The Inter-American Development Bank (IDB) is joining forces with the United Nations' Green Climate Fund (GCF) to create the first regional fund to promote electric mobility and green hydrogen in Latin America and the Caribbean. The fund is expected to provide $450 million in concessional loans and grants to nine countries.
The funding 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
“The region’s urban mobility systems are under strain. The COVID-19 pandemic dealt a hard blow to public transportation companies, reducing the number of users and revenue needed to sustain operations, move away from volatile and polluting fossil fuels and transition toward more secure energy sources,” IDB President Mauricio Claver-Carone said. “This regional e-mobility fund will provide the financial resources needed to adopt cleaner technologies. It will also boost the resilience of transportation and energy systems.”
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, it will 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 partner funds, 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).
The fund will also finance vehicle-to-grid (V2G) and green hydrogen pilot projects to assess their viability as ways to increase grid resilience. V2G consists of using low-emission vehicle batteries as power storage reservoirs to provide energy during climate hazards.
The program also features a major technical assistance component to improve the design, enabling policy, regulatory framework, and business model 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.
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.
About the Green Climate Fund
The Green Climate Fund (GCF) is the world’s largest dedicated climate fund. GCF’s mandate is to foster a paradigm shift towards low emission, climate-resilient development pathways in developing countries. GCF’s portfolio delivers transformative climate action in more than 100 countries. It also has a readiness support programme that builds capacity and helps countries develop long-term plans to fight climate change. GCF is an operating entity of the financial mechanism of the United Nations Framework Convention on Climate Change (UNFCCC) and serves the 2015 Paris Agreement, supporting the goal of keeping average global temperature rise well below 2 degrees Celsius.
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