Green FinanceGreen finance broadly refers to financial investments flowing into sustainable development projects and initiatives, environmental products, and policies that encourage the development of a more sustainable economy and a range of another environmental objective. Green finance includes climate finance but is not limited to it. Saiba Mais
Green finance comprises:
- components of the financial system that deal specifically with green investments, including their specific legal, economic and institutional framework conditions;
- the financing of public and private green investments in different areas, including:
- provision of environmental goods and services,
- prevention, minimization and compensation of damages to the environment and to the climate
- the financing of public policies that encourage the implementation of environmental and environmental-damage mitigation or adaptation projects and initiatives.
Green finance Initiative (GFI) strives to increasing the level of financial flows from financial institutions, investment funds, insurance and also micro credit, available to the public, private and not-for-profit sectors to implement sustainable development goals.
The GFI aims to support National Development Banks (NDBs), Agencies and Local Financial Institutions in the promotion of financing strategies geared to mobilize private sector green investments.
Scope of Activities
Tailored support for National Development Banks to design and promote green financial instruments; Structuring a green financing strategy, including strengthening of its institutional capacity FOR NDBs.
Innovative Financial Solutions
Public–Private Partnerships (PPPs), interconnected zones, renewable energy, energy efficiency.
Financial Innovation Labs (LABs) to promote dialogue with regulators, capital markets and financial sector stakeholders.
Where it is implemented
The goal of the program is to improve the efficiency and sustainability of energy production and use in Argentina. It is expected that the program increases SMEs´ investments in renewable energy ("ER") and energy efficiency ("EE"), through access to medium and long-term financing, thereby reducing greenhouse gas ("GHG") emissions.Read More
The program is executed jointly by the Foreign Trade and Investment Bank (BICE), who leads the financing, and the IDB, who leads the technical cooperation.
This program uses Green Climate Fund (GCF) resources, along with co-financing from BICE and IDB, to develop and offer financial mechanisms designed to meet the specific needs of RE and EE projects and investments. We offer standard financing tools, such as loans that can be combined with instruments like the Energy Savings Insurance (ESI), to reduce perceived and real risks for project developers and SMEs, thereby helping to remove investment barriers.
The credit line encourages leverage of other sources of capital mainly through: (i) a minimum capital requirement in financed projects (e.g. from developers/SMEs as final beneficiaries of the sub-loans); and (ii) credit exposure limits per client.
Sector-specific uncertainties critically influence investment decisions in renewable energy and energy efficiency. For example, understanding how certain technologies work, the evolving regulatory framework for EE and RE, or the existence or volatility of a renewable energy resource. In this context, the demonstrative effect of public intervention becomes crucial to promote and attract private financing and create a cluster of energy efficiency and renewable energy investments backed by a carefully designed incentive structure. This includes financial incentives, guaranteed and third-party verified energy savings, risk-sharing mechanisms such as energy savings insurance, and international standards for ESG.
An additional challenge is overcoming the macroeconomic and operating challenges in the COVID-19 environment. At the same time, this program represents a vital opportunity to support Argentina and its SMEs in the low-carbon economic recovery phase.
Through year-end 2020, five sub-projects have been financed for the construction and operation of biogas and biomass plants to produce thermal and electric energy in different provinces of Argentina. Taken together, the total installed capacity is 10.5 MW with expected CO2e emissions reductions of 27,017 tCO2e per year. These sub-projects have leveraged USD 12.8 million of private financing from SMEs/third parties.Read More
Pipeline development activities continue. Many webinars and capacity building sessions have been carried out and are planned to build institutional capacity in EE and RE finance and investment opportunities. An electronic registry system has been designed and implementation continues at BICE to support sub-project evaluation and impact reporting. The enabling environment is being strengthened through, for example, policy dialogue activities that includes the creation and training of a new, cross-cutting sustainable finance team in the public sector led by the Ministry of Economy. In addition, various potential demand studies have been carried out, including a gender baseline study on financing female-led SMEs and participation of women in relevant engineering and operational activities in Argentina to promote greater market penetration.
In the long term, the cumulative results of the effective operation of the biomass, biogas, and energy efficiency sub-projects funded by our partners are expected to lead to more efficient and sustainable patterns of energy production and use in the Argentinean market.
• The Government of Chile is promoting the development of strategies at the national scale to promote investments in Public-Private Partnerships and green private investments, through dialogue tables between the public and the private sector (the “Green Agreement”).
• CORFO will be developing and implementing innovative financial instruments and technical assistance to be deployed through Chile’s first-tier, local, financial institutions to promote private investments in low-carbon projects including renewable energy, energy efficiency and sustainable transport measures.
Why Green Finance?GF scales up public and private investments that provide environmental benefits, through new policies, financial institutions and financial instruments, such as, inter alia, green banks, green bonds, carbon market instruments, innovative financial technologies, labelling, guarantees for PPPs.
Investment in the green economy needs to take place on a larger scale over coming decades in order to achieve the Sustainable Development Goals and the global objectives of the Paris Agreement.
Green Finance allows overcoming barriers to green investment such as:
- 3 years since the establishment of the LAB
Banco do Brasil is among the 10 most sustainable companies in the world
- The bank was rated 1st in the ranking of financial institutions. Banco do Brasil (BB) was considered the most sustainable financial institution in the world, and ranks among the ten most sustainable corporations in the “Global 100 Most Sustainable Corporations in the World” index, produced annually by the Canadian publication Corporate Knights. The announcement was made this Tuesday (22) during the World Economic Forum, in Davos (Switzerland).
First Certified Agricultural Green Bond in Oaxaca
Partners on the GroundWho is supporting GFI
This Initiative is being promoted by the IDB with support from the International Climate Initiative (IKI) of the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB).
Furthermore, the IDB has partnered with key determined ‘green’ stakeholders and National Development Banks to design and promote green financial instruments in the Latin America and the Caribbean region.
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