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Argentina to invest in sustainable energy with IDB support

Loan of $100 million from the Green Climate Fund will benefit Small and Medium Enterprises investing in renewable energy and energy efficiency projects

Argentina will increase Small and Medium Enterprises (SME) investments in renewable energy and energy efficiency by providing greater access to finance, with a $100 million loan approved by the Inter-American Development Bank. 

The loan will specifically finance small-sized renewable energy generation projects (mainly biogas and biomass) and efficiency improvements in industrial processes, including equipment replacement and cogeneration.

Improved efficiency in the use and production of energy will help cut greenhouse gas emissions and enable energy consumers to benefit from greater and better availability of cleaner energy at competitive prices.

The operation is expected to have an important transformational impact by helping SMEs access more financing and allow them to scale up their investments. SMEs in Argentina face multiple obstacles that prevent them from investing in renewable energy and energy efficiency, with inadequate access to finance among the major impediments.

These companies also face higher transaction costs than larger firms, and in many cases, lack appropriate collateral to comply with banking requirements. In Argentina, credit to microenterprises and SMEs represents only 3 percent of GDP, although these firms account for at least 50 percent of GDP and generate around 71 percent of total employment.

In addition to this program, the IDB is supporting Argentina with $3.6 million in technical cooperation grants geared at promoting energy efficiency investments by small and medium enterprises which, among others, will replicate the IDB’s Energy Savings Insurance strategy, which was endorsed by the Global Innovation Lab for Climate Finance as one of the most promising instruments to mobilize private sector investments in energy efficiency.

The project will be executed by the Banco de Inversión y Comercio Exterior (BICE), a public bank that grants medium- and long-term credit aimed at productive investment and foreign trade.

The IDB financing is for a 20-year term, with a 5.5-year grace period and a 0.75 fixed interest rate.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.

 

Contacts

Cavelier,Andres

Cavelier,Andres
External Contacts

Carlos Pauletti

Carlos Pauletti
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