GCF and IDCOL sign key agreement on ambitious energy project
GCF and the Infrastructure Development Company Limited (Bangladesh) or IDCOL, have signed a critical agreement to implement a large-scale energy saving project for Bangladesh’s textile and garment industries.
The agreement was signed at the most recent GCF Board meeting, the first in person Board meeting to be held in the Republic of Korea since 2019.
The USD 340.5 million project first received approval in November 2020 and is GCF’s largest contribution to a single country private sector project, with over USD 256 million in approved GCF financing.
Bangladesh’s textile and garment sectors together account for more than 80% of the country’s exports yet are also the largest industrial contributors to Greenhouse Gas Emissions.
The project will provide financial and technical assistance to textile and garment producers, allowing them to transition to more energy efficient equipment and modern technologies that lower emissions and protect jobs and growth in this critical economic sector. Crucially, it will encourage private sector investment by encouraging local financial institutions to develop scalable lending and investment business model for climate mitigation and sustainable development of the sector.
IDCOL is a Direct Access Entity (DAE) to GCF, a mechanism which allows national or sub-national commercial or public sector organisations nominated by a country’s National Designated Authorities to directly access GCF funding and resources. Partnerships with DAEs are crucial to unlocking transformative climate action, strengthening country ownership of programming and delivering climate finance closer to the ground.
Speaking at the signing of the agreement, Sharifa Khan, Secretary of the Economic Relations Division of Bangladesh’s Ministry of Finance said, “The textile and garment sectors are the most important to the Bangladeshi economy and to the livelihoods of our people. We are already facing the negative impacts of climate change and we will greatly benefit from this project.”
Alamgir Morshed, Executive Director and CEO of IDCOL said, “The timing of this could not be better, with the wrath of climate change that we see globally, from the fires in Europe to the floods here in Bangladesh. This programme also includes the private sector, which is important because the government alone cannot tackle this. Private sector engagement is critical. This is where GCF is helping, in partnership with IDCOL, to mobilise the private sector in the fight against climate change.”
Yannick Glemarec, Executive Director of GCF said, “This programme will not only enhance energy efficiency and reduce Greenhouse Gas Emissions, it will dramatically improve the quality of life for workers, 80% of whom are women in this sector. It is an immense privilege to be signing this agreement on behalf of GCF.”
The programme aims to reduce greenhouse gas emissions by 14.53 million tonnes of CO2 equivalent over a 20-year period with a series of high-impact investments that will also have a transformative impact on air and water quality, the creation of green jobs and improvements to worker safety.