MANILA, Philippine ? Due to growing energy demand, the Asian Development Bank and its development partners are setting up a facility that would provide seed capital for renewable energy and energy efficiency projects in the Asia-Pacific region.

In a statement, the ADB said it would develop the Seed Capital Assistance facility that would be initially funded by a $4.2-million grant from the Global Environment Facility, a global partnership established in 1991 to help developing countries fund projects that protect the global environment.

The seed capital assistance facility would be jointly managed by ADB and United Nations Environment Programme.

The ADB said the facility would ?provide technical assistance to private equity fund managers and entrepreneurs to develop sustainable clean energy funds and financing for the early stages of such projects, share in the costs of development and transactions, and encourage taking riskier portfolios through a seed capital return enhancement offered on a per-project basis.?

It further noted that the facility would increase access to financing at the early stages of sustainable energy enterprises and projects around the Asia-Pacific region.

With increased experience among financiers in investing in small-scale renewable energy and energy efficiency projects, mainstream energy investors would be encouraged to invest more in clean energy enterprises and projects, it added.

?By 2010, Asia is expected to account for nearly a third of global greenhouse gas emissions, so to slow that down, increases in investment in renewable energy, energy efficiency and other clean technologies are needed,? said Mu Shin Kim, investment specialist at the ADB private sector operations department.

?This facility will play a role in supporting a number of clean energy private equity funds in which ADB invests,? Kim added.

In the Philippines, the Department of Energy is fast-tracking the completion of the rules and regulations governing the Renewable Energy Act of 2008 to attract more investments in the renewable energy sector.

Mario Marasigan, director of the Bureau of Energy Utilization and Management, earlier said potential investors were eyeing north and central Luzon and Visayas for wind power development projects, and central Luzon and Visayas for biomass.

Marasigan said the companies that had sent letters of interest to the Department of Energy or visited the department, included Global Green Power, Amihan Energy, Deep Ocean Power Philippines and Agus Corp.

Other companies are also looking at hydropower projects in Cagayan, Pangasinan and Quezon, he added.