The World Bank has just made its first “green loan” available to a Vietnamese Bank. The loan is intended to help businesses take care of emission problems.
Vietnam has one of the worst carbon emission rates in the world, even though its economy has been growing at a fast pace in recent years.
The $212.5 million loan package to the VPBank has passed through the international guidelines and the green loan principles. This loan would be the first the World Bank has made possible to access as the international Bank tries to help countries deal with pollution problems.
Although The World Bank has been lending loans for the development of biodiversity and solar power, this new initiative to help fight off carbon-intensive environments is a new one.
The loan will help to tackle carbon emission issues
While explaining the reasons for the loan, the International Finance Corporation of the World Bank (IFC) said that Vietnam comes third as the most carbon-intensive country in South East Asia Pacific. The other nations that come first and second are China and Mongolia respectively.
IFC said it’s the right decision to help Vietnam reduce the level of carbon pollution in the environment. “Carbon intensity”, in this sense, compares the level of carbon a country emits against the GDP the country generates.
The loan will help begin climate-smart initiatives that can help to reduce the level of carbon emission in the country.
Director at IFC financial institutions group, Rosy Khanna, said that the loan disbursement is in line with the World Bank’s initiative to help emerging economies tackle their carbon emission issues to reduce the level of greenhouse gas in the environment.
She also said investors are willing to provide capital to help the Vietnamese economy deal with such environmental problems. Apart from the need to tackle climate change, investors are also looking at the business opportunity they have seen in Vietnam, which should help foster the growth of various sectors of the country.
Vietnam needs a cleaner alternative energy source
Economic data has shown that Vietnam is one of the fastest-growing economies in the world. But the environment is paying a high price for such growth. Vietnamese citizens are concerned about the continued presence of pollutants in the environment such as chemicals and plastics that usually end up in the ocean.
Khanna said the Asian country is capable of reducing the levels of carbon emissions in the environment. But the main problem is the nation’s primary source of generating electricity, which is through coal. According to her, that’s the dirtiest source of generating electricity.
She said that if the country wants to seriously reduce this level of emission, it needs to start looking for a cleaner alternative to electricity generation.
The beneficiary of the loan, VPBank, said it will invest in alternative energy sources with the loan. The bank said the initiative is an opportunity for VPBank to offer its own contributions towards the realization of a green economy. It said it will look into eco-friendly projects such as waste management, green transport, green buildings, as well as renewable energy.
The IFC has also partnered with other countries to help finance their green ambition, including Ukraine, Mexico, India, Egypt, and Costa Rica.