Role of MDBs in financing of countries NDCs

Transcription

1 Role of MDBs in financing of countries NDCs Climate Change and Sustainability Division 2/11/2016 Amal-Lee Amin Inter-American Development Bank Infrastructure and Environment Sector Climate Change and Sustainability Division

2 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 2

3 IDB Value Added 10 years of proven experience working in the region: Ordinary Capital Country Relationships Safeguards Access to Know How Concessional Finance Innovate Leverage Learning Replicate/ Scale up Transformation UPDATED INSTITUTIONAL STRATEGY SUSTAINABLE INFRASTRUCTURE STRATEGY OTHER SECTOR FRAMEWORKS, IIC BUSINESS PLAN & MIF CLIMATE CHANGE SECTOR FRAMEWORK DOCUMENT 3

4 Climate Finance 4

5 DELIVERING THE PARIS AGREEMENT

6 LAC s Nationally Determined Contributions 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. 6 - Unconditional actions plus those conditional on international support

7 Translate NDCs into investment plans, programs for transformation & financeable project pipelines: 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 7

8 8 MOBILIZING THE PRIVATE SECTOR

9 Overcoming barriers and risks to mobilise investment 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 Technology risks Market risks Capacity constraints Policy and regulatory risks Financial challenges Scale of investment challenges Specific financial challenges within developing country context Scarce availability of capital for public investment Poor credit-worthiness and lack of guarantees Lack of access to appropriate forms of credit August

10 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 Policy incentives and regulations - Renewable energy support mechanisms - Tax credits - Energy efficiency standards - Low-carbon transport pricing schemes Public sector financial instruments - Loans (concessional) - Guarantees - Grants - Equity No single way of designing a successful incentive scheme or financial instrument - public resources designed to best allocate risks and rewards between actors August

11 Clean Technology Fund - Large Scale Solar PV Program 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 11

12 Low Carbon Agriculture in Brazil Expected results: US$ 40 million (grants) US$ 400 million leveraged (including loans) 10 million tco2 emissions reduced 3,500 small & medium producers benefited After final monitoring report and 3rd part verification IDB do the cash transfers. Producers & ATECS implement approved proposals using leveraged resources, including from official credit lines; IDB issues the individual letters to approved PTECS IDB verifies PTECs Producers & Assigned Technical Advisors (ATECs) submit Technical Proposals (PTECs) Public Call for Proposals ( 12

13 DEVELOPING DOMESTIC GREEN BONDS MARKETS 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: 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) 13

14 Let s talk about climate change and