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Jan 18, 2007

IDB fund creates clean energy markets cluster

New instruments to help small enterprises access opportunities, improve competitiveness

The Inter-American Development Bank’s Multilateral Investment Fund announced today the creation of a new cluster of activities focused on Promoting Clean Energy Markets. This initiative will help small enterprises gain access to clean energy market opportunities while improving their competitiveness.

“In Latin America and the Caribbean, energy efficiency and renewable energy offer great potential to reduce the negative effects of increasing energy costs,” said IDB Team Leader Daniel Shepherd.

“The new MIF cluster will promote new financial instruments in the clean energy market and assist in the creation of capacities required by smaller firms to serve this market,” added Shepherd. “Projects in the cluster will share the same technical theme and development goals to generate economies of scale and disseminate best practices. They will also seek to be innovative, combining existing models with newer approaches to create a catalytic effect in the region.”

IDB programs to promote renewable energy and energy efficiency opportunities play a growing role in Central America in the context of the Plan Puebla Panama (PPP) and in connection with the Initiative for the Integration of Regional Infrastructure in South America (IIRSA).

Cluster network participants will include stakeholders in MIF donor countries, including governments, private sector organizations, civil society organizations and universities.

The new cluster has already approved two financings for projects to support market opportunities for clean energy:  A $975,000 grant to Fundación Chile and a $600,000 grant to the Ecologica Institute to work in rural areas of Tocantins, Brazil.

Fundación Chile

This project will foster the use of renewable energy and energy efficiency by facilitating access to market-based economic incentives that support the use of low carbon-emitting technologies. It will increase market opportunities for small and medium enterprises and improve their competitiveness.

Projects selected will include small and medium-sized agro-industry and agricultural producers; firms involved in commercial and residential air-conditioning; energy engineering; hospitals, public schools and hotels; and refrigeration and freezer service companies.

Energy service companies, most of which are small and medium-sized, will also be a target group for this project and will benefit from support to create a viable market with potential to grow significantly in the next few years due to increased interest in energy cost savings among private and public clients.

Fundación Chile is a not-for-profit private corporation established in 1976 to promote the use of technology and support new private enterprises in the market.

Ecologica Institute

This project will contribute to the socioeconomic development of rural areas in the north of Brazil. It will implement an integrated model for the production and marketing of an alternative biofuel and other by-products from rural areas of Tocantins in Brazil.

Around 160 producer families in two targeted settlements and producers in other neighboring communities will benefit from training and access to mini-processing facilities, as well as other producers that utilize animal feed by-products from sweet potato production to increase cattle and dairy production. In most of Tocantins’ recently colonized poor settlements, sweet potato production offers an alternative source of income due to climatic and agroecological conditions and lower capital costs.

Brazil has become a world leader in the production of biofuels thanks to a program initiated by the government in the 1970s. Today about a third of Brazilians use biofuel (ethanol) in their vehicles. It is estimated that a 1 percent substitution of petroleum-based diesel for biodiesel produced by small farmers could generate 45,000 jobs paying $2,000 each per year.

Ecologica Institute is a nongovernmental organization created in 2000 to improve the quality of life of local communities by conserving the natural environment and culture and fostering sustainable development values.

The Multilateral Investment Fund is an autonomous fund, administered by the IDB. It provides grants, investments and loans to promote private sector growth, labor force training and small enterprise modernization in Latin America and the Caribbean.

More Information

For more information contact MIF project Team Leader Daniel Shepherd at daniels@iadb.org

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