Download IDB

Ideas to engage GEF and
carbon finance under GEF-5
Input from IDB
Washington D.C. 15 November 2010
Possible roles for GEF 5 on
carbon finance
On the basis of IDB’s experience in Latin-America and the
Caribbean, GEF could make a significant contribution to
carbon finance on the following areas (among others):
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Design and test financial instruments to facilitate carbon
finance operations
Pilot sectoral/programmatic approaches in key sectors
Enable domestic climate change action through market
mechanisms
Financial instruments
Development of carbon markets limited by barriers to
project financing and by project and carbon market risks
 Little experience with financial instruments applied to
carbon finance:
 Guarantees, contingent financing, equity,
“green-lines”, etc.
 Growing interest from local financial institutions:
 Development and commercial banks, insurers,
exchanges
 Technical assistance to identify opportunities and needs
 Facilitate partnerships
 Design and test instruments
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Sectoral/programmatic approaches
Need to expand the scale of carbon finance operations
and reach underrepresented sectors/technologies
 New and emerging carbon finance mechanisms present
significant challenges
 Institutional complexities and transaction costs are often
beyond the means of individual private promoters
 Investments in some key sectors depend on decisions
from public agents, who often face legal, financial and
practical barriers to engage in carbon finance
 Support the set-up and implementation of programmes
in key sectors (energy efficiency, waste management),
including nationally appropriate mitigation actions
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Domestic climate change action
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Domestic climate change action limited by regulatory,
technical and market barriers
Companies and organizations in developing countries
are increasingly exposed to climate change related risks
Emerging local carbon markets initiatives in developing
countries
Lack of adequate regulation to promote voluntary action
Limited capacities related to corporate greenhouse gas
accounting, independent verification and carbon trading
National efforts benefit from regional dialogue and
integration
Francisco Arango ([email protected])
Sustainable Energy and Climate Change Unit
Inter-American Development Bank