Facility for Performance Based Climate Finance in Latin America

Facility for Performance Based Climate Finance in Latin America

Project ID: LAIF-20

There is considerable potential to reduce greenhouse gas emissions (GHGs) in Latin America, especially in the areas of renewable energy, energy efficiency and waste management systems. Structuring effective mechanisms to promote GHG mitigation projects and to leverage public and private sector funding is crucial for the sustainable and climate-friendly development of Latin American countries.

The Facility for Performance Base climate Finance aims to enable the early implementation of pilot measures that are part of sectorial GHG mitigation schemes and that may serve as examples for entire sectors. These pilot measures will directly lead to emission reductions and will continue to cut emissions after the end of the programme.

The Facility aims to overcome barriers to investment in activities that mitigate CO2-eq, such as high upfront cost for measures with high mitigation potential and elevated risk levels, by providing adequate financial incentives that are predominantly performance-based and are linked to achieve emission reductions. The goal of the Facility is to reduce GHG of around one million tonnes of CO2-eq by end of 2021.

The PBC Facility consists of three components:

  • Financing of Performance Based Incentive Schemes
  • Technical Assistance to support design and implementation of the mitigation activities, especially with capacity building measures, implementation of a robust monitoring/ reporting/verification systems and monitoring, reporting, verification processes
  • Financing Investments for Pilot Schemes.

The LAIF contribution finances the first two components while the investments for pilot schemes will be financed by KfW and CAF.