Climate financing
In UNIDO’s experience, investments into energy efficiency and optimization activities typically deliver rapid returns. On average, committed companies saved between 4-15 per cent of their energy and associated costs during the first year of energy management system implementation with little to no capital investment. Payback times can be only one month. However, despite all of this promise, financing for industrial energy efficiency and low-carbon technologies in many energy intensive countries is still unavailable.
From the investor’s perspective, there is a general lack of awareness of the commercial benefits of best practices in energy efficiency and low carbon technologies. Other challenges include a lack of appraisal capacity among bank staff and the ‘high-risk’ perceptions surrounding these projects.
Access to finance for low carbon technologies
This involves:
- Designing a financing mechanism alongside de-risking instruments for low-carbon technologies
- Implementing 10 capital intensive pilot projects, documenting them and publishing case studies on the lessons learned
- Supporting the preparation of 80 bankable proposals for financing of low-carbon technology projects
- Training 10–15 local banks and financing institutions on how to assess low-carbon technologies projects
- Raising awareness on investment opportunities, benefits and potential of industrial low-carbon technologies
- Training 100 national professionals on how to prepare bankable proposals.
Progress update
In 2023, UNIDO and Econoler undertook a landscape analysis to assess the current industrial decarbonization financing situation in Sri Lanka and the challenges, obstacles and barriers that are preventing further scale up.
Stakeholder consultations were also conducted with 20 policymakers, financial institutions and representatives from industrial businesses in the textiles and apparel, food and beverages and rubber and plastics industries.
The findings have been used to develop an industrial decarbonization financing strategy for Sri Lanka, in consultation with key industry representatives, financial institutions and policymakers. The strategy outlines objectives, actions and targets to increase access to decarbonization financing for Sri Lankan industries.
