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Bloomberg Philanthropies and Goldman Sachs Backed Climate Innovation and Development Fund Announce its First Blended-Finance Investments

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Bloomberg Philanthropies and Goldman Sachs Backed Climate Innovation and Development Fund Announce its First Blended-Finance Investments

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  • Initial investments focused on innovative electric mass mobility solutions in India and Vietnam
  • The fund, managed by the Asian Development Bank and financed by philanthropic funding from Bloomberg Philanthropies and Goldman Sachs, will provide critical finance to expand networks of electric buses and supporting charging infrastructure in key emerging markets

The Bloomberg Philanthropies and Goldman Sachs-backed Climate Innovation and Development Fund has completed its first set of blended-finance investments focused on innovation across the sustainable transport sector in each of India and Vietnam.  These initial investments are the first realization of the Fund’s potential to unlock up to $500 million in private sector and governmental investments in support of sustainable low-carbon economic development with a focus on South and Southeast Asia.

David Solomon, Chairman and CEO of Goldman Sachs, said, “Creative solutions like blended-finance facilities can mobilize the capital needed to advance sustainability. By encouraging more private capital to support projects like these, the Climate Innovation and Development Fund will accelerate the decarbonization of mass transportation in India and Southeast Asia and make further progress in the journey of climate transition.”

“Switching to clean power and electric transportation can bring enormous benefits to developing countries but up-front costs often stand in the way,” said Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies. “This initiative brings people together to unlock capital and jump-start more projects that will cut emissions, improve public health, spur economic growth, and create jobs. We’re looking forward to working with partners at the Asian Development Bank and Goldman Sachs on these initial projects in India and Vietnam.”

“Mobilizing capital at scale is critical in the battle against climate change, especially in Asia and the Pacific where this global fight will be won or lost,” said ADB President Masatsugu Asakawa. “By supporting important new initiatives such as the Climate Innovation and Development Fund, partners like Bloomberg Philanthropies and Goldman Sachs can help marshal the private sector finance needed for transformative projects that can put the region on a path to low carbon economic growth.”

See related article: Pemex in Talks With Goldman, HSBC on $1 Billion ESG Financing

About the India/GreenCell project

In India, the Fund’s investment will mobilize approximately 14 times its investment capital to support the purchase of 255 electric buses to replace existing diesel buses operating on 56 high traffic intercity routes across cities, including Delhi and Pune, and the states of Andhra Pradesh, Karnataka, Tamil Nadu, and Telangana. The e-buses are expected to serve five million people per year and include enhanced safety features for female passengers. Additionally, the Fund will support the construction of charging infrastructure including solar-plus-battery solutions at the bus depots to maximize potential emission reductions. The solar-plus-battery solution has emerged as an innovative, additional step in tackling climate change by using a green power source instead of procuring predominantly thermal energy from the grid. The project expects to reduce ~15,000 tons of CO2 emissions per year, reflecting a particularly critical decarbonization effort in the country given the road transportation sector in India is largely fossil fuel based and contributes nearly 12% of the country’s total emissions. 

About the Vietnam/Vinfast project

In Vietnam, the Fund’s investment will mobilize 44 times its investment capital to support the country’s first electric bus fleet for public transport and the first national electric vehicle charging network. The project aims to build up to 140 e-buses and 150,000 charging ports across 2,000-3,000 stations throughout the country. The Fund’s initial investment will provide capital expenditure related to installing solar-plus-battery storage at bus depots to enable the fleet to use renewable power sources, rather than sourcing power from the grid. The investment in clean transport comes at a critical time for the country as a 2022 report from the World Bank estimates Vietnam will need to spend $368 billion through 2040 to address climate mitigation and adaptation if it is to continue advancing on its development goals. Vietnam’s transportation sector accounts for 18% of the country’s annual GHG emissions, and decarbonization through solutions like public e-mobility will directly impact the country’s ambition to achieve net zero by 2050.

Collectively, the loans utilize an innovative financing structure to tackle the limited availability of long-term financing to grow the sustainable mobility network in the region. The Fund’s contribution is intended to drive capital towards into projects to help accelerate the drive to decarbonization and help to reduce financing risk associated with the projects.  Also, these investments aim to bring greater opportunity and better livelihoods for those holding jobs exposed to diesel-based mass transportation and its related low profitability.

Source: Goldman Sachs

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