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First of its kind instrument helps overcome financial barriers for Brazilian businesses to adopt energy efficiency measures

The Inter-American Development Bank (IDB) and Global Environment Facility (GEF) announce the issuance of $1.6 million in guarantees under the joint Energy Efficiency Guarantee Mechanism (EEGM) to support companies financing energy efficiency projects in Brazil. The first guarantees were recently issued to APS Soluçoes, a Brazilian energy service company, to assist in securing commercial bank financing from Banco Indusval (BI&P) to implement three energy efficiency projects in a call center, logistics warehouse and large retail shopping mall.

"The EEGM is an innovative tool that is supporting Brazil’s energy efficiency industry develop and expand new business models for saving energy,” said Hans Schulz, Vice President for Private Sector & Non-Sovereign Guaranteed Operations, a.i.

The EEGM ( is a $25 million mechanism formed jointly by the IDB and the GEF that addresses funding needs in the currently underserved sector of energy efficiency in Brazilian commercial buildings.The EEGM is the first guarantee fund in the world that covers both performance risk of energy efficiency projects and credit risk of the borrowers.

“Providing incremental financing for risk reduction in developing countries is a high priority for GEF," said Naoko Ishii, CEO and Chairperson of the GEF. “With the IDB as our partner, we are demonstrating innovative approaches that will attract Brazilian private sector investors to energy efficiency projects and accelerate reductions in greenhouse gas emissions.”

Energy efficiency is consistently cited as the best means to meet the ever growing energy needs of Latin American countries. Electricity consumption in Brazil has increased by as much as 9 percent annually in recent years.This growth in energy demand can be cut in half, without compromising economic growth, through the widespread adoption of more efficient existing technologies. Yet paradoxically, energy efficiency still faces many financial barriers for businesses.

Gilberto Barshad Faiwichow, Executive Vice President, BI&P in São Paulo, said, “We were able to use the EEGM guarantees to extend our tenor, lower our lending rate and finance projects that we otherwise would not have be able to finance.”

Under the EEGM, guarantees are available in Brazilian reais up to the equivalent of $800,000 and are fast-tracked to minimize transaction costs. The focus is on energy efficiency projects that have the potential to achieve high carbon-emission savings and high financial returns, but wherefinancing is often unavailable due to perceived risks. All technologies are considered including advanced lighting and climate control systems, as well as self-supply solar power and co-generation.

About the Structured and Corporate Finance Department

The Structured and Corporate Finance Department (SCF) leads IDB’s non-sovereign guaranteed loans for large-scale projects and medium and large companies and financial institutions. SCF has lent over $2 billion to support over $7 billion in climate change projects in the past two years.

About the Global Environment Facility

The Global Environment Facility (GEF) unites 183 countries in partnership with international institutions, civil society organizations (CSOs), and the private sector to address global environmental issues while supporting national sustainable development initiatives. An independently operating financial organization, the GEF provides grants for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants.

Since 1991, GEF has achieved a strong track record with developing countries and countries with economies in transition, providing $11.5 billion in grants and leveraging $57 billion in co-financing for over 3,215 projects in over 165 countries. Through its Small Grants Program (SGP), the GEF has also made more than 16,030 small grants directly to civil society and community based organizations, totaling $653.2 million.

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