Lebanese Republic

Going Green for SMEs

Going green for SMEs


Economic cost of climate change in Lebanon  |  Climate change and the impact on SMEs  |  Why SMEs should go green  |  Simple ways for SMEs to go green  |  Barriers to going green for SMEs  |  Initiatives from the public and private sectors for going green  |  Additional resources


Economic cost of climate change in Lebanon

A joint study conducted in 2015 by the Lebanese Ministry of Environment, the UNDP and the Global Environment Facility has projected that the potential fluctuations in climate due to human activities in Lebanon may result in USD $23.2 billion in foregone GDP by the year 2080. This maps into lost gains to economic activities which results in losses for corporations and households. Direct costs for both consumers and producers will begin to surge as temperatures rise, precipitation levels change, and extreme weather events affect our environment; events such as storms cut back agricultural output, adversely affect human health, lead to flooding and may inflict similar harm on different sectors of Lebanon’s economy and society.

 

Potential Costs

Year 2020

Year 2040

Year 2080

Direct annual damage from drought, etc. in Lebanon (millions USD)

320

2,800

23,200

Forgone GDP in Lebanon (millions USD)

1,600

14,100

115,700

Percentage reduction in GDP

3%

14%

32%

Total cost to Lebanon (millions USD)

1,900a

16,900

138,900

Average cost per household in Lebanon (USD)

1,500

13,100

107,200

Government’s share (millions USD)

610

5,400

44,300

Potential total cost on economy due to climate change (source: Ministry of Environment).

 

Climate change and the impact on SMEs

Climate change, should it materialize as per projections by several scientists, may impact SMEs in several ways, including: higher insurance rates, loss of business, loss of tourist dollars, reduced resources, cost of infrastructure rehabilitation, and higher taxes. In fact, natural disasters, drought and other negative natural phenomena can significantly disrupt business, reduce commercial activity and increase cost of production.

 

Why SMEs should go green

According to specialists, putting in practice energy saving principles is easier for these companies than for larger companies; given their smaller size, SMEs have fewer layers of management and enjoy less bureaucracy for making changes and improvements. Going green can be beneficial for SMEs for several reasons, including:

  • Saves costs by optimizing use of resources on the long run;
  • Elevates the company’s prestige, social responsibility, customer trust, and loyalty;
  • Boosts profitability and market competitiveness;
  • Improves production processes;
  • Leads to a positive impact on the environment.

 

Simple ways for SMEs to go green

  • Power your office with alternative energy;
  • Use biodegradable products (e.g., cleaning detergents, recyclable consumables, etc.);
  • Replace outdated appliances and supplies with their greener counterparts;
  • Recycle and reuse.

 

Barriers to going green for SMEs

It must be highlighted that SMEs in Lebanon face multiple and varied barriers in adapting to environmentally efficient practices such as:

  • Limited availability or knowledge of adaptation options;
  • Lack of technical capacity to implement;
  • Lack of financial capacity to implement;
  • Policy and regulation that hinder adaptation;
  • Social attitudes toward adaptation;
  • Cost and length of time to introduce changes;
  • Uncertain market benefits;
  • Resistance to change.

 

Initiatives from the public and private sectors for going green

Kafalat Energy Loans – IBL Bank and Kafalat

  • Energy Efficiency Program: IBL Bank, in collaboration with Kafalat offers an energy efficiency loan program that is ideal for individuals and companies who want to adopt or switch to sustainable energy so they can ultimately cut down on energy consumption.

  • Renewable Energy Generation Program for Internal Use: IBL Bank, in collaboration with Kafalat offers a renewable energy generation loan program for internal use that is designed for individuals and companies that want to install a renewable power generation system for their own internal use as a replacement for fossil fuel based electricity.

  • Renewable Energy generation program for sale to third parties: IBL Bank, in collaboration with Kafalat offers a renewable energy generation loan program for sale to third parties, which is especially tailored for individuals and companies that want to install a renewable power generation system to sell all or part of the electricity produced to others, including the public grid.

Eco Business Loan - BBAC

The Eco Business Loan by BBAC is made for companies looking to either start new environmentally friendly projects or to develop already existing projects into environmentally friendly ones. The environmentally friendly projects must aim to preserve the environment or reduce negative environmental impacts in the following areas; green architecture projects and landscaping, renewable energy, ecotourism, organic agriculture, waste water treatment and recycling.

Green Economy Financing Facility (GEFF) – Bank Audi and EBRD

With an aim to strengthen sustainable energy in Lebanon, the EBRD and Bank Audi, have joined forces by allocating a total of USD $200 million for loans relating to green projects. The programme addresses critical issues for Lebanon’s sustainable development, such as diversifying energy supply, reducing the use of limited natural resources (e.g.,  energy and water), and improving energy efficiency, thus decreasing pollution levels, conserving resources and contributing to a better environment. GEFF Lebanon will be supported by a team of specialized consultants including engineering, environmental, financial and marketing experts, who will offer Bank Audi and its clients direct support and advice throughout the green project lifecycle using best-in-class technologies. The technical assistance package is supported by the EBRD Shareholder Special Fund.

Lebanon Climate Act – Ministry of Environment and UNDP Lebanon and the Central Bank

The Lebanon Climate Act (LCA) aims at creating economic growth in a way that also creates value for the society by addressing climate change challenges in Lebanon.

Incentives Initiative

The Minister of Environment’s decision 99/1 of April 2013 provides an incentive to the private sector (commercial, institutional and industrial enterprises) to directly report their GHG emissions and related activity data to the Ministry of Environment. In exchange for their cooperation, reporting companies are awarded with a certificate signed by the Minister. A template provided by the Ministry of Environment helps calculate GHG emissions of the company per category and per gas.

Business Knowledge Platform (BKP)

The Business Knowledge Platform aims at enabling businesses to design and implement activities to reduce the impacts of climate change and capturing success stories to inspire others. Participants will be taken through the fundamentals of climate change and how organizations can measure and manage their impact, using case studies and practical exercises and tools. It will provide the essentials for developing a credible strategy and developing leadership in the field of climate change.

Lebanon Climate Act Guidebook

The Lebanon Climate Act Guidebook was created as a tool to help businesses in Lebanon ride the international climate change wave and develop and implement a plan to effectively take part in climate change action on the scale of each business.

NEEREA – Central Bank, UN, EU, Lebanese Center for Energy Conservation (LCRC) and Ministry of Environment

Under the funding of several stakeholders and the patronage of the Lebanese Center for Energy Consumption, NEEREA was created as a green financing mechanism that provides interest-free long-term loans to residential, commercial, non-profit and industrial users for all energy efficiency and renewable energy projects for new and existing facilities. The loan is eligible for new environmental friendly projects or for existing projects to enhance their conditions in order to become environmentally sound. The loan has a ceiling of USD $20 million and is offered at an interest rate of 0.6% for period that must not exceed 14 years including a grace period of 6 months to 4 years. The green loans are provided through all the Lebanese commercial banks to directly reach the end user.

Lebanese Environmental Action (LEA) – Central Bank and the Lebanese Center for Energy Conservation (LCRC)

LEA is a financing mechanism that provides the private sector in Lebanon with long-term loans at low interest rate in order to implement environmental projects. LEA finances and covers the cost of environmental measures of new projects or the enhancement of conditions of an existing project to become environmentally sound. It allows private sector entities (e.g., individuals, SME’s, or corporate bodies) to apply for subsidized loans of any type for qualified environmental projects.

Electronic Vehicle Exemptions – Lebanese Government

In a bid to decrease pollution in Lebanon, the Government of Lebanon has issued a decree to eliminate custom fees on electric cars, and decrease them to 20% on hybrids. This move aims to encourage car dealers to import eco-friendly vehicles and make them available to consumers at a relatively affordable price. Public transportation vehicles will also be discharged from registration and maintenance fees at their first registration in order to encourage the import of better public transportation vehicles.

 

Additional resources

 

For correction or inclusion of additional information, please contact us at sme@economy.gov.lb

 

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