GCF Approves USD 137 Mn FMO Investment in India’s Green Growth Equity Fund

The Board of GCF has approved the proposal by FMO to accelerate private and public sector investment in India’s green infrastructure projects.

GCF FMO Investment in India

The Board of the Green Climate Fund (GCF) has approved Dutch development bank FMO’s proposal to accelerate private and public sector investment in India’s green infrastructure projects. Through the Green Growth Equity Fund (GGEF), managed by EverSource Capital, the Dutch development bank will invest USD 137 million in the energy value chain, water, waste and transport sectors that promote low carbon and climate-resilient initiatives in line with India’s climate objectives and Sustainable Development Goals. 

The project is FMO’s second collaboration with the GCF, following the USD 100 million that the GCF invested in Climate Investor One in 2019.

Linda Broekhuizen, CEO ad interim at FMO said “we are excited to announce our second GCF project, with such a substantial contribution to sustainable development goals, across economic, environmental and social dimensions. Apart from contributing to India’s climate goals, GGEF contributes to job creation and increased economic activity. This stimulus is particularly timely now, in a covid19 pandemic environment, which is threatening India with the economic slowdown, job losses and negative implications for businesses.”

India faces major climate change challenges largely due to greenhouse gas (GHG) emission-induced warming. The country faces increasingly extreme weather events and natural hazards, putting pressure on critical natural resources such as water, while damaging infrastructure and threatening the livelihoods of its population. There is a clear need for far-reaching mitigation and adaptation measures, since GHG emissions in India are the third-largest in the world, contributing to 7 percent of global emissions and temperature rise.

The total investment needs to ensure low-carbon and climate-resilient pathways for India is estimated at USD 2.5 trillion over 2016-2030. An upcoming study by Climate Policy Initiative (CPI) finds that India is mobilizing less than 25 percent of the investment needed to reach this target (CPI, 2020). These mitigation and adaptation gaps are especially evident in the infrastructure sector, with the government facing budgetary constraints and limited capacity to structure and deliver green infrastructure projects.

That is why the EverSource Capital managed GGEF targets raising equity capital up to USD 940 million for India’s green infrastructure sectors such as renewable energy, transport, resource efficiency and energy services. The program is innovatively structured, blending concessional equity and grant capital to mobilize significant amounts of commercial equity to accelerate investments in these sectors, while providing the necessary USD 4.5 million in technical assistance support to create an enabling environment. 

Dhanpal Jhaveri, CEO, EverSource Capital said “we are delighted to receive GCF Board approval for an investment in GGEF. This is the largest single country amount approved by GCF ever for a private sector equity fund focused on climate mitigation. This investment commitment strengthens our resolve and ability to work towards supporting India’s climate objectives and Sustainable Development Goals along with creating impact and value in India’s clean energy ecosystem.”

By investing across the energy sector value chain, transport and waste sectors, the program reduces GHG emissions and increases access to alternative water resources in India through investments into wastewater treatment and desalination plants. The total emission reduction expected from the equity investment of the program is the equivalent of 166 million tons of CO2, while treating and generating an additional 5,700 million cubic meters of water from alternative resources for use by households, farmers and businesses.

The GCF is the world’s largest dedicated climate fund. Its mandate is to foster a paradigm shift towards low emission, climate resilient development pathways in developing countries.

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