THIS WEEK
- Clean energy investment in Latin America drops in 2016
- Colombia to hold renewable energy auctions
- Vaquita marina capture suspended
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Feature: Clean energy investment in Latin America fell in 2016, but still highest share of FDI
Latin America’s abundant renewable energy resources, stable market conditions and favorable regulatory frameworks offer significant opportunities for international clean energy investors. Since 2010, Latin America has attracted over US$ 3 billion annually and more foreign project capital was deployed to Latin America than to any other individual region. Brazil, Chile and Mexico were among the developing countries that attracted the most foreign investment in clean energy, with particularly high levels of equity investment. However, Bloomberg New Energy Finance’s latest Climatescope research on clean energy in emerging markets found that 2016 investment levels in Latin America dropped to US$ 9.2 billion from US$ 14.3 billion in 2015, reflecting a worldwide trend. Yet despite this decrease, the renewable energy sector drew the largest share of total foreign direct investment (FDI) in 2016. With 18 percent of FDI, clean energy was the region’s most dynamic sector for the second year in a row. (Climatescope 2016 website 11/06/2017; CEPAL website 08/10/2017)
New asset (project) financing for clean energy in developing nations, 2010-2016 (Source: ClimateScope 2016)
Climate Change
The Committee on Andean, Amazonian, Afro-Peruvian Peoples, Environment, and Ecology of the Peruvian Congress approved a preliminary opinion on a proposed Climate Change Law. The law would establish the legal and institutional framework to implement actions against climate change and reduce Peru’s vulnerability to this phenomenon. This confirmation allows the proposal to be discussed and approved by the full Congress in the coming weeks. If approved, the Ministry of the Environment (Minam by its acronym in Spanish) will play a key role in its implementation. (La Prensa 11/08/2017)
#ICYMI: The 2017 Latinobarómetro annual public opinion survey found that 71 percent of Latin Americans believe fighting climate change should be a priority regardless of potential impacts on economic growth. Concern about climate change is even higher in some countries: Colombia (85 percent), Ecuador (80 percent) and Chile (78 percent). In presenting the results, the executive director of Latinobarómetro noted that the high level of importance given to climate change is linked to Latin America’s vulnerability to natural disasters that are increasingly frequent and violent. She also highlighted that the results from a region with, on average, relatively low GDP demonstrate that concern with the environment is not dependent on higher incomes. (El Tiempo 10/27/2017)
Clean Energy
The Minister of Mines and Energy in Colombia, Germán Arce, announced that the country would hold an energy auction for non-conventional renewable energy to encourage long-term contracts for large and small wind, solar and biomass projects. Arce commented that these projects are “key in the diversification of the energy grid, expanding the country’s energy coverage…and meeting the goals of COP21 to reduce emissions.” In 2014, Colombia passed a law (Law 1715) regulating the integration of non-conventional renewable energy into the national system to help the country better face climate change. That law lays the framework for the future auction, which the administration expects to conduct before the end of President Santos’s term. (La República 11/7/2017; Presidencia de la República 5/13/2014)
Ministers of the 29 member countries of the International Energy Agency (IEA) unanimously invited Mexico to become the agency’s 30th member and the first Latin American member country during the 2017 Ministerial Meeting in Paris. The invitation reflects the rapid work Mexico has taken to reform its energy sector, attract private investment and promote a “clean energy transition.” The IEA also announced the launch of its Clean Energy Transitions Program, which will leverage the agency’s experience and lessons learned to help accelerate the global transition to clean energy, especially in emerging economies. The multi-year program’s budget of 30 million Euros comes from 13 different countries. Key focus countries will include Brazil, China, India, Indonesia, Mexicoand South Africa, as well as others where the program “can have an impact.” (IEA 11/7/2017; Al Momento 11/7/2017)
Green Finance
The Ministry of Energy in El Salvador will present to Congress a proposal for an energy efficiency trust for US$ 70 million. The funding for the trust will come from the Inter-American Development Bank, the Japanese International Cooperation Agency, and private donations. The funds will be used to finance energy efficiency projects, such as energy-efficient lighting and air conditioning, in public buildings. The savings in electricity bills will be used to fund other projects in the country. If all existing equipment is replaced, it is estimated the project will result in a reduction of 60,000 metric tons of CO2 in the following five years. (El Mundo 11/06/2017)
The government of Mexico City, Mexico issued this past September its second green bond for MXN$ 2 billion (US$ 105 million) in the Mexican Stock Exchange. While 50 percent of the funding will be used to refinance current debt, nearly 23 percent of the funding will be used to build a new line of the metrobus system. This investment aims to improve public transport and reduce carbon emissions. A further 8.5 percent will be used to improve existing water infrastructure, and 18.6 percent will be used to build cultural and educational infrastructure. The debt acquired by this bond will be paid in 10.5 years, ending in March of 2028. Mexico City was the first Latin American city to issue a green bond. Its first bond was for MXN$ 1 billion (US$ 52 million). (Milenio 11/07/2017)
Conservation
Affirming that “water is life,” Argentine and Uruguayan members of MERCOSUR’s parliament presented a proposal to declare the Guaraní Aquifer "natural patrimony.” This policy would potentially make oil prospecting illegal in a vast 1,190,000 km² area that represents 26 percent of the planet’s usable fresh water, stretching across Argentina, Brazil, Paraguay and Uruguay. Acknowledging the need to develop scientific research on environmental threats, the parliamentarians proposed to design and manage a comprehensive policy aimed at recognizing and ensuring the protection, conservation and revaluation of the Guarani Aquifer System. Ultimately, the purpose of the recommendation is to draw attention to this unique and indispensable natural treasure and make it incumbent upon the common region, and not just the individual countries, to take action. (Agencia Parlasur 11/07/2017)
The Vaquita CPR (Conservation, Protection and Recovery) international rescue team suspended its program indefinitely after a specimen of the world’s most endangered marine mammal died after being captured. The mature female vaquita, which was not pregnant or lactating, had been taken to a floating pen. When its health began to deteriorate, veterinarians attempted unsuccessfully to release it, despite all efforts to keep it alive. According to Mexico’s Secretariat of Environment and Natural Resources, the team expressed concern about this “devastating loss,” claiming that “no conservation project like this has been done before, and the operation involved a significant risk.” The Animal Welfare Institute cautioned that the small cetaceans are especially prone to stress in captivity. Despite the tragic loss, scientists maintained that the risk of extinction due to by-catch mortality from fishing nets was much greater than the risk of their rescue efforts. Even though the capture operation is suspended, the team will continue to focus on acoustic detection, photography and counting of the remaining vaquitas. (SEMANART 11/10/2017; Diario de Yucatán 11/05/2017; AP/Sin Embargo 11/06/2017)