Energy Efficiency Green Bonds in Latin America and the Caribbean (GCF-FP006)

Countries
  • Mexico
Where the impacts of the investment may be experienced.
Financial Institutions
  • Green Climate Fund (GCF)
  • Inter-American Development Bank (IADB)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Bank Risk Rating
U
Risk rating varies among banks and may refer only to the particular investment and not to the risk for the project as a whole. Projects marked 'U' have an 'Unknown' risk rating at the time of disclosure.
Voting Date
Nov 11, 2015
The estimate day the bank will vote on a proposed investment. The decision dates may change, so review updated project documents or contact the EWS team.
Borrower
Inter-American Development Bank (IDB)
The holder of the loan, grant, or other investment.
Sectors
  • Climate and Environment
  • Finance
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Guarantee
The categories of the bank investment: loan, grant, etc.
Investment Amount (USD)
$ 22.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please review updated project documents for more information.
Project Cost (USD)
$ 334.50 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please see updated project documentation for more information.
Bank Documents
Primary Source

Original disclosure @ GCF website

Updated in EWS Jun 26, 2018


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Project Description

From the GCF:

This programme seeks to address 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.

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.

Expected project benefits:
GCF results areas
Gender benefits

The Environmental and Social category for this project is I3.

Investment Description
  • Green Climate Fund (GCF)
  • Inter-American Development Bank (IADB)

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 total project funding is USD 334.5 million. Additional financing comes in the form of an IADB loan of USD 50 million, an IADB guarantee for USD 56 million, a CTF guarantee for USD 19 million, private sector equity of USD 37.5 million, and private sector bonds for USD 150 million.

Contact Information

ACCOUNTABILITY MECHANISM OF GREEN CLIMATE FUND

The Independent Redress Mechanism (IRM) is the independent complaint mechanism for a person or people who have been or believe they are likely to be adversely affected by a project or programme funded by the Green Climate Fund. If you submit a complaint to the IRM, it may seek to address the issues raised by facilitating a problem-solving dialogue or, if that is not possible, conducting an independent investigation into whether the GCF has complied with its environmental and social policies. The IRM is newly created and is still in the process of developing its procedures and website. More information about the IRM and how you can file a complaint is forthcoming. You can contact the IRM at irm@gcfund.org.