This post is a part of BioBiz’s Bio-CNG Perspectives.
BioBiz, a division of EAI, is a leading market intelligence & strategic consulting firm for the Indian bio-based sectors.
This blog post uses the terms bio-CNG and renewable natural gas (RNG) interchangeably.
Bio-CNG or bio-compressed natural gas, also known as sustainable natural gas or biomethane, is a biogas which has been upgraded to a quality similar to fossil natural gas and having a methane concentration of 90% or greater. As the gas is derived from natural and renewable sources, it is also termed renewable natural gas (RNG).
Renewable natural gas (RNG) is an emerging market in India. With the Indian Government planning to install 5000 RNG plants by 2025, several entrepreneurs and large businesses are exploring to venture into the growing segment. While the Indian Government offers attractive incentives under MNRE policies and SATAT scheme to encourage these businesses, several non-governmental organizations globally also support these sustainable projects through funding and partnerships. This blog post highlights some prominent multi-lateral agencies who assist the Indian Government and IREDA through funding for development of sustainable waste to energy projects.
The multi-lateral agencies discussed include
- World Bank
- International Finance Corporation
- European Investment Bank
- Asian Development Bank
- KfW Development Bank
1. World Bank
The World Bank finances and advises on solid waste management projects using a diverse suite of products and services, including traditional loans, results-based financing, development policy financing, and technical advisory. World Bank-financed waste management projects address the entire lifecycle of waste—from generation to collection and transportation, and finally treatment and disposal.
Objectives that guide the Bank’s solid waste management projects and investments include:
- Infrastructure: The World Bank provides capital investments to build or upgrade waste sorting and treatment facilities, close dumps, construct or refurbish landfills, and provide bins, dumpsters, trucks, and transfer stations.
- Legal structures and institutions: Projects advise on sound policy measures and coordinated institutions for the municipal waste management sector.
- Financial sustainability: Through the design of taxes and fee structures, and long-term planning, projects help governments improve waste cost containment and recovery.
- Citizen engagement: Behavior change and public participation is key to a functional waste system. The World Bank supports designing incentives and awareness systems to motivate waste reduction, source-separation and reuse.
- Social inclusion: Resource recovery in most developing countries relies heavily on informal workers, who collect, sort, and recycle 15%–20% of generated waste. Projects address waste picker livelihoods through strategies such as integration into the formal system, as well as the provision of safe working conditions, social safety nets, child labor restrictions, and education.
- Climate change and the environment: Projects promote environmentally sound waste disposal. They support greenhouse gas mitigation through food loss and waste reduction, organic waste diversion, and the adoption of treatment and disposal technologies that capture biogas and landfill gas. Waste projects also support resilience by reducing waste disposal in waterways, addressing debris management, and safeguarding infrastructure against flooding.
- Health and safety: The World Bank’s work in municipal waste management improves public health and livelihoods by reducing open burning, mitigating pest and disease vector spreading, and preventing crime and violence.
- Knowledge creation: The World Bank helps governments plan and explore locally appropriate solutions through technical expertise, and data and analytics.
The World Bank’s waste management engagement spans multiple development areas, including energy, environmental sustainability, food and agriculture, health and population, social protection, transportation, urban development, and water.
Its engagement with India is guided by its Country Partnership Framework for FY18-22 (CPF). Its lending portfolio consists of 105 operations with $27.1 billion in commitments, of which $18.5 billion is IBRD, $8.5 billion is IDA, and $0.1 billion is from other sources, primarily grant funding from the Global Environment Fund. Roughly a third of the number of operations and 40% of the volume of commitments are either central or multi-state operations with the remainder consisting of state-specific operations in 21 of India’s 29 states.
The three largest portfolios are Transport and ICT (15 projects totalling $6.7 billion in commitments), Water (14 projects totalling $5.3 billion), and Energy (12 operations totalling $3.7 billion). In FY19 the Bank approved 10 operations totalling $1.49 billion in IBRD.
2. International Finance Corporation
IFC finances electricity generation, transmission, and distribution upgrades in developing countries, with a particular focus on natural gas and renewable energy such as solar, wind, and hydropower. They also help remove barriers to private sector investment in the power sector by identifying and developing new market opportunities and supporting new technology and business models with potential to scale.
In India, the International Finance Corporation (IFC) sees immense opportunities to finance projects through green bonds, especially in areas like urban transportation, waste-to-energy and water treatment
IFC estimates a total climate-smart investment opportunity of $3.1 trillion in India from 2018 to 2030, with $ 11 billion in municipal solid waste management to bridge the gap between the significant amount of waste produced and the availability of appropriate infrastructure for solid waste management to 2030.
3. European Investment Bank
In 2019, the European Union (EU) and India agreed on a Joint Action Plan 2019-2020 to step up their cooperation in the area of Smart and Sustainable Urbanization. Five action points under the plan focus on: a) supporting Smart and Sustainable Cities b) promoting investments in sustainable urbanization c) promoting climate action and disaster risk reduction in cities d) Developing effective solid waste management & treatment and promotion of circular economy e) Developing effective water supply & sewage system f) Innovation in Housing.
The European Investment Bank (EIB), EU’s bank, will strive towards launching additional investment projects in the field of urban transport with a value of up to €1 Billion. EIB has already financed metro projects upto € 1.6 Billion in India. EU will continue to support 12 smart cities in India, under the EU-AFD Smart City project, focussing on sustainable mobility, public open spaces, social and organisational Innovation and urban e-governance. EU currently provides € 21.5 million as investment, grants and technical assistance to 3 projects implemented by AFD, with a focus on sustainable urban mobility, green affordable housing and smart cities.
4. Asian Development Bank
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific. ADB assists member countries in developing Asia towards sustainable energy, sustainable transport, environmental sustainability and more.
In India, as of 2017, ADB has planned to raise annual lending to India to a maximum of USD 4 billion per year during 2018-22 to accelerate inclusive economic transformation. The proposal was endorsed at new ADB Country Partnership Strategy (CPS) for 2018-2022.
As part of the enhanced lending under CPS, ADB will continue to prioritise private sector development and support government in reviving private financing of infrastructure projects, including via public-private partnerships.
In private sector, it will support transport, power, urban infrastructure (including sewerage and solid waste management), affordable housing, manufacturing, health and education among others.
5. KfW Development Bank
KfW Development Bank is committed to the concept of sustainability, an economic system that safeguards the livelihood and quality of life for the coming generations, too. In India, KfW contributes to the Smart City Programme of the Indian Government, by providing concessional financing in particular for urban mobility and for water and wastewater management.
In 2017, Odisha govt. signed a MoU with KfW to avail a concessional long term loan of Rs.440 crore. The loan would be utilized for infrastructure projects like solid waste management, energy efficient street lighting, sewerage system and more. As per the agreement, the loan would have to be paid over a period of 10 years after a moratorium of six years commencing from Dec 2022, with 1.40 percent interest.
Know more on how BioBiz can assist your business in your strategy for the bio-based businesses, Here