The Inter-American Development Bank (IDB) approved a $300 million loan to help Colombia manage and fund climate action, develop economic opportunities based on natural capital and the circular economy, and quicken its energy transition. The ultimate goal is to support the country on its path to sustainable and resilient economic growth.
The program focuses on updating and instituting regulatory and policy measures to cut greenhouse gas emissions in various sectors of the economy and create around 4,000 new green jobs.
This operation is the second in a series under the Loans for Policy Reform initiative. The first operation provided $800 million in IDB funding and resulted in the approval of 44 measures to strengthen the government’s capacity to incorporate climate action and sustainable economic recovery into national policy frameworks. The series was also co-financed by partners such as the French Development Agency, the KfW Development Bank of Germany, the Export-Import Bank of Korea, the Swedish International Development Cooperation Agency, the Development Bank of Latin America, the Central American Bank for Economic Integration, and the UKSIP Program of the British Government.
As part of the program, Colombia unveiled its Long-Term Climate Strategy at the COP 26. It also approved the Climate Action Law (Law 2169 of 2021), and issued the first sovereign green bonds (TES verdes) in the domestic market. The Ministries of Treasury and Environment spearheaded these actions. The country also overhauled its climate funding strategy and industry- and region-specific climate change plans as part of the program. In agriculture, for example, the program promotes regulatory changes to monitoring and reporting systems, carbon markets, and the transfer of knowledge about climate-smart farming and best practices for resilience. Up to the 2 million farmers and 30% of rural women could benefit from this knowledge transfer.
For the energy and transportation industries, the measures aim to reduce air pollution from internal combustion engine vehicles and develop a diversified energy mix that is cleaner, more resilient, and generates 20 GW from non-conventional renewable energy sources.
This loan will also be used to bolster nature-based solutions, forest management, and the circular economy. New regulations will foster sustainable use of forest resources and contribute to the goal of net-zero deforestation by 2030.
Another aim is to enhance protected area management to better safeguard the biodiversity of Colombia, which is the second-most biodiverse country in the world after Brazil. The country’s goal is to protect and conserve 30% of its lands by 2030 and, together with the governments of Costa Rica, Ecuador, and Panama, it has issued a declaration to conserve and manage the Eastern Tropical Pacific Marine Corridor.
With the first IDB operation, Colombia was able to raise its targets for reducing greenhouse gas emissions from 20% to 51% in 2030, as part of its commitments under the Paris Agreement. It combined this measure with other policies like the National Policy for Controlling Deforestation, the Sustainable Tourism Law (Law 2068 of 2020), and the Energy Transformation Law (Law 2099 of 2021).
This program aligns with Vision 2025, the IDB Group’s roadmap for accelerating recovery and inclusive and sustainable growth in Latin America and the Caribbean. Climate action is a fundamental pillar of Vision 2025, and 100% of the loan’s resources were considered climate funding, bringing the IDB closer to achieving its ambitious goals in this area.
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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