Make green finance more accessible: Stakeholders
Highlights
- IDCOL disbursed Tk700cr as Green Finance since 2016
- Another Tk3,000cr available for use in same purpose
- IDCOL's interest rate on Green finance is 5%-6%
- 150 buildings green certified, including 132 in RMG sector
- 500 buildings are waiting for LEED certification
The government should focus on making green finance more accessible to industries that can aid Bangladesh in cutting its primary energy consumption by 20% within 2030 under the energy efficiency master plan, said stakeholders on Thursday.
At a virtual discussion titled "Industrial Energy Efficiency Dialogue", representatives from different sectors, including readymade garments and cement, said the RMG sector already has the highest number of certified green buildings in the world.
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Bangladesh currently has 150 green buildings – including 132 in the RMG sector – certified by the LEED (Leadership in Energy and Environmental Design), which is an internationally recognised certification system.
The Infrastructure Development Company Ltd (IDCOL) has provided Tk700 crore as financing for green buildings since 2016 to fulfil the Energy Efficiency and Conservation Master Plan up to 2030.
Speaking as a panelist at the event organised by IDCOL, in collaboration with Energy & Power magazine, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq said, "Around 500 factories are currently waiting for LEED certification.
"However, green financing remains a difficult to access facility for many investors."
Later, providing more details to The Business Standard, Huq said, "The process is set in such a way that it becomes very difficult for SMEs [small and medium enterprises] to meet the requirements.
"The process should be set up in a way which is helpful to factories that need the green finance facility the most. Sometimes the process needs 3 to 6 months. Therefore, entrepreneurs prefer regular loans instead of green finance."
She continued, "Apart from this, high amount of collateral, a lack of expertise of the banks in green finance, central green finance unit and certified auditors for energy efficiency audit are the major reasons obstructing green financing."
Huq recommended the government to create a separate guarantee fund from the climate change trust fund, and urged policymakers to incentivise the RMG sector.
At the programme, Tosrifa Industries Managing Director Mohim Hassan pointed out that a capital investment at low interest is the key to build an energy-efficient factory.
Sharing his Experience in managing green financing, he said, "Funding should be allotted on a priority basis to sectors that have the potential to save more energy, such as the textile industry."
"But financing agencies always try to hold back when textile industries seek funds, which I experienced while trying to get funds from the World Bank," he added.
Responding to the stakeholders' experience and suggestion, Energy Adviser to the Prime Minister Dr Tawfiq-e-Elahi Chowdhury, who graced the occasion as chief guest, suggested that IDCOL should finance the industries directly.
He added, "IDCOL should also collaborate with the banks to ease the financing process. There could be a separate branch in banks for green financing. To spread the program, I also suggest setting up a year-long goal to finance factories and distribute energy efficiency certificates to the industries.
Meanwhile, IDCOL CEO Mahmood Malik said his organisation has been providing loans at 5%-6% interest for the last 10-12 years under green finance.
"Currently, we have around Tk3,000 crore available to disburse under green finance. Several projects the garment and textile sectors are under the process to get financing," he added.
SREDA Chairman Mohammad Alauddin presented the keynote at the programme, while Energy & Power magazine Editor Mollah Amzad Hossain moderated the discussion.
Among others, Special Envoy for the United Nations Climate Vulnerable Forum Presidency Abul Kalam Azad; Chairman at Bangladesh Energy Regulatory Commission Abdul Jalil; and Secretary of Power Division Habibur Rahman spoke as guests of honour.
Leading experts in the sector, economists and journalists also participated in the event.
