Group of llamas walk near a lake in Peruvian highlands
Photo: USAID Peru

Transformational Approaches to Channel Finance into Action

Part 1 – Low Carbon Development in Vietnam and Peru
By Regina Bernhard, Johannes Schroeten, Matthew Ogonowski

This is the first blog in a two-part series detailing the Climate Finance Readiness Program (CF Ready), a program implemented by GIZ that receives joint support from USAID and the Ministry for Environment of the Czech Republic on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). Part One focuses on work in Vietnam and Peru to promote low-carbon development pathways. Part Two highlights CF Ready-funded climate change adaptation efforts in Tanzania and Cambodia.

Three sugar mills in Vietnam installed an additional 150 megawatts (MW) of new biomass-fired combined heat and power generation capacity, leveraging more than $120 million of private investment from domestic sources. A public bank in Peru is offering a new mortgage program for “green” housing, focusing on energy and water efficiency measures. These are just two modest but tangible results of a co-financing mechanism called the CF Ready. CF Ready wants to spur transformational use of climate finance.

Combining economic growth and prosperity with environmental and climate protection is one of the greatest challenges in the international community. Achieving a sustainable path in developing countries will require an unprecedented mobilization of finance and investment from public and private funding sources, both national and international. CF Ready, commissioned by BMZ, contributes to this goal by helping countries mobilize and manage climate finance effectively for large-scale action in the areas of clean energy, sustainable landscapes, and adaptation.

In 2014, USAID co-financed $5 million for work in four countries: Vietnam, Peru, Tanzania, and Cambodia. While the countries may need additional assistance to refine their specific needs and approaches, the program has strengthened their abilities to take action independently and chart their way forward. USAID’s collaboration with CF Ready has provided key assistance to help these countries leverage private sector investment in on-the-ground projects and develop National Adaptation Plans and reduce emissions of greenhouse gases. It has also contributed to sustainable economic development, as well as a transition to long-term self-reliance.

Advancing Low-Carbon Development in Vietnam and Peru

CF Ready’s work in Vietnam focuses on supporting the private sector in introducing cleaner technologies for electric power generation, thereby contributing to implementation of the country’s national biomass policy and the Vietnam Green Growth Strategy. Five sugar mills received advice on expanding investments in biomass-fired combined heat and power generation. One result of this work is an additional 150 MW of new capacity at three mills, contributing to a leverage of more than $120 million from private sources.

The project also helped identify new sources of biomass energy and supported the development of new policies. For example, CF Ready’s support for the preparation of Provincial Biomass Energy Development Plans in two provinces further contributes to low-carbon energy development, reduces GHG emissions, and provides strong economic support for the rural population.

In Peru, with the help of CF Ready, the national Government is integrating low-carbon mitigation aspects into national public and private financing mechanisms. The Ministry of Transport and Communications and the Ministry of Economy and Finance received support to design a budget program for sustainable transportation, improving efficiency in urban transport planning, and enabling climate change mitigation aspects to be taken into account in investments.

CF Ready also supported capacity-building efforts with key development and municipal banks in Peru. CF Ready’s work with the social housing bank Fondo Mivivienda resulted in development and issuance of grants and mortgage loans for green housing, energy and water efficiency measures. The project also supported the agriculture bank Agrobanco with development of a new credit product for agroforestry, as well as one with the municipal bank Caja Sullana for solar technologies.

With the support of CF Ready, the Peruvian Initiative Programa de Inversión Responsable, in coordination with the Peruvian University of Piura, published a user’s guide on corporate sustainability reports for all companies that issue securities and are regulated by the Peruvian Superintendency of the Stock Market (Superintendencia de Mercado de Valores).

Country
Vietnam, Peru
Strategic Objective
Mitigation
Topics
Emissions, Low Emission Development, Climate Finance, Clean or Renewable Energy, Private Sector Engagement
Region
Africa, Asia, Latin America & Caribbean
Regina Bernhard

Regina Bernhard

Regina Bernhard has more than 11 years of experience in the field of public finance, climate finance, and technical cooperation projects worldwide. Currently, she is coordinator of the GIZ NDC Assist project, contributing to the global NDC Partnership. Before NDC Assist, she served as project manager in the GIZ Climate Finance Readiness project, managing the cooperation with USAID and the Czech Ministry of the Environment.

Johannes Schroeten

Johannes Schroeten

Johannes Schroeten studied European Studies at the University of Maastricht. After two intermediate stops at a green bank and a sustainable rating agency in Germany, he now works as a junior advisor in the Climate Finance Readiness Programme of GIZ, overseeing various global and country related activities.

Matthew Ogonowski

Matthew Ogonowski

Matthew Ogonowski works for USAID's Office of Global Climate Change in Washington, DC, and led the Agency's engagement with the GIZ Climate Finance Readiness Programme in Vietnam and Peru. Since 1999 he has provided technical/economic analysis, project management, policy design and financing support for clean energy development to USAID, ICF Consulting, Center for Clean Air Policy (CCAP) and other organizations.

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