The Board of Executive Directors of the Inter-American Development Bank (IDB) endorsed a partnership with the Green Climate Fund (GCF) to create the first regional program to promote electric mobility and green hydrogen in Latin America and the Caribbean. The project was first approved by the GCF’s board in July 2022.

The E-mobility Program for Sustainable Cities in Latin America and the Caribbean, which is expected to provide $450 million in concessional loans and grants to nine countries, will underpin a transition in the region’s cities towards lower carbon emissions and resilient public transportation by accelerating the use of electric and hydrogen-based public transportation and by making urban mobility systems more resilient to climate change. The resources will enable this shift in Barbados, Chile, Colombia, Costa Rica, the Dominican Republic, Jamaica, Panama, Paraguay, and Uruguay.

Benigno Lopez, IDB’s Vice President for Sectors and Knowledge, and Yannick Glemarec, GCF’s Executive Director, made the announcement after a bilateral meeting held during the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27), in which the IDB plays a key role as the region’s primary strategic partner in channeling private and public investment for climate action and in mobilizing private capital in Latin America and the Caribbean.

“We are pleased to announce that our Board of Executive Directors decided in favor of forming an ambitious alliance with the GCF,” said IDB’s Vice President for Sector and Knowledge, Benigno Lopez. “This will put us in a position to provide the financial resources needed to adopt cleaner technologies and ensure our transportation and energy systems are more resilient.”

GCF Executive Director Yannick Glemarec said, “GCF is pleased to partner with IDB for the first fund that will promote electric mobility and green hydrogen in the region.  Not only will our investment of USD 200 million help increase access to low-emission transportation and strengthen the resilience of the urban transport infrastructure, but it will also provide socio-economic benefits to millions of people in Latin America and the Caribbean.”

By increasing access to low-emission transportation, the program will eliminate 7.5 million tons of carbon dioxide emissions. Its climate adaptation measure will directly benefit 1.5 million people and indirectly benefit 9 million, representing 9% of the entire population of program countries. Benefits include lower fossil-fuel import bills, improved public- and private-sector mobility capacity, new green jobs, a fair transition that addresses gender and other considerations, and a power grid that is more resilient to climate events.

The IDB and other partners are expected to provide $200 million of the funding ($195 million in loans and $5 million in grants), and the Green Climate Fund just approved another $200 million ($145 million in loans and $55 million in grants). The governments of the nine beneficiary countries are expected to provide an additional $50 million in local cofinancing, for a total initial investment of $450 million.

Nearly two-thirds of the funds ($284 million) will be used to finance electrified integrated urban mobility. This addresses the limited appeal of investing in e-buses, limited experience in making urban transport infrastructure more resilient, and the lack of financial support for investments to make this infrastructure less vulnerable to climate change. This portion of the funding will finance electric buses, taxis and ride-hailing vehicles, last-mile delivery service vehicles, and trucks and institutional fleets.

Twenty-two percent of the funding ($98 million) will support climate-resilient micro mobility infrastructure, including short-distance vehicles, docking stations, cycling lanes, and pedestrian streets. These funds will also be used to allocate and improve the support for urban spaces and infrastructure for public e-transport, address gender-specific needs, and connect users with alternative urban transportation options (electric and non-motorized).

Additionally, the fund will finance vehicle-to-grid (V2G) and green hydrogen pilot projects to assess their viability as ways to increase grid resilience. V2G consists of using vehicle batteries as power storage reservoirs to provide energy during and after extreme weather events and support other power grid reliability services.

The program also features a major technical assistance component to improve the design, enabling policy, regulatory framework, and business models for private-sector participation given that the region’s cities still lack these conditions for electric and green hydrogen mobility.

As part of this component, the program will prepare a Gender Action Plan. The plan will aim to boost female participation and gender awareness in the electro-mobility sector, increase women’s access to economic opportunities by developing their technical and entrepreneurial skills, establish incentives for hiring women, and incorporate gender eligibility criteria into project selection processes.