GEF Supports the Energy Efficient Market Environment in India



Energy efficient roller kilns being introduced at ceramic units in India at Morbi in GujaratWashington DC, February 17, 2011 - The Global Environment Facility (GEF) in partnership with the United Nations Industrial Development Organization (UNIDO) announced Thursday a project that is projected to boost energy efficiency in India, saving 276,600 Mwh per year and by 2015 having avoided over 1.2 million tonnes of CO2eq emissions.

The $33.3 million energy efficiency project in India includes a $7.172 million grant from the GEF that leveraged an additional $26.2 million in co-financing by the Indian government and UNIDO. The project will promote a market environment for energy efficiency and renewable energy technologies in selected Micro, Small and Medium Enterprises (MSME) clusters in India. The goal is to reduce energy usage per unit of product, improve the productivity and competitiveness of units, and reduce overall carbon emissions to improve the local environment.

Today the GEF is one of the public sector’s largest funders for energy efficiency in the world, with direct investments of $850 million and an additional $5.9 billion in co- financing in more than 90 developing and emerging countries, including India. These investments together are expected to reduce carbon dioxide (CO2) emissions by 1.3 billion tonnes by 2020,” said Monique Barbut, CEO and Chairperson of the Global Environment Facility.

UNIDO Director-General Kandeh K. Yumkella said: “While we clearly regard the development of the productive sectors, and industry in particular, as the most effective means of poverty reduction, we are also conscious of the fact that this has to take place in the context of environmental sustainability. UNIDO believes in the need for joint action by many actors, both in the public and in private sectors, and partnerships across national and regional boundaries to contribute to this process. Such is our strategic partnership with GEF. Promoting clean production, as well as access to clean renewable energy and the efficient use of energy, is one of our three organizational priorities, together with support for the development of productive activities to reduce poverty. The UNIDO project in India funded by GEF will introduce cost effective technologies and practices which will help improve energy efficiency and use of renewable energy in micro, small and medium industrial enterprises. This will increase their competitiveness and bring greater global benefits from reduced carbon emissions.”

The Indian SME sector is a vibrant sector contributing up to 8% to country’s GDP. However, energy use is relatively inefficient owing to poor access to knowledge about options and perceived risks associated with their implementation. The Government of India has launched several programs though the Bureau of Energy Efficiency (BEE -Ministry of Power) and the Ministry of Micro, Small and Medium Enterprises (MoMSME) to assess available energy efficiency options; develop local capacity for design and implementation; enable financing; and support demonstration projects.

Dr. Ajay Mathur, Director General of India’s Bureau of Energy Efficiency, which is the executing agency for the GEF-UNIDO project welcomed the news of GEF project approval and said, “We are very glad to join hands with the GEF and UNIDO to create the institutional and human capacity to enable sustainable energy efficiency improvements in SME clusters in India.”


India is one of the major nations with growing energy usage and subsequent CO2 emissions. Within the Indian economy, industry remains the largest consumer of energy – accounting for over 50% of total primary energy consumption in the country. There are estimated 13 million Micro, Small, and Medium-sized Enterprises (MSME) and they contribute around 45% of manufacturing output and employ more than 40 million people Most of energy intensive MSMEs largely depend on inefficient equipment, technology and operating practices leading to high energy consumption and significant CO2 emissions. There are numerous potential barriers within the MSMEs which need to be addressed in order to bring about actual projects and a sustained and expanding energy efficiency and renewable energy (EE/RE) market. The following four components of the project will address the barriers to achieve its stated aim:

  • Increasing the capacity of suppliers of EE/RE product suppliers/service providers/finance providers to support the expansion of EE/RE in the clusters
  • Increasing the level of end-use demand and implementation of EE and RE technologies and practices by MSMEs
  • Scaling up of the project to a national level
  • Strengthening policy, institutional and decision-making frameworks


The key overall performance indicators of the project will be as follows:

  • Total tonnes of CO2eq emissions avoided per year as a direct result of this project – target 84,700 tonnes per year by 2015.
  • Total tonnes of CO2eq emissions avoided over a 15 year lifetime as a direct result of this project – target 1,270,500 tonnes by 2015.
  • Total energy saved (MWh/year) – target 276,600 MWh per year by 2015.
  • Contribution to the enabling policy environment –facilitating the implementation of biomass as a fuel source and in main-streaming EE/RE policies for MSME development.
  • Volume of investment in EE/RE technologies– target $16 million by 2015.
  • The co-financing will be provided by the following entities: Bureau of Energy Efficiency: $2 Million; Ministry of New and Renewable Energy: $6.7 Million; Ministry of Small and Medium Enterprises: $17 Million; UNIDO: $0.5 Million.

Media contact: Christian Hofer, Senior Communications Officer, GEF, chofer@thegef.org, +1 202 413 4185.

About the Global Environment Facility
The Global Environment Facility (GEF) unites 182 member governments — in partnership with international institutions, nongovernmental organizations, and the private sector — to address global environmental issues. An independently operating financial organization, the GEF provides grants to developing countries and countries with economies in transition for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants. These projects benefit the global environment, linking local, national, and global environmental challenges and promoting sustainable livelihoods.

Established in 1991, the GEF is today the largest public funder of projects to improve the global environment. The GEF has allocated $9.2 billion, supplemented by more than $40 billion in cofinancing, for more than 2,700 projects in more than 165 developing countries and countries with economies in transition. Through its Small Grants Programme (SGP), the GEF has also made more than 12,000 small grants directly to nongovernmental and community organizations, totaling $495 million. For more information: www.thegef.org