The total financing support from GCF also includes a 75 million USD guarantee.

Some 8.3 million USD from the grant will be used to build capacities for the private sector to identify, appraise and execute energy efficiency projects. It will also provide technical assistance to the Ministry of Industry and Trade and relevant authorities to strengthen policy frameworks and regulations and create an enabling environment to accelerate the energy efficiency market in Vietnam.

The remaining grant funds and the guarantee will be used to establish a risk sharing facility to provide partial credit guarantees to support local banks who may risk potential defaults on loans for energy efficiency projects.

By reducing lending risks, the facility is expected to mobilise around 250 million USD of commercial financing, to be provided to industrial enterprises and energy service companies at competitive terms and with low collateral requirements.

The grant and guarantee are executed under the Vietnam Scaling up Energy Efficiency Project which aims to support Vietnam in achieving energy efficiency targets set out in the Green Growth Strategy as well as emission reduction objectives pledged under the National Determined Contributions.

According to the WB, Vietnam is actively embarking on the green energy transition and decarbonisation pathway.

The WB’s Low Carbon Study estimates that Vietnam could save up to 11 GW of new generation capacity by 2030 if comprehensive demand-side energy efficiency investments are carried out. The energy efficiency investment need for key industries in Vietnam was estimated at around 3.6 billion USD.