role of mdbs in financing of countries...

2/11/2016

Inter-American Development Bank

Infrastructure and Environment Sector

Climate Change and Sustainability Division

Role of MDBs in financing of

countries NDCs

Climate Change and

Sustainability Division

Amal-Lee Amin

Inter-American Development Bank | Climate Change and Sustainability

Climate Change and Sustainability Division

• CCS specialists collaborate across the IDB Group to catalyze, support and

report on climate related programs and investments

• Ensure effective use of grant finance to promote innovative and

transformational approaches - support design and implementation

• CCS also provides technical and strategic oversight of external sources

of concessional climate finance – CIFs & GCF (also GEF & Canadian Fund)

Together these resources enable to Bank to provide clients with a range of

financial and technical support for overcoming barriers, managing risks and

reducing costs of climate actions

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IDB Value Added 10 years of proven experience working in the region:

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Know How

Country

Relationships

Safeguards

Ordinary

Capital

Leverage

Innovate

Access to

Concessional

Finance

UPDATED INSTITUTIONAL STRATEGY

SUSTAINABLE INFRASTRUCTURE STRATEGY

CLIMATE CHANGE SECTOR FRAMEWORK DOCUMENT

Learning

Replicate/

Scale up

Transformation

OTHER SECTOR FRAMEWORKS, IIC BUSINESS PLAN & MIF


Climate Finance

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DELIVERING THE

PARIS AGREEMENT

Inter-American Development Bank | Climate Change and Sustainability 6

24 IDB clients: Argentina, The Bahamas, Barbados,

Belize, Bolivia, Brazil, Chile, Colombia,

Costa Rica, Dominican Republic, Ecuador, El Salvador,

Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico,

Paraguay, Peru, Suriname, Trinidad & Tobago,

Uruguay, Venezuela.

Varied approach in the elaboration of NDCs

Economy-wide and/or sectoral targets to

2025/30

Consensus emerging on sector coverage:

- Energy, industrial processes, agriculture, land

use, forestry and waste.

- Adaptation addressed in various ways

- Some include cities as an actor.

- Unconditional actions plus those conditional on

international support

LAC’s Nationally Determined Contributions


Translate NDCs into investment plans, programs

for transformation & financeable project pipelines:

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• Upstream focus on effective institutional arrangements: economic and financial

planning, sectoral policy and regulatory frameworks

• Strengthening adaptive capacity of economic and sectoral decision-makers to

address climate risk and resilience to climate impacts and risks

• Build in-country multi-stakeholder dialogues on implementation and how to mobilize

the finance required

• Design of instruments, markets, mechanisms and innovation systems to maximize

impact of domestic & international finance and technology

• Capacity to generate data, information and reporting systems for transparency and

accountability.

• Take a more strategic and programmatic approach involving multiple sectors and

stakeholders ensuring leverage between public and private sectors

MOBILIZING THE

PRIVATE SECTOR

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Existence of market opportunities

Reasonable return on investment

Limited or acceptable level of risk

Need for understanding of the specific challenges and risks to

climate technology investments

Overcoming barriers and risks to

mobilise investment

August 2014

Financial challenges Policy and regulatory risks

Scarce availability of capital for

public investment

Poor credit-worthiness and lack

of guarantees

Lack of access to appropriate

forms of credit

Specific financial challenges within developing country context

Capacity constraints

Scale of investment challenges

Market risks Technology risks


Mobilizing investment requires a range of

public sector responses

Public sector incentives to mitigate risks for private sector investors:

understanding technology specific barriers and real and perceived risks of investors

important to determine appropriate mix of policy, regulatory and finance incentives

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No single way of designing a successful incentive scheme or financial instrument

- public resources designed to best allocate risks and rewards between actors

August 2014

Public sector financial instruments

- Loans (concessional)

- Guarantees

- Grants

- Equity

Policy incentives and regulations

- Renewable energy support mechanisms

- Tax credits

- Energy efficiency standards

- Low-carbon transport pricing schemes


Clean Technology Fund - Large Scale Solar

PV Program

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• SECCI demonstrate feasibility and technical support for first on-site solar PV for an

industrial fruit producer

• IDB-CTF crucial for first merchant solar PV plant with financing from local commercial

bank in Chile

• Led to creation of energy efficiency and renewable energy self-supply program

• Catalyst for several private sector investments

• Crucero (73MW) USD16m CTF & USD50.4m IDB OC

• Arica 1 (44MW) USD8.5m CTF, USD27.7m IDB OC

USD13.9m China Fund

• Pozo Almonte (26.5MW) USD20.4m Canadian Fund

USD20.4m IDB OC plus local counterpart USD41.3m

• Los Loros (54MW ) USD18m Canadian Fund, IDB OC

USD20m, USD 7.3m China Fund & USD20m

PROPARCO

2 small projects 6.5M@ El Olivo and Alturas de Ovalle


Low Carbon

Agriculture in Brazil

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Expected results:

US$ 40 million (grants)

US$ 400 million leveraged (including loans)

10 million tCO2 emissions reduced

3,500 small & medium producers benefited

Public Call for Proposals (www.ruralsustentavel.org)

Producers & Assigned Technical Advisors (ATECs) submit Technical Proposals (PTECs)

IDB verifies PTECs

IDB issues the individual letters to approved PTECS

Producers & ATECS– implement approved proposals using leveraged resources, including from official credit lines;

After final monitoring report and 3rd part verification IDB do the cash transfers.

http://www.ruralsustentavel.org/


Innovating through Green Bonds for Energy Efficiency in Mexico*

•Facilitates access to novel asset-backed security for local institutional investors.

•Aggregates a pool of ESCO energy efficiency projects securitizes these to obtain

financing from domestic capital markets.

•Structure includes a revolving credit line (up to $50 million) and guarantees from the

IDB and the CTF to back issuance of securitized green bonds.

•Scale up through Green Climate Fund: including for Regional Facility starting in

Colombia, Domincan Republic and Jamaica:

DEVELOPING DOMESTIC GREEN BONDS

MARKETS

IDB Finance: US$106 million

CTF: US$19 million

IDB Finance: $400m loan and partial credit guarantee

GCF: $217m (includes $20m for Mexico, $2m grant for preparation, $195m

allocation for regional facility)

Let’s talk about climate change and sustainability

@BIDcambioclima | http://blogs.iadb.org/climatechange

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