CONTEXT

Economic growth in Latin America is expected to generate a continuous increase in emissions. At the same time, the region has substantial GHG emission reduction potential in many sectors. Financial, technological and knowledge barriers often impede efficient measures to mitigate GHG emissions.

Structuring effective mechanisms to promote GHG mitigation programmes and to leverage public and private sector funding is crucial for sustainable and climate-friendly development.

PROJECT

The objective of this program was to develop and implement a Sector Mitigation Scheme employing Performance Based Climate Finance in Colombia, to reduce GHG emissions at the sector level in the nation. Two sectors were pre-identified as candidates for participation in such a program.

The first sector, energy efficiency in industry, entailed projects utilising mitigation measures such as the implementation of new cogeneration systems with the export of excess electricity to the national grid (SIN, for its acronym in Spanish).

The second sector, renewable energy generation, included the generation of electricity by non-conventional sources for the SIN or non-interconnected zones (ZNI, for its acronym in Spanish). Non-conventional sources are defined under Colombian Law 1715 of 2014 and would include biomass, small-scale hydroelectricity, wind, geothermal, solar and “energy of the seas,” which covers sources such as tidal, wave, marine current, and so forth.

OUTCOME

BASE developed a financing strategy and a build a project pipeline (USD 250 million) to finance renewable energy and cogeneration projects in Colombia. BASE identified the technologies, size the market potential, understand the barriers, and develop an incentive (EUR 4 million) mechanism.