Energy efficiency green bonds in Latin America and the Caribbean
Addressing demand-side energy efficiency in Latin America and the Caribbean through green bonds, by using the concept of aggregation to mobilize institutional funds at scale toward small and medium sized energy service companies.
The Programme addresses demand-side energy efficiency (EE), an area identified by the Intergovernmental Panel on Climate Change as comprising the greatest component of climate finance shortfall for mitigation. EE is one of the most competitive and cost efficient ways of responding to increasing energy demand, while reducing greenhouse gas emissions, lowering production costs and improving productivity. Lack of adequate financing is however a major barrier to private sector initiatives in energy efficiency.
In each targeted country, the Programme uses a two-phased approach to bridge that gap. It will, at first, fund energy efficiency projects using loans. Once a sufficient amount of projects are aggregated, the Programme will “bundle” them such that they will be used to underpin the issuance of partly guaranteed green bonds. In its initial phase, the Programme targets four Latin America and Caribbean countries – Colombia, the Dominican Republic, Jamaica and Mexico (as pilot country) – of which two are Small Island Developing States.
During the eleventh Board Meeting, the Board approved the amount of USD 20 million of Partial Credit Guarantees for the (pilot) Phase I in Mexico and USD 2 million as a programme development grant to facilitate the replication of the financing structure for Phase I into other capital markets in Latin America and the Caribbean under Phase II of the Progamme. The Board also allocated USD 195 million for Phase II of the Programme to be committed, subject to funding approval by the Board, in several tranches over the course of the next five years.
The Programme targets minimum emission reduction of 13.2 million tCO2e (2.5 million tCO2e in Phase I) and 780 million dollars (150 million dollars in Phase I) of private sector bond issuances with potential for further upscaling and replication in other developing countries.
The project page will capture Phase I information only, pending the approval by the Board of the next phase of the Programme.
The project has an estimated lifespan of 6 years.
- Private sector
- Public sector
|Total GCF Financing|
|Inter-American Development Bank||Loan||USD 50,000,000|
|Inter-American Development Bank||Guarantee||USD 56,000,000|
|Private sector||Equity||USD 37,500,000|
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Phone +82 32 4458 6338 (KST)
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Phone +82 32 458 6186 (KST)
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Integrity issuesGCF Independent Integrity Unity (IIU)
Phone +82 32 458 6155 (KST)
National Designated Authority
Ministry of Finance and Public Credit (SHCP), Unit for Public Credit
Director General, Unit for Public Credit and International Affairs, SHCP
Av. Insurgentes Sur 1971, Plaza Inn, Torre III, Piso 3, Col. Guadalupe Inn, Alcaldía Álvaro Obregón, Ciudad de México, Mexico
Notification related to FP006 FP006
||Notification||05 Oct 2018|
Energy efficiency green bonds in Latin America and the Caribbean IDB FP006
||Approved funding proposal||03 Mar 2017|