Korea Development Bank-led 'Indonesia Energy Efficiency Improvement' Project Passes Green Climate Fund Board

[Asia Economy Sejong=Reporter Son Seon-hee] A project to help finance energy efficiency improvements at aging industrial facilities in Indonesia at low interest rates has passed the Green Climate Fund (GCF) board meeting. This project was proposed by the Korea Development Bank (KDB), marking the first time a project led by a domestic institution has been approved by the GCF. The significance lies in the opportunity it opens for domestic institutions and companies to participate in related projects.

According to the Ministry of Economy and Finance on the 21st, at the 34th GCF board meeting held in Incheon from the 15th to the 20th, a total of nine climate change response industry projects, including the "Indonesia Industrial Energy Efficiency Improvement Project," were approved for GCF funding of $550 million. The board also reviewed and approved this year’s operational performance and execution details, as well as next year’s work plan and budget.

The Indonesia Energy Efficiency Improvement Project proposed by KDB supports guarantees for loans from local financial institutions to help local small and medium-sized enterprises (SMEs) secure low-interest financing needed to improve energy efficiency in aging industrial facilities. With the board’s approval, a total of $105 million in GCF funds will be invested in the project. Based on this, local financial institutions are expected to provide guaranteed loans worth approximately $130 million, making the total project scale about 2.5 trillion KRW.

The Ministry of Economy and Finance explained that the approval of a project proposed by a domestic institution is significant as it creates a market environment for domestic companies and institutions to participate in climate projects in developing countries, utilize GCF guarantees, and support the private sector in developing countries.

At the board meeting, Kim Kyung-hee, Director General of the Development Finance Bureau at the Ministry of Economy and Finance, stated, "Next year, it is necessary to strengthen developing countries’ direct access to GCF funds to more effectively respond to their climate change needs." She added, "To this end, capacity building for developing country GCF accreditation entities and expanding the review of project proposals submitted by these entities should be enhanced."

Meanwhile, the government plans to strive for the development of the GCF, the world’s largest climate change response fund, and actively support the participation of domestic institutions and companies in GCF projects in connection with domestic climate change response policies.

The next GCF board meeting is scheduled to be held in Korea for four days starting March 13 next year.

This content was produced with the assistance of AI translation services.