Reducing the fossil fuel consumption of Turkey’s growth

Turkey suffers from a heavy external energy dependence (73% of its primary energy needs are covered by imports). In addition, this dependence is accentuated by the country’s increasing energy needs (its economic growth consumes 50% more energy than that of the EU) and insufficient power generation capacity (despite it being doubled over the past 10 years, i.e. 57 GW in 2012). With 39 million visitors in 2013 (for a population of 75 million inhabitants), Turkey ranks in 6th place in the world in terms of foreign tourist arrivals and the sector is experiencing impressive growth (flows estimated to double by 2023). Faced with this twofold observation, AFD is once again partnering with the development bank TSKB with the aim of providing technical and financial solutions for private project initiators seeking to invest in the sustainable tourism or innovative renewable energies sectors, such as for biomass, photovoltaic solar and geothermal energy. This project aims to reduce pressure on the environment in Turkey via two objectives : Initiate the development of the concept of sustainable tourism and sustainability labels in the hotel sector in Turkey ; Reduce the dependence on fossil fuels by increasing the share of innovative renewable energies in the energy mix.

This fourth credit line allocated by AFD to TSKB is in line with the aim of continuing a quality partnership with this bank. It amounts to EUR 60m and will finance : New or renovation tourism projects based on international sustainable construction labels and with a level of required sustainability proportional to the size of the project ; Power generation units with variable sizes using renewable energy sources, which are still innovative in Turkey, such as biomass, geothermal or solar energy. AFD’s financing terms also aim to allow the bank to set up a technical assistance program to : Build its in-house capacities to analyze projects in the sustainable tourism sector; Raise the awareness of its clients in terms of this relatively new concept in Turkey. TSKB is a development bank set up in 1950 at the initiative of the World Bank and Central Bank of the Republic of Turkey. Its mandate includes the implementation of public policies. The bank is the leading “green bank” in Turkey and has, in this respect, received the “Sustainable Emerging Markets Bank of the Year, Eastern Europe” award three times from the Financial Times/IFC. Its environmental management system is certified ISO 14 001. TSKB has established itself as the main financial institution for renewable energy financing in Turkey and is seeking to develop its activity in the tourism sector.

The project will firstly contribute to reducing the environmental and social impact of the funded tourism facilities (in particular by reducing energy and water consumption and improving water and waste treatment). Secondly, it will diversify Turkey’s energy mix through the support provided to financing the most innovative renewable energies; The investments financed will aim to serve as a reference and create a knock-on effect in their sector, which will accelerate the responsible commitment of actors; Finally, the technical assistance component combined with AFD’s loan will build the capacities of TSKB’s technical teams and eventually make it easier to replicate this type of investment.