The Inter-American Development Bank (IDB) approved a $300 million loan to Chile to expedite a fair, clean and sustainable energy transition in the country.
This is the second and final operation in a two-loan series to support policy reforms. The IDB approved the first operation for $50 million in June 2021.
As part of the second operation, Chile will overhaul its energy pricing to align it with its modernized distribution regulations and guarantee affordable electricity. Furthermore, it will accelerate the population’s use of clean and sustainable energy that displaces fossil fuels and other polluting power sources.
The program associated with the loan will also work to close gender gaps by promoting equal pay, including more women in the energy industry and pushing for gender parity at energy-related civil society organizations.
Additionally, the program will help decarbonize power generation, create energy scenarios and projections that are consistent with the country’s carbon neutral target for 2050 to update the Long-Term Energy Plan, compress the timeline for decommissioning coal-fired plants, draft the first fair transition strategy, and draw up regulations to facilitate grid connections for intermittent renewables and electricity storage.
The operation also involves stimulating technological innovation through the approval of the National Electrical Vehicle Strategy this year, as well as new regulations aligned with the Energy Efficiency Law for rolling out electrical vehicles. Other similar steps include launching a program for trading in high-mileage vehicles, enforcing regulations on green hydrogen, and providing backing for the country’s first green hydrogen projects.
The loan contributes to the digital economy, climate change and gender and inclusion pillars of the IDB’s Vision 2025 – Reinvest in the Americas: a Decade of Opportunities, which lays out a roadmap to recovery and inclusive growth in Latin America and the Caribbean.
The $300 million IDB loan has a 16-year term, a five-and-a-half-year grace period and an interest rate based on the SOFR.
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.
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