Canadian Climate Fund for the Private Sector in Asia II

What is the fund?

Established in March 2017, the Canadian Climate Fund for the Private Sector in Asia II is a CAD200 million fund designed to support greater private sector participation in climate change mitigation and adaptation in low and lower middle income countries and upper middle-income small island developing states in Asia and the Pacific. The fund will also seek to promote gender equality and the empowerment of women and girls in projects supported by the fund.

The fund will aim to play a key role in helping the private sector overcome development risks (including market risks, technology risks, financing risks, regulatory and other risks) by offering financing on concessional terms and conditions to projects that would not proceed solely on a commercial basis. Concessional financing will be used to help offset cost hurdles and initiate, scale-up and replicate high impact projects in markets that show strong potential for growth. ADB will be judicious in its use of concessional financing resources so as to not distort local markets, and will be guided by a set of principles on the use of concessional finance.

The fund has been designed to provide concessional financing in the form of senior loans, subordinated loans and risk participations. Fund resources will not be invested as equity or any instruments convertible into equity. Similar to the first fund, this fund has provision for unhedged local currency financing in some markets subject to an overall ceiling.

The fund was established as a trust fund and will provide co-financing alongside ADB’s ordinary capital resources for non-sovereign projects. Fund resources will not be used to finance stand-alone transactions, meaning ADB participation will be necessary in all transactions. ADB is responsible for the administration and management of the fund, including the selection and approval of projects. ADB, acting as trustee of the fund will be responsible for the origination, processing, approval, and monitoring of transactions in accordance with the fund arrangement. ADB will be the lender of record, or guarantor of record, as applicable, for transactions supported by the fund.

What are the priorities?

The fund will invest in a combination of private sector led climate mitigation and adaptation activities including, but not limited to:

• Clean and renewable energy generation;
• Energy efficiency;
• Transmission and distribution systems for renewable energy projects;
• Process emissions;
• Sustainable transport;
• Waste management and wastewater projects;
• Water supply and management;
• Agriculture and forestry;
• Land use management;
• Natural resource management;
• Resilient infrastructure;
• Coastal protection; and
• Disaster risk management.

Projects supported by the fund will contribute to increased gender-responsive economic development in eligible countries, and will integrate gender equality outputs.

To the extent applicable, projects supported by the fund will maximize development co-benefits. These may include efforts to:

• Invigorate local economies;
• Increase the number of incremental jobs in communities;
• Benefit consumers;
• Improve health benefits through reduced pollution; and
• Improve countries’ competitiveness and sustainable development initiatives, including economic diversification.

Who is eligible to receive the fund?

The fund will support projects in Afghanistan, Armenia, Bangladesh, Bhutan, Cambodia, Fiji, India, Indonesia, Kiribati, Kyrgyz Republic, Lao People's Democratic Republic, Maldives, Marshall Islands, Federated States of Micronesia, Mongolia, Myanmar, Nepal, Pakistan, Palau, Papua New Guinea, Philippines, Samoa, Solomon Islands, Sri Lanka, Tajikistan, Timor-Leste, Tonga, Tuvalu, Uzbekistan, Vanuatu, and Viet Nam.

Who supports the fund?

The Government of Canada supports the fund.

Projects that received fund resources

• Afghanistan: Kandahar Solar Power Project
• Bangladesh: Spectra Solar Power Project
• Cambodia: Prime Road National Solar Park Project
• Indonesia: Eastern Indonesia Renewable Energy Phase 1
• Indonesia: Eastern Indonesia Renewable Energy Phase 2
• Indonesia: Karian Serpong Water Supply Project
• Lao People's Democratic Republic : Monsoon Wind Power Project
• Maldives : BML Supporting Recovery of the Small and Medium Enterprise and Blue Economy Tourism Sector Project
• Nepal: Upper Trishuli-1 Hydropower Project
• Uzbekistan: Navoi Solar Power Project
• Viet Nam: Floating Solar Project