SHARM EL SHEIKH, Egypt, Nov 11, Two Caribbean Community (CARICOM) countries are to benefit from the first regional program to promote electric mobility and green hydrogen in Latin America and the Caribbean that was first approved by the Green Climate Fund (GCF) in July this year.
The Inter-American Development Bank (IDB) says it has endorsed a partnership with the GCF for the program initiative, known as the E-mobility Programme for Sustainable Cities in Latin America and the Caribbean that aims to provide US$450 million in concessional loans and grants to nine countries to help cities in the region transition toward lower carbon emissions and resilient public transportation.
It will accelerate the use of electric and hydrogen-based public transportation and make urban mobility systems more resilient to climate change. The program will help power the green transition in Barbados, Chile, Colombia, Costa Rica, the Dominican Republic, Jamaica, Panama, Paraguay, and Uruguay.
IDB’s vice president for sectors and knowledge, Benigno Lopez, and Yannick Glemarec, GCF’s executive director, made the announcement after a bilateral meeting at the ongoing 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27).
The IDB plays a key role at the conference as the region’s primary strategic partner for channeling private and public investment for climate action and for mobilizing private capital.
“We are pleased to announce that our Board of Executive Directors decided in favor of forming an ambitious alliance with the GCF,” said Lopez, adding, “this will put us in a position to provide the financial resources needed to adopt cleaner technologies and ensure our transportation and energy systems are more resilient.”
Glemarec said the GCF is pleased to partner with the IDB for the first fund that will promote electric mobility and green hydrogen in the region.
“Not only will our investment of $200 million help increase access to low-emission transportation and strengthen the resilience of the urban transport infrastructure, but it will also provide socioeconomic benefits to millions of people in Latin America and the Caribbean.”
By increasing access to low-emission transportation, the program will eliminate 7.5 million tons of carbon dioxide emissions. Meanwhile, its climate adaptation feature will directly benefit 1.5 million people and indirectly benefit nine million, representing nine percent of the total population in the beneficiary countries.
Benefits will also include lower fossil-fuel import bills, improved public- and private-sector mobility capacity, new green jobs, a fair transition that addresses gender and other considerations, and a power grid that is more resilient to climate events.
The IDB and other partners are expected to provide US$200 million of the funding ($195 million in loans and five million in grants), while the Green Climate Fund just approved another $200 million ($145 million in loans and $55 million in grants).
Governments in the beneficiary countries are expected to provide an additional US$50 million in local co-financing for a total initial investment of $450 million.
Nearly two-thirds of the funds (US$284 million) will be used to finance electrified integrated urban mobility. This aims to overcome the limited appeal of investing in e-buses, limited experience in making urban transport infrastructure more resilient, and a lack of financial support for investment to make this infrastructure less vulnerable to climate change. This portion of the funding will finance electric buses, taxis and ride-hailing vehicles, last-mile delivery service vehicles, trucks, and institutional fleets.
Twenty-two percent of the funding (US$98 million) will support climate-resilient micro-mobility infrastructure, including short-distance vehicles, docking stations, cycling lanes, and pedestrian streets.
These funds will also be used to allocate and improve support for urban spaces, infrastructure for public e-transport, gender-specific needs, and for connecting users with alternative urban transportation options (electric and non-motorized), the IDB said.
Additionally, the funds will finance vehicle-to-grid (V2G) and green hydrogen pilot projects to assess their viability as options for increasing grid resilience. V2G consists of using vehicle batteries as power storage reservoirs to provide energy during and after extreme weather events and to support other power grid reliability services.
The program also features a major technical assistance component to improve the design, as well as the enabling policy and regulatory framework and business models to promote private-sector participation. Each of these aspects is critical because the region’s cities still lack these conditions and incentives to invest in electric and green hydrogen mobility.
The program will also prepare a Gender Action Plan that aims to boost female participation and gender awareness in the electro-mobility sector. In addition, it will help increase women’s access to economic opportunities by developing their technical and entrepreneurial skills, establishing incentives for hiring women, and incorporating gender eligibility criteria into project selection processes.
Meanwhile, the IDB and IDB Invest, the IDB Group’s private-sector arm, have provided more than US$26 billion in climate financing for Latin America and the Caribbean between 2016 and 2021., representing approximately 60 percent of all climate financing in the region from multilateral investment banks during this period.
Of the total, US$8.3 billion went to climate adaptation and resilience, a priority in a region where the frequency of natural disasters has tripled over the last 50 years. IDB Invest’s contribution to adaptation has grown from US$400,000 to US$1.5 million in the last five years.
According to a recent IDB study, investing in long-term planning for adaptation can save lives and property both now and in the future and prevent or reduce damages and losses caused by climate change.
The IDB estimates that every dollar invested in resilient infrastructure can generate up to four dollars in economic benefits. Therefore, it is crucial for countries to include climate risks in their development planning and prioritize multi-sector actions to boost resilience.
The IDB said the level of climate finance provided in recent years reflects the region-wide commitment of the IDB Group and cements its place as a leading strategic partner in facing the climate emergency.
IDB Lab, the Bank’s innovation laboratory, is currently advancing innovative climate solutions for entrepreneurs. One of them is Regenérate, the first fund to develop an entrepreneurial ecosystem for creating and incubating bio-economy business opportunities in the Amazon region. The fund will bolster this ecosystem through debt financing, capital investments, grants, and other financial instruments.
At COP27, the first event organized by the IDB Group titled “Accelerating the Implementation of Climate Action in Latin America and the Caribbean” highlighted the Bank’s work to build synergies between the public and private sectors.
“Governments and businesses must come together to address the climate emergency. This is key to ensuring that the future is not lost,” Lopez said.
IDB Invest chief executive officer, James Scriven, emphasized the private sector’s opportunity to play a decisive role in accelerating the green transition in the region:
“There is a huge need for climate finance. We are working to help our clients close this gap and multiply the social and economic impact of their businesses.”
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