Financing Opportunities for Sustainable Energy through the Global Environment Facility (GEF) and IDB Access to Sustainable Energy For LAC: Solutions to Regional Challenges Inter-American Development Bank Washington, DC – November 3 rd, 2010

2 GEF - General Aspects  The GEF is the largest public-sector funding source worldwide to support the transfer of environmentally sound technologies and promote Global Environmental Benefits associated to development goals  182 countries have access to the GEF through 10 implementing agencies (including United Nations agencies and Multilateral Development Banks)  Since 1991 the GEF has provided $9 billion in grants and leveraged another $40 billion in cofinancing for more than 2600 projects. Around 21% of these funds have been invested in the LAC region  The GEF allocates resources amongst 6 Focal Areas, including: biodiversity, climate change mitigation, international waters, land degradation, ozone layer and persistent organic pollutants and sustainable forest management

3 GEF - Climate Change Focal Area o The GEF has provided close to $3billion for Climate Change Mitigation (CCM), Adaptation and Enabling Activities, and has leveraged over $15billion in co-financing o Under GEF-5, the CCM strategy aims at financing projects with catalytic effects in the adoption of climate-friendly technologies that reduce or avoid large quantities of greenhouse gas emissions o This strategy will target technologies that are on stages of market demonstration, deployment and diffusion o In GEF-5, Latin America and the Caribbean (LAC) has been allocated a total of $ for CCM, primarily to: Brazil $53.92M; Mexico $40.03M; Argentina $20.21M; Colombia $ ; and Venezuela $ 11.77

4 GEF - Climate Change Focal Area o The GEF-5 Climate Change Mitigation Strategy includes 4 core objectives that pertain to Sustainable Energy Financing: 1.Promote the demonstration, deployment and transfer of innovative low-carbon technologies 2. Promote market transformation for energy efficiency in industry and residential sectors 3. Promote investment in renewable energy technologies 4. Promote energy-efficient, low-carbon transport and urban systems Source:

5 IDB-GEF Program Overview  Since joining the GEF as an Executing Agency in 2004, the IDB has developed a portfolio of nearly US$120 million in projects, with co-financing estimated at US$500 million  18 projects are under implementation and 12 in preparation  Projects under the Climate Change Mitigation Focal Area of GEF represent 32% of the total Portfolio MFA –Multi-focal Area BD –Biodiversity IW –International Waters CCM –Climate Change Mitigation

6 Examples –Private Sector  Energy Efficiency Guarantee Mechanism in Brazil (VPP/SCF): GEF: $10M, co-finance: $15M (IDB private sector) plus a partnership with UNDP for TA activities. Objective: provide guarantees to commercial banks for lending to ESCOs, demonstrating the financial viability of using EE savings performance contracts as loan collateral  Water Funds Platform for Watershed protection ( INE/WAS ) : GEF Earth Fund: USD 5m; co-financing: USD 15m (partnership with TNC). Objective: provide a platform for private sector projects targeting watershed protection. Sources of capital for the Water Funds include private sector donations  Clean Tech Fund –Regional (MIF): GEF:$0.9M; Co-finance $62M, of which at least 6.5% comes from private sector. Objective: make equity or quasi-equity investments in small-to-medium-size enterprises (SMEs) that implement renewable energy power production projects throughout 5 countries

4 Examples – Public-Private  Promoting and Strengthening an Energy Efficiency Market in the Industry Sector in Chile: GEF: $2.6M; co-finance: $39.7M ($3.1M from private sector). Objective: to promote and strengthen energy efficiency in the industry sector through supporting the development of an energy efficiency services market  Development of geothermal potential demonstration project: GEF: $5M; co- finance: $20.8M ($4M from private sector). Objective: to promote and support catalytic investments for geothermal power in Colombia through the development and implementation of a demonstrative geothermal project in the Macizo Volcanico del Ruiz  Promotion and Development of Local Wind Technologies in Mexico: GEF: $5M; co-finance: $20.8M ($4M from private sector). The project aims to expand Mexico’s wind generation capacity by enabling local development and implementation of wind turbine technologies, particularly for distributed generation 7

8 Opportunities for engaging with IDB-GEF projects  Consulting services: short term consultancies for specific project components (e.g. Baseline Studies, Economic Analysis, Financial viability, policy or regulatory framework)  Contractor services: support the execution of specific project components (e.g. supply equipment for RE projects, training programs, prototype design, etc)  Project partner/beneficiary: involved in project development, execution and monitoring, cofinancing  Financial instruments : partial loan guarantees, revolving funds, etc

9 Eligibility for GEF finance  Compliance with at least one objective of a Focal Area (FA) strategy, and its associated expected outcomes and outputs  Project costs will be financed by resources under the allocation given to a country for each FA  GEF will cover the incremental costs associated to the generation of Global Environmental Benefits  There is clear co-financing in a ratio of GEF:Cofinance preferably of (at least) 1:3 or 1:4  The project is aligned with the country priorities and has been endorsed by the country’s designated GEF Operational Focal Point  The project is aligned with IDB’s priorities and country programming (i.e. our lending portfolio)

10 More Information on GEF  GEF Website:  GEF Projects:  IDB-GEF website:  Contact: IDB-GEF Coordination Team Ricardo Quiroga Carolina Jaramillo