A CDN$250 million Canadian Climate Fund which will be managed by the Inter-American Development Bank (IDB) will finance private sector climate mitigation and adaptation projects in Latin America and the Caribbean that need concessional financing to become viable, the IDB said yesterday in a news release.
“The private sector is a key player in helping countries address climate change. The Canadian Climate Fund will go a long way in moving the needle on innovation and helping reduce the gap in financing for climate-friendly projects,” IDB President Luis Alberto Moreno is quoted as saying.
“We thank the Canadian government for providing the resources to create this fund and are grateful for its decision to partner with the IDB.”
And Canada’s Minister of International Cooperation, Beverley J. Oda said that “Fostering active private sector participation, especially innovative initiatives that generate jobs, is an important component of our efforts to make our international assistance more effective.”
“Through this fund, the IDB will be helping to finance climate-related initiatives, helping to stimulate sustainable economic growth and deliver better results which will benefit Latin America and the Caribbean as a whole,” she added.
The fund aims to mobilize private sector investment in cleaner technologies, which often have higher initial costs and longer pay-backs than fossil fuel technology, the release stated.
By making these projects viable, the Canadian Climate Fund is expected to pave the way for up to US$5 billion in climate change investments, which are expected to contribute to a reduction of up to 50 million metric tons of greenhouse gas emissions over the fund’s 25-year life.
“A key aspect of the Canada Climate Fund is its ability to level the playing field,” said Hans Schulz, General Manager at the IDB’s Structured and Corporate Finance Department.
“Canada’s partnership offers us a tremendous opportunity to expand our support for climate-friendly projects in our member countries.”
Projects supported may include renewable energy, energy efficiency, agriculture and forestry greenhouse-gas emission-reduction projects, as well as adaptation projects to reduce climate change vulnerabilities. The fund will make up to half of its capital available for loans and guarantees in local currency.
This CDN$250 million investment is part of Canada’s 1.2 billion-Canadian dollar contribution to the Fast Start financing to support developing countries’ efforts to reduce greenhouse gas emissions and adapt to the adverse impacts of climate change, the release said.
