MOBILIZING PRIVATE RESOURCES
AND FINANCING INCLUSIVE GREEN
GROWTH IN THE REPUBLIC OF
MOLDOVA
Andrei ISAC, Independent Expert,
former Head of Environmental Policy Department , Ministry of Environment, Republic of
Moldova
G20 DWG Workshop on Inclusive Green Growth, 7 July 2013, Moscow
“MOLDOVA 2020”: 7 SOLUTIONS FOR
ECONOMIC GROWTH AND POVERTY
REDUCTION
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National development strategy adopted
in 2012
Aims to accelerate economic growth and,
implicitly, poverty reduction by:
 Conducting structural changes of the
national economy;
 Promoting a dynamic growth model
based on local and foreign
investments and development of
industries exporting goods and
services.
Identifies seven priority areas: the “7
solutions for economic growth and
poverty reduction”
States that the country will undertake
all efforts to ensure the transition
Population: 3.5 million
(UN, 2011)
Capital: Chisinau
Area: 33,800 sq km
(13,050 sq miles)
Life expectancy: 66 years
(men), 73 years (women)
Main exports: Foodstuffs,
animal and vegetable
products, textiles
GNI per capita: US $1,810
(World Bank, 2010)
DEVELOPMENT PRIORITIES
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Aligning the education system to labor market needs in
order to enhance labor productivity and increase
employment in the economy.
Increasing public investment in the national and local
road infrastructure in order to reduce transportation
costs and increase the speed of access.
Reducing financing costs by increasing competition in the
financial sector and developing risk management tools.
Improving business climate by streamlining the
regulatory framework and applying information
technologies in public services for businesses and citizens.
Reducing energy consumption by increasing energy
efficiency and using renewable energy sources.
Achieving financial sustainability of the pension system
in order to ensure an appropriate rate of wage replacement.
Increasing the quality and efficiency of justice and fighting
corruption in order to ensure equity for all citizens.
ENERGY EFFICIENCY OBJECTIVES AND
TARGETS
Indicator
2010
2015
by 10%
Reducing energy intensity
Reducing electricity losses in transport and
distribution networks
Reducing natural gas losses in transport and
distribution networks
Reducing heating losses in transport and
distribution networks
Reducing greenhouse gas emissions (compared
to 1990)
Diminishing the share of natural gas in the
national energy mix
Reducing energy consumption in buildings
Share of renovated public buildings
2020
up to 13%
up to 11%
by 20%
by 39%
by 2%
by 5%
by 25%
53%
45%
by 10%
10%
MOLDOVAN SUSTAINABLE ENERGY
FINANCING FACILITY (MOSEFF)
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Launched in September 2009 by the European Bank for
Reconstruction and Development (EBRD) in order to
support energy efficiency investments of Moldovan
enterprises;
EBRD made a total of € 20 million available for on-lending
through local partner banks;
MoSEFF includes a grant component for eligible projects,
from 5% to 20% of the loan amount, depending on the
energy savings and CO2 emission reductions achieved;
Offers a higher share of grant financing for projects
employing Best Available Techniques (BAT).
http://www.moseff.org
MOSEFF: TYPICAL INVESTMENTS
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Energy efficiency
Thermal insulation of walls, roofs and floors, installation of
insulated windows, rolling doors or door lockers
 Replacement and rehabilitation of boilers (enhanced control,
economizers, etc.)
 Refurbishment of efficient heat and power distribution systems
 Switch from electric heating to fuel based heating
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Renewable energy
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Biomass combustion in heat only and combined heat and power
plants
Biogas generation for the use in heat only and combined heat
and power plants
Solar thermal collectors for hot water or steam generation,
Solar photovoltaic power plants
Small hydro power plants
Wind power plants
80 PROJECTS: EXAMPLES OF RESULTS
ACHIEVED BY SECTORS/COMPANIES
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Food sector: Telemar LTD: 55% energy savings, a 66%
carbon emission reduction;
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Agricultural sector: Agromaxer LTD: savings 91% of
energy and reducing annual CO2 emission by 1322 tons;
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Industrial sector: Macon SA: achieved 43% energy
savings and a 40% carbon emission reduction;
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Building rehabilitation: Artima SA: achieved 83%
energy savings and CO2 emissions reduction of 163 tons
per year;
Small enterprises: Startcom LTD: reduce the company’s
energy consumption by 90% and CO2 emissions by 31 tons
annually;
Energy projects: Vila Verde Hotel: the largest solar
thermal system in Moldova with a surface of 200 m2 reduced its energy consumption by 80% and its CO2
emissions by 133 tons per year.
USE OF REMITTANCES
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Important role – some 30% of GDP
PARE “1+1” programme –
replicates Mexican experience
 Aims to mobilize the human and
financial resources of Moldovan
migrants, in Moldova's sustainable
economic development, by
fostering the establishment and
development of small and medium
enterprises by migrant workers
and recipients
 Operates under the rule of "1+1",
so every MDL invested from
remittances will be complemented
with a MDL in the form of grant
 Grant financing can amount up to
50% of the investment, but not
more than 200 thousand MDL
 Not yet clear how could be used to
finance “green” projects
Source:
http://www.worldbank.org/content/dam/Wor
ldbank/document/eca/Moldova-EconomicUpdate.pdf
COMPLEMENTARY INVESTMENT
SOURCES
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Public funding
National Ecological Fund – 10 million Euro/year (revenue
from environmental taxation)
 National Regional Development Fund – 10 million
Euro/year
 National Energy Efficiency Fund – 6.3 million Euro/year
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Donor funding
European Union Programs - 2011-13 National Indicative
Programme (NIP) - €273.14 million financed under the
European Neighbourhood and Partnership Instrument
(ENPI)
 US Millennium Challenge Account - 2010-2015 Compact
$262 million grant
 GIZ – German International Cooperation Agency: German
support for Investments – 15 million Euro in 2013 (water
supply and sanitation; Waste management; Energy
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MAJOR CHALLENGES TO PRIVATE INVESTMENT
On the demand side:
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Deficiencies in the framework policies and public administration
practices
Need for regulatory reforms (e.g. improved regulations on energy audits,
energy efficiency standards and labels, on associations of homeowners),
investing in education, supporting R&D
 Information dissemination – insufficient access to information and
uncertainties regarding the performance of new technologies make firms
risk averse with regard to long-term green investments
 Subsidized and cross-subsidised prices and tariff structures not related to
consumption (i.e. where actual consumption is not metered) impede green
investments - pricing in Moldova gradually addressed
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Insufficient capacity of borrowers to prepare viable projects
On the supply side:
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Lack of liquidity or access to adequate funding in the banking system
General creditworthiness requirements of lenders and credit
constraints faced by enterprises and households (e.g. high interest
rates, short maturities, focus on short-term returns)
Lack of capacity within local banks to identify and finance green
investments
FUTURE OBJECTIVES AND ROLE OF
INTERNATIONAL COMMUNITY
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Continue to support the existence of a mix of financing
instruments (private, public domestic, ODA, etc.)
Advise on the further development of financing
instruments
Help understand the magnitude of investment flows
Help understand specific market and policy barriers
that restrict green, low-carbon financing
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EaP GREEN programme (EU, OECD, UNECE, UNEP,
UNIDO)
Help foster public-private partnerships and advise on
how to best match private and public financing
Facilitate the transfer and diffusion of environmentally
sound technologies and corresponding know-how
Capacity development and pilot projects
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Moldova Energy and Biomass Projects (EU and UNDP)
THANK YOU FOR YOUR
ATTENTION!