IFC, ADB step up green financing for poor countries

MANILA, Philippines - The Asian Development Bank (ADB) and the International Finance Corp. (IFC) are offering developing countries more opportunities to go green and alter the negative impact of climate change.

The IFC, the private investment arm of the World Bank, will issue its first “green” bond, a $200-million fixed rate bond to address climate change while the ADB has put up a $2-million technical assistance grant to develop clean energy technologies.

Both financial products are intended for projects in developing countries, including the Philippines, without or with limited access to clean energy.

The IFC has tapped SEB, a North European financial group, to manage the four-year bond. The proceeds of the issue will be set aside in a separate “green account” for investing exclusively in renewable energy, energy efficiency and other climate-friendly projects in developing countries.

The issue will have a coupon price of 2.25 percent per annum with a maturity date of April 28, 2014.

IFC vice president and treasurer Nina Shapiro said this marks the first time the multilateral institution will issue bonds to raise funds that will be put into a separate account tied to a specific pool of loans.

“The Green Bond is an innovative financial product that offers both development impact and good return for investors,” Shapiro said.

The bond issue highlights increased interest from sustainable and socially responsible institutional investors who wish to support climate change-related projects in developing countries.

Projects that may be funded include the rehabilitation of power plants and transmission facilities to reduce greenhouse gas emissions, solar and wind installations, and funding for new technologies that result in significant reductions in greenhouse-gas emissions.

In the Philippines, Banco de Oro Unibank Inc. (BDO) and the Bank of the Philippine Islands (BPI) are working with the IFC for financially-related activities in energy efficiency and clean energy finan-cing.

Meanwhile, the $2-million assistance of the ADB will develop and implement access to clean energy projects.

An estimated 800 million people in developing Asia currently have no access to basic electricity services, and some 1.8 billion people must rely on traditional biomass fuels to meet their cooking and heating needs.

ADB vice president Ursula Schaefer-Preuss said clean energy transform lives by providing better delivery of education and health services, a cleaner and healthier environment, and improved opportunities for the poor, especially for women and children.

The technical assistance will contribute to the ongoing work of the “Energy for All Initiative,” established in 2008 to increase ADB investment in access to energy.

In 2009, ADB projects worth $418 million translated to about 243,600 new households connected to modern energy, compared to the average of 169,200 between 2003 and 2008.

It will also support the “Energy for All Partnership,” a regional platform launched by ADB last year which brings together financial institutions, the private sector, civil society and governments with the target of bringing power to 100 million people in Asia and the Pacific by 2015.

The new technical assistance will initially focus on a few high-impact countries to include Bangladesh, Bhutan, Cambodia, Indonesia, Lao PDR, Nepal, Pakistan and the Philippines.

Potential projects include expanding access to piped natural gas among concentrations of urban poor to biogas development and rural electrification through micro-hydro, solar and small wind power.