IDB supports energy efficiency green bonds

Financing package of up to $450 million to underwrite energy efficiency projects will also receive funding from Green Climate Fund

The Inter-American Development Bank (IDB) has approved financing to establish a regional Energy Efficiency Green Bond Facility. The program was selected to receive up to $217 million in additional funding as one of eight projects worldwide in the first round of allocations announced by the Green Climate Fund (GCF) on November 6.

“This private sector program stands out for its innovative financial approach, involving small and medium enterprises and the potential mobilization through capital markets of funds from different institutional investors such as pension funds and insurance companies,” said Gema Sacristan, IDB’s Financial Markets Division Chief.

Providing an alternative financing mechanism for energy efficiencyprojects through the issuance of green asset-backed securities (ABS), the program will also contribute to the development of capital markets in the region. The program will introduce green ABS following the Green Bond Principles standards and will foster socially and environmentally responsible investments.

“The approval of this program furthers our commitment to supporting Latin American and Caribbean countries in the implementation of their proposed Intended Nationally Determined Contributions (INDCs),” said Amal-Lee Amin, IDB’s Climate Change and Sustainability Division Chief. “Tapping into domestic capital markets for refinancing of energy efficiency is key for increasing scale of investment for de-carbonization over the medium and longer-term.”

Mexico will be the first country to implement this program, followed by the Dominican Republic, Jamaica, and Colombia. The IDB’s loan of up to $400 million will be complemented by a loan of up to $50 million from the China Co-Financing Fund, administered by the IDB, in connection with the first utilization of the Facility in Mexico.

Last month, in advance of the UN Framework Convention on Climate Change climate conference in Paris, the IDB announced an aspirational goal for doubling its climate financing by 2018, through both its public and private sector investments.

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’s vision is to support a paradigm shift to low-emission and climate-resilient development. It is driven by innovation and targets its investments for transformational impact. In order toachieve maximum results, GCF seeks to catalyze funds, multiplying the effect of its initial financing by opening markets to new investments. The Fund creates new models for climate finance, channeling investment from both the public and private sectors.