Washington -- March 12, 2007 -- A Sustainable Energy and Climate Change Initiative approved by the Board of Directors of the Inter-American Development Bank will help the countries of Latin America and the Caribbean to expand the use of renewable energy and energy efficiency technologies, increase their access to international carbon finance, and support efforts to adapt to climate change.

The initiative calls for action in four key areas:

In the first, the IDB will help countries to assess their potential for renewable energy and energy efficiency to meet their energy needs. It will also work to minimize regulatory, institutional, and financial barriers to making investments in these areas while increasing incentives. In addition, the IDB will finance renewable energy and energy efficiency projects. 

The initiative also calls for the IDB to help countries assess their potential as producers of biofuels, promote policies that support biofuel development, and finance biofuel projects and the adaptation of new biofuel technologies. 

In the area of greenhouse gas reduction, the Bank will develop so-called Clean Development Mechanism (CDM) projects in which entities in industrialized countries receive credit in exchange for financing projects in developing countries that reduce greenhouse gas emissions. The IDB will work to lower transaction costs and risks for such operations as well as strengthen the capacity of the region’s countries to participate in the international carbon market.

Finally, the IDB will consider the risk of climate change in operations in its borrowing countries, particularly to reduce the vulnerability of urban and regional infrastructure and rural communities.

In the past year the IDB approved financing for a number of projects to promote sustainable energy and climate change mitigation. The included the following:

• Support for creating business models for energy efficiency services
• An analysis of the role and potential for biofuels in Central America.
• An assessment of the potential for biofuel production from sugar cane in Guyana, Jamaica and Barbados and the possibilities for these countries to obtain carbon credits through the CDM specialized market.
• An assessment study of biofuels for transport in Mexico.
• An operation to improve energy efficiency in water pumping systems in El Salvador.
• A study of opportunities to increase efficiency in residential, service and commercial sectors in Central America.

• The development of a renewable energy tool kit tailored for Latin America.
• Assistance to countries in preparing CDM documentation.

In June of this year the IDB will present an action plan that establishes targets, milestones, timeframes, responsibilities for priority actions and a budget for activities included in the initiative. The plan will also include activities for raising awareness and providing technical support to IDB staff and the Bank’s clients. In addition, the Bank will meet with donor agencies to establish financial contributions for the initiative.

The new initiative and action plan follow a series of studies and events that the Bank has undertaken to identify opportunities and needs for renewable energy, energy efficiency and climate change mitigation and adaptation. Last November the IDB held a regional conference, “Sustainable Energy and Climate Change Investment in Latin American and the Caribbean” in which decision-makers from the public and private sectors discussed how to increase investments in sustainable energy in the priority areas of energy production, housing, transportation and industry, as well as opportunities for climate change mitigation and adaptation.

Source; iadb.org