Green Economy Transition

The Green Economy Transition approach builds on a decade of successful climate and resource efficiency investments by the Bank. When we launched GET at the end of 2015, we sought to increase the Bank’s volume of green financing from an average of 25 per cent of our ABI over the last decade to 40 per cent by 2020. We achieved this target in 2017 — three years ahead of schedule.

The EBRD is leading international action on the transition to a green economy. We coordinate MDB climate finance reporting, help to develop standards and metrics for climate resilience investments, and feature prominently at the Conference of the Parties (COP) events, engaging with high profile stakeholders.

The transition to a green economy creates numerous opportunities for growth. Have a look at the right-hand sidebar for video stories on how EBRD clients and countries are moving towards a low-carbon future under our GET approach, and are reaping considerable economic, environmental and social benefits.

Low carbon and climate resilient investments

In 2017 we supported the progressive decarbonisation of energy-intensive sectors and operations across our countries of operations. Notable examples include Project Latte, a loan to support greenhouse gas (GHG) reductions in the Turkish dairy industry; the environmental improvement of Ukraine’s largest steel mill, Mittal; and continuing work on reducing the carbon footprint of the Egyptian cement industry.

Low carbon transport

We help make transport infrastructure more resilient to the impacts of climate change and enable significant emission reductions.

In 2017 we invested €684 million of green financing in the transport sector (six times the amount we invested in 2016). Key projects focused on the modernisation of rail infrastructure in Egypt; the electrification of the major railway line Dolynska-Mykolaiv-Kolosivka in Ukraine; the rehabilitation of docks to boost the shipping industry in Turkey; and investments in mass and public transport in various other cities across our region.

These projects are estimated to result in primary energy savings totalling 997,600 GJ per year.

See also Transport.

 Partnerships in climate finance

The EBRD’s climate finance partners provide crucial support for our policy dialogue efforts and provision of technical expertise to clients. When market barriers are high, these partners also step in and provide capital expenditure grants or concessional finance. This is combined with the Bank’s commercial finance. By working this way the EBRD puts together integrated packages of loans, grants and technical assistance to address market barriers and help create new markets.

Green Climate Fund

The Green Climate Fund (GCF) is the largest and newest international climate fund, created in 2010 under the United Nations Framework Convention on Climate Change. It supports low-emission and climate-resilient programmes.

In November 2017, the GCF gave the green light to the largest climate project to date in its partnership with the EBRD, signing a US$ 378 million concessional loan to support new climate finance flows under planned GEFF operations to Armenia, Egypt, Georgia, Jordan, Moldova, Mongolia, Morocco, Serbia, Tajikistan and Tunisia. This will support thousands of individual investments in technologies such as renewable energy, energy efficiency and climate adaptation measures, such as improving water management.

Significant donor funds support for GET investments have been approved by the EU (for example €23.5 million funding technical assistance, policy dialogue and small capital grants under the Western Balkans Regional Energy Efficiency Programme), Austria, Japan, Sweden and the Taiwanese as well as from the EBRD Shareholder Special Fund.

International action

The Bank played an active role in the COP23 conference in November 2017. We reported progress on delivering our climate finance objectives under the Paris Agreement of 2015, as well as demonstrating our ongoing commitment to address the challenges and risks of climate change.

With its investments, the EBRD will continue to support the countries where it invests to implement their Nationally Determined Contributions (NDCs) under the Paris Agreement. Understanding the fiscal impact on individual country economies is a vital step in this process. In 2017 the EBRD worked closely with the governments of Kazakhstan and Egypt to understand the implications of switching to a green economy for their own domestic economies, such as lower fiscal revenues from fossil fuels. The EBRD has held public discussions on the topic at the 2017 Astana Economic Forum and the 2017 UN Climate Change Conference in Bonn, Germany.

In addition to our continued focus on energy efficiency, renewables and green cities – all areas where carbon emission reductions can be achieved quickly — we are also now focusing on climate adaptation financing.

Knowledge-sharing and innovation

We increased our engagement with relevant stakeholders and partners in climate finance in 2017. The EBRD continues to influence and lead in this area, creating blueprints for other stakeholders to follow.

We work with other MDBs on a common methodology to track financial flows dedicated to climate change mitigation and adaptation. The latest joint report, prepared by the EBRD, was published in September 2017.

Some of our key initiatives which we led last year are:

Türkiye Materials Marketplace

This is a cloud-based platform designed to facilitate cross-industry materials reuse among Turkish companies and communities. During 2017, this programme reached 25 participant companies in Turkey and the first full-scale transaction was completed, together with two material transactions for testing purposes.

Innovation vouchers

In 2017, the Bank launched two innovation vouchers schemes in Serbia and in Ukraine to boost green innovation in the two countries. Innovation vouchers are grants that can be used by companies to purchase research and development (R&D) services to improve resource efficiency and promote the development and adoption of climate technologies.

Green bonds

The use of capital market instruments such as green bonds is key to scaling up green investments. The Bank’s first investment in a green bond (and one of the very first in our countries of operations) was implemented in 2017 through the subscription for 10 per cent (€30 million) of Lietuvos Energija’s debut green bond. The proceeds will be used to finance new investments in biomass and waste combined heat and power (CHP) and refinancing of wind farm acquisitions.

Some highlights of policy activities that were undertaken in 2017 include:

• A National Energy Efficiency Action Plan (NEEAP) was agreed and adopted by the authorities in Turkey. This is the first such plan supported by the EBRD to be adopted in our countries of operations. There was also follow up on the previously agreed National Renewable Energy Action Plan (NREAP) with the launch of an auction for new wind capacity.
• A technical assistance framework was approved to provide support to countries on their Nationally Determined Contributions (NDCs) which are the plans defining their commitments on implementing the Paris Climate Agreement.
• Jointly with the EU, IFC, the World Bank and EIB, policy dialogue aimed at removing barriers to energy efficiency in buildings was conducted in Georgia, Serbia, Tunisia and Ukraine.
• Sustainability criteria for investment in real estate funds were established and are being applied.

Sustainable trade finance

As a key player in trade finance, the EBRD is well placed to help promote and incentivise the trade of sustainably produced commodities and higher performance technologies.

Since 2016, the Bank’s Trade Facilitation Programme (TFP) has been implementing the Green TFP: an innovative marketing initiative which aims to stimulate the supply of green technologies into the economies where we invest, particularly into markets where demand is generated via the GEFFs.

Over the course of 2017, the Green TFP has contributed more than €127 million in GET financing. More than 180 Green TFP transactions have been financed in 11 EBRD countries of operations, resulting in estimated annual energy savings of 206,352 MWh¹, water savings of 18,592m³ and emission reductions of 68,995 tonnes CO₂ equivalent.

Transactions have ranged from the import of LED lighting to Armenia and Serbia, to solar cells to the Kyrgyz Republic for the production of solar panels; as well as transactions supporting resource efficiency, such as the import of water-saving processing equipment to Ukraine.

¹ This includes the equivalent in primary energy savings from renewables, the actual figures are annual energy savings of 198,309 MWh and renewable energy generated 3,217 MWh.

Sustainable food security

2017 marked 20 years since our collaboration began with the Food and Agriculture Organization of the United Nations (FAO). Since then, the EBRD and FAO have collaborated on more than 150 projects with a total value of US$ 36 million, facilitating more effective investments across agrifood chains, helping to improve energy efficiency and productivity, and promote sustainable and inclusive growth.
“Greening” the agribusiness sector and making systems within it more sustainable is the main priority for our future joint efforts with FAO. This includes helping countries curb food losses, use resources more efficiently and reduce the sector’s carbon footprint.

Both institutions already help countries and investors prioritise the adoption of climate technologies in the agricultural sector – from solar-powered water pumps to energy-efficient cold storage. We are also exploring the potential of converting unused agricultural residues into bioenergy for heating, cooking and electricity in countries such as Egypt and Turkey.

Equally important to ensure sustainability from “farm to table” is the inclusion of producers and small and medium-sized enterprises in modern food value chains. To achieve this, FAO and the EBRD are assisting these businesses to set and meet higher food quality and safety standards.

Municipal and environmental infrastructure

In 2017, we financed 41 projects across 18 countries in the MEI sector, representing an EBRD commitment of €1.3 billion.

These investments are expected to benefit a total of over 29 million people in the EBRD region through provision of improved district heating, solid waste facilities, water services and other municipal infrastructure.

In addition, over 960,000 people are expected to use public transport systems on a daily basis which have been modernised and made more efficient with our support. Around 92 per cent of these investments were supported by the Bank’s GET initiative leading to predicted emission reductions estimated at 734,000 tonnes of CO₂e a year.

Our MEI investments leveraged considerable volumes of loan and grant co-financing from commercial banks, the European Union (EU) and other sources, to a total of €243 million in mobilised co-financing.

Gender equality

Addressing inequality of all kinds is a vital part of sustainable growth.

The EBRD’s Strategy for the Promotion of Gender Equality focuses on supporting women’s economic inclusion, namely through: access to finance; access to employment and skills; and access to services.

We promote gender equality through our investments – whether it’s to engage with our clients to improve equal opportunities for all or with our Women in Business programme.

Women’s entrepreneurship plays a key role in creating jobs and driving economic growth in the countries where we invest, but access to bank finance remains limited for women-led SMEs, particularly in the SEMED region. The first Women in Business (WiB) credit line in SEMED was signed in November 2017 in Egypt with QNB Alahli, and the first quarter of 2018 will see the launch of the first WiB programme in Morocco, with opportunities in Tunisia also being explored.

Improving women’s access to employment is also one of the key objectives of our Gender Strategy. 2017 marked the launch of several equal opportunities projects aimed at greater access to employment and related training opportunities for women candidates and staff within our client’s workforce. In Georgia, for example, we are working with the city of Tbilisi for the benefit of the Tbilisi Transport Company LLC to improve HR policies and standards with respect to equal opportunities in a sector that is mainly male-dominated. We are also working with subsidiaries of IC Elektrik, a Turkish company active in power and energy, to develop a tailored Gender Action Plan in a country and sector where women face substantial barriers in access to employment and skills.

We also work on policy dialogue to promote gender equality through initiatives addressing legal and regulatory bottlenecks for women’s participation in the economy. Such initiatives have included building the capacity of policy-makers in Tajikistan to formulate investment climate policies to support women entrepreneurs and working with the governments of Kazakhstan and the Kyrgyz Republic towards reducing legal barriers which ban women from participating in a long list of occupations and tasks.

We signed 29 projects with a gender focus or component in 2017.

Economic inclusion

We support our clients across all sectors to diversify their workforces, introduce high-quality local training and open up paths to employment. This is at the heart of economic inclusion. These efforts bring clear benefits to business as well as the wider community.

With our new Economic Inclusion Strategy (2017), we are strengthening our private sector-focused approach to promote a greater economic integration of women, youth and people living in less-developed areas. We aim to gradually widen this approach to include other groups such as an ageing workforce, people with disabilities and refugees.

Our strategy also highlights the importance of enhancing the financial inclusion of and entrepreneurship opportunities for young people and women through start-up and SME support and by incentivising SMEs to offer more work-based learning opportunities. Regional inclusion will be strengthened through enhanced infrastructure connectivity and IT links, as well as access to water, wastewater systems and irrigated land.

Achievements in 2017

• We signed 31 projects with inclusion components, representing a total investment volume of €1.6 billion.
• We launched a set of projects in Kazakhstan to promote economic inclusion in the energy and natural resources sectors. These include: vocational training and partnerships between employers and local schools; policy engagement to remove barriers for women to work in these industries; and the improved national occupational safety standards across both sectors.
• In Turkey, we are helping to develop technical and vocational training programmes to provide young people with the necessary skills to forge successful careers in sectors such as mining and the automotive industry.
• The Abdali Mall project in Jordan, established in 2016, has successfully trained more than 140 Jordanian young people as well as 85 Syrian refugees, who are progressing into formal employment in the retail sector. These activities will continue.

Special environmental programmes

The EBRD is recognised globally for its expertise in working in challenging economic environments, including those related to nuclear safety. Our experience means we are best-placed to manage these two important environmental investment programmes in eastern Europe. In doing so, we actively seek new contributions and new project opportunities for both programmes, and guide the discussion on reforms and sector priorities.

The Eastern Europe Energy Efficiency and Environment Partnership (E5P)

The E5P is a multi-donor fund, the purpose of which is to facilitate investment in energy efficiency and environmental projects, reduce greenhouse gas emissions and promote policy dialogue and regulatory reforms in E5P countries. The E5P’s initial focus has been Ukraine and it also operates in Armenia, Georgia and Moldova. In 2017 the Fund was extended to Belarus.

The Northern Dimension Environmental Partnership (NDEP)

The NDEP is a multi-donor fund that manages nuclear and environmental challenges. In 2017 two major wastewater treatment projects were completed in Russia under NDEP. Kaliningrad, a city located on Russia’s Baltic coast and home to over 400,000 people, has a new plant which treats approximately 150,000 cubic metres of wastewater every day. In addition, the upgraded Northern Wastewater Treatment Plant in St Petersburg will have the capacity to treat 1,200,000 cubic metres of wastewater per day.

Nuclear safety

Most of the projects financed from the seven nuclear safety funds managed by the EBRD have a significant, beneficial impact on people and the environment. More than 40 governments have contributed almost €5 billion to these funds. The EBRD has also made a €715 million contribution to the Chernobyl projects, including the New Safe Confinement.

In Andreeva Bay, on the coast of the Barents Sea near Murmansk, a complex nuclear fuel management facility was put into operation in early 2017. The spent nuclear submarine fuel “temporarily” stored at Andreeva Bay for almost 40 years – a legacy of the Soviet nuclear fleet – poses a huge environmental risk. The first shipment of retrieved spent fuel in June 2017 was a huge step towards elimination of the main environmental hazard for the entire region.

A key nuclear safety objective was also achieved at Ignalina Nuclear Power Plant in Lithuania. All nuclear fuel has been retrieved from the core of the second reactor and safely stored in the new interim storage facility which received its licence for industrial operation in 2017. Removal of spent fuel from a reactor core is a significant step change in nuclear safety.

We also made progress with our new fund, the Environmental Remediation Account for Central Asia, which supports measures to deal with the legacy of Soviet-era uranium mining and processing in the region. Framework agreements have been signed with the Kyrgyz Republic, Tajikistan and Uzbekistan which will provide the legal basis for implementation of projects in these countries.

Donor support

Support from our donors —governments as well as multilateral institutions, the European Union, global climate funds, and private sector firms and foundations — makes so much of the EBRD’s sustainability work possible.

Donors support the Bank’s work through co-financing grants as well as technical cooperation projects and policy reform activities. The projects they support cover all economies where the EBRD is active, with an emphasis on the Early Transition Countries and the SEMED region.

Above all, donor funds provide strong support when it comes to increasing the sustainability and transition impact of the Bank’s work across sectors and regions.