable transport, renewable energy and energy efficiency systems, as well as low-carbon agriculture and natural resources.
“The program seeks to accelerate the flow of green capital from banks, investors, and capital markets to Southeast Asia by helping de-risk and prepare bankable green infrastructure investments,” said ADB’s ACGF Unit Head Anouj Mehta. “The program will also help countries scale up issuances of green and climate bonds to support sustainable growth in developing Southeast Asia.”
The Green Recovery Program will be implemented according to the principles of ACGF, established by the ASEAN Infrastructure Fund and managed by ADB. ACGF has published a set of green investment principles and eligibility criteria and created a pipeline of projects, including its first project approved for financing in 2020. ACGF has attracted more than $1.4 billion in cofinancing commitments, which will support the Green Recovery Program. ADB will prioritize the use of GCF funding under the program for investment projects in Cambodia, Indonesia, the Lao People’s Democratic Republic, and the Philippines.
GCF approved the funding for the program at its 28th board meeting on 19 March 2021. Based in Songdo, Republic of Korea, GCF is a global fund created to help developing countries address the challenge of climate change. ADB has received 12 funding approvals totaling $948 million since becoming an accredited GCF entity in 2015.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.