BANGKOK, November 26, 2009 – The Royal Thai Government has submitted this month a proposal for the Clean Technology Fund to support development projects that will help Thailand curb its carbon emissions and move toward low-carbon growth in the future.
The proposal is officially known as the Clean Technology Fund Investment Plan for Thailand. It identifies five broad programs that would help reduce greenhouse gas emissions in the transport and the energy sectors.
Although specific number of projects under each program is not yet confirmed, altogether they are expected to cut Thailand’s greenhouse gas emissions by about five million ton-equivalent per year, when fully implemented.
These five programs will require a total investment of $4.3 billion. The Thai government is asking the CTF, a trust fund set up by 10 industrial countries, to provide $300 million of co-financing at very concessional rates. About $3.5 billion of the investment will come from domestic sources, including the government itself and the private sector.
The World Bank and its private investment arm, the International Finance Corp. (IFC), are prepared to lend $500 million to these programs. But each project for which World Bank financing is proposed will require approval from the World Bank Group’s Board of Executive Directors.
Among other things, the CTF Investment Plan for Thailand proposed CTF support for renewable energy projects by the Electricity Generating Authority of Thailand (EGAT); for forest residue biomass power generation and energy-efficient street lighting projects by the Provincial Electricity Authority of Thailand (PEA); and for the expansion of Bangkok Metropolitan Administration’s Bus Rapid Transit system, as well as for the retrofitting of BMA-owned buildings with energy-efficient lighting.
To catalyze clean energy investments by the private sector, the Thai government also requested CTF support for a new funding facility for small, privately-owned renewable energy projects, which would otherwise have difficulty getting support from commercial banks.
The CTF Investment Plan for Thailand is a result of close collaboration between the Thai government, the World Bank, the Asian Development Bank, the IFC, and other development partners. The draft plan was presented during a public consultation in September and received an approval in principle from the Thai cabinet on November 3rd.
Along with other countries’ proposals, the Thailand plan will be reviewed during the December meeting of the CTF Committee. Thai government officials will be invited to present Thailand’s case to the Committee via videoconference, linking Washington, DC, with Manila, Bangkok, and London.
Background on Clean Technology Fund
CTF aims to accelerate the deployment of low-carbon technologies in the energy and the transport sectors, the major contributors to greenhouse gas emissions in developing countries.
It provides a very low-interest long-term financing (20-40 years) for activities that will (i) reduce carbon emissions by the power sector; (ii) encourage energy savings in the transport sector by shifting to more efficient forms of transport; and (iii) promote efficient use of energy in buildings, industries and agriculture.
Countries interested in CTF financing are required to submit the CTF Investment Plan to the CTF Trust Fund Committee for approval. In general, CTF funding should be around one-fifth of the total investment cost.
Recipient countries are required to put up some money on their own – to ensure ownership of the investment plan. The plan must also complement country development strategy already adopted by the government.
Countries requesting CTF support are also required to seek loans from any multilateral development banks that are partner of the CTF. This is to ensure that they have the access to technical assistance needed for the preparation of the investment plan and the project implementation, once the proposal is approved.
The World Bank was appointed by donors to manage the CTF, whose working capital is $5 billion.
Seven donor countries (Australia, France, Germany, Japan, Sweden, the UK, and the US) and seven potential recipient countries (Brazil, China, Egypt, India, Mexico, South Africa, and Turkey) were selected as members of the Clean Technology Fund (CTF) Trust Fund Committee in October last year.
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