1 billion for green infrastructures in Southeast Asia

1 billion for green infrastructures in Southeast Asia

On April 4 in Chiang Rai, Thailand, AFD joined forces with the Asian Development Bank (ADB) to launch the ASEAN Catalytic Green Finance Facility. This initiative aims to generate more than $1 billion worth of investments in green and climate-compatible investments in countries belonging to the Association of Southeast Asian Nations (ASEAN).

Southeast Asia faces a two-pronged challenge when it comes to infrastructures. Although the sector remains the backbone of economic growth in ASEAN countries, it carries a high environmental cost, causing degradation of natural resources, air and water pollution, and increased greenhouse gas emissions. At the same time, current investments in this area are insufficient to meet needs. According to a study by the ADB, these needs total some $210 billion annually, including the costs of attenuation and adaptation to climate change. There is, thus, clearly an urgent need to invest more in environmentally friendly, climate-compatible and socially inclusive infrastructures in Southeast Asia.

Public investment will not be sufficient to close the gap between what is needed and the volume of investment required. Private stakeholders, meanwhile, have the capacity to invest considerable resources to address current development challenges in the region, yet the vast majority of green infrastructure projects are not considered “fundable” at this point because they are deemed to be too risky.

A large number of financiers have therefore decided to join forces and actively participate in the ASEAN Catalytic Green Finance Facility, which aims to improve the financial attractiveness of investing in green infrastructures by reducing the associated risks and promoting the use of private funds.

“AFD intends to direct its funding to projects related to climate change issues. In the ASEAN countries, we would like to see 70% of our projects with a co-benefit for the climate,” explains Yazid Bensaïd, AFD Regional Director in Southeast Asia.

That is why France, via AFD, has already provided a €1 million grant to support the initiative. Going forward, Agence Française de Développement’s support will take the form of helping to fund some of these projects. The grant will be used in particular to fund the project preparation phase and reinforce the climate requirements for this type of investment.

Original source: AFD
Published on 04 April 2019