IDB’s clean energy ranking in Latin America and the Caribbean

The Inter American Development Bank (IDB) through its Multilateral Investment Fund (FOMIN), in partnership with Bloomberg New Energy Finance have recently published the executive summary of the Climatescope, the first annual ranking on Clean Energy in Latin America and the Caribbean. The report highlights market data and new opportunities for entrepreneurs and investors on clean energy in the region.

The final report is scheduled to be presented during the United Nations Conference on Sustainable Development, Rio+20, that is taking place in Rio de Janeiro, Brazil, in upcoming June this year. The study profiles 26 countries in the region and evaluates their ability to attract capital for low-carbon energy sources while building a greener economy. Nonetheless, our intent is to be very much present during the launching event, though our diplomatic mission to Rio+20. Bellow a few highlights on the executive summary. Bellow is how the Climatescope scores each country in the region:

Enabling framework: The existing policies, power market structures and levels of clean energy capacity.

Clean energy investment and climate financing: Funds deployed in support of clean energy, plus the availability and cost of local capital such as microfinance.

Low-carbon business and clean energy value: The availability of local manufacturing and supply chains for clean energy goods, services and financing.

Greenhouse gas management activities: The extent of actions taken and projects developed under the United Nations Clean Development Mechanism (CDM).

Key findings:

  • At least 80 clean energy policies are in place or in the late stage in Latin America and the Caribbean (energy market mechanisms or tax-based incentives). Overall, the region is significantly behind in the clean energy policy realm.
  • Brazil, Nicaragua and Panama, respectively, received the highest Climatescope scores thanks to a combination of supportive local policies, clean energy investment and other factors.
  • The region’s relatively high electricity prices offer opportunity for clean energy project developers.
  • Microfinance has emerged as a significant lever to help expand clean energy access.
  • The region’s largest economies are the leaders in terms of active domestic players involved in clean energy value chains, ranging from financial institutions, to equipment markets, to project developers and installers. Brazil is the only country with a complete value chain for at least two clean energy technologies (biofuels and biomass, and waste). Mexico is the on the road of becoming the first country with a complete value chain for wind and solar.
  • Most CDM projects in Latin America and the Caribbean are located in Brazil and Mexico. A presence of multinational corporations in these nations is most likely the reason.

Brazilian energy policy: Compared with its peers, Brazil has the most diverse set of clean energy policies with at least one incentive in place for nearly every one of the categories examined. To date, Banco Nacional de Desenvolvimento Econômico e Social (BNDES)’s offers of below market rates and extremely favorable conditions has effectively monopolized lending to the country’s low-carbon economy.

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