To What Extent Financial Mechanisms Promote Development of "Green" Energy Policy in Armenia

To What Extent Financial Mechanisms Promote Development of "Green" Energy Policy in Armenia

EcoLur

By joining the global processes of combating climate change, it’s urgent for Armenia to transit to “green economy” strategy. Armenia has undertaken a commitment to restrict greenhouse gas emission in the range of 633 million tons within 35 years. According to the National Cadaster of Greenhouse Gases, most greenhouse gas emissions, 70%, derive from energy sector. Renewable energy and energy efficiency projects are implemented to reduce this percentage. Banks are envisaged to give out “green” loans for the implementation of such projects. “Nowadays both the international financial institutions and the Armenian banks are issued the mandate to have climate change as “red line” in their portfolios,” said UNDP Climate Change Programme Coordinator Diana Harutyunyan at the round table “Green Energy Policy: Finances, Resources and Prospects” held at EcoLur Press Club.  

The recent increase in gas and electricity in Armenia enables for people to think more over energy efficiency, said Tamara Babayan, E2R2 Renewable Energy Fund Director.

“Currently our commercial banks have such resources to be directed at the implementation of renewable energy and energy efficiency projects. Unfortunately, though the banks quite often receive soft financing, they add up not only the value of their capital, which may make up around 4.5-5%, but they nominate higher value to get higher interests, which is partially conditioned with the nature of the bank.”

Habitat for Humanity Armenia Foundation Energy Efficiency Increase Project Manager Karen Asatryan mentioned that the loans provided by the banks are given out in US dollars and rather high, which generate obstacles.

“AraratBank has always focused on the borrowers, whose investments will lead to the reduction of environmental impact, energy efficiency, reduction of carbon dioxide emission, use of renewable energy, introduction of alternative technologies etc. By loaning energy efficiency we solve two essential problems at once. First, we reduce the fees for monthly consumed electricity, the unit cost of the borrower’s production decreases making it more competitive both in the domestic and foreign markets, and secondly, it’s the reduction of adversary effects on environment. Though these loans are mainly given out in foreign currency, they have low annual interest rates.

It should be mentioned that in case of environmental problems the bank develops an action plan directed at impact reduction, its implementation schedule and all the staff supervises the implementation of these actions,” said Tigran Yesayan, Deputy Head of Department for Corporate Operations at Araratbank CSJC.

“The existing environment affecting on loan interest rates (including also external) doesn’t enable to reduce interest rates, and that’s why the banks don’t have any opportunities to reduce loan interest rates. The interest rates of the loans offered for energy efficiency projects by our minimum are possibly minimum. I would like to mention that in the frames of social responsibility adopted by our bank, we implement and continue implementing projects aimed at energy efficiency and aim at disseminating the idea of green economy,” said Mikhayil Amirkhanyan, Chief Specialist at SME and Corporate Business Product Management and Sale Department at “ACBA Credit Agricole” Bank.

 

The material is prepared by 'EcoLur' Informational NGO under “Armenia’s First Biennial Update Report to the UNFCCC” UNDP-GEF/00079327” project.

The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNDP, or the UN Member States.



19:25 May 18, 2016


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