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Teaming Up to Tackle Climate: Germany Weighs In

By - Apr 7 2016

climate smallClimate change is upon us. Even in Latin America and the Caribbean (LAC), where countries have made a historically small contribution to climate change, vulnerability to its impacts are particularly high. Estimates from the Inter-American Development Bank (IDB), for instance, hold that climate change may cost the region between 2 and 4 percent of its GDP by 2050, even without taking into account income levels in a region where the most vulnerable populations bear higher costs. To confront and mitigate these impacts, the IDB has teamed up with such climate change trailblazers as Germany, partnering to share knowledge and valuable resources that can better equip the region to tackle it. Building on a renewed partnership agreement signed early last year and a long history of collaboration focused on mainstreaming climate change as a cross-cutting development priority, hear from André Ahlert, Director for Latin America and the Caribbean at Germany’s KfW Development Bank, about the importance of addressing climate change, and addressing it together.

IDB: The challenge of confronting the consequences of climate change is often framed in terms of two potential paths: adaptation and mitigation. How do you balance the question of adaptation versus mitigation in your own strategy?

KFW: Mitigating climate change is and remains the essential pillar of climate change policy at the global and national level. However, many Latin American countries – such as the Andean countries and Central America – are the most affected by climate change through more intensive storm events, heat waves, droughts and the melting of glaciers. The Caribbean islands are particularly affected by sea level increases. For these countries adapting to climate change is often a more urgent priority than mitigation. Given the low income levels of some of these countries, external financing is particular important for them in order to confront the above-mentioned challenges. For this reason KfW Development Bank, in line with national priorities, increasingly focuses on adaptation to climate change. The support of climate risk insurance for Central American countries and efforts to make urban areas in Honduras and El Salvador more resilient to the impact of intense rainfall events and tropical cyclones are two concrete examples of these efforts.

 

IDB: Considering the global scope of these issues, why invest in the mitigation of climate change in Latin America and the Caribbean specifically?

KFW: Given the existence of large forests in Latin America, there is a high potential to prevent greenhouse gas emissions through the protection of these forests. This has been successfully piloted in the Brazilian state of Acre with the support of the German government and KfW Development Bank. Mitigation of climate change through the protection of forests has a comparatively low cost per ton of avoided emissions and is thus particularly efficient. Furthermore, the very concept of sustainability was invented in the German forestry sector in the 19th century, giving testimony to the German experience in this field. German development cooperation helps to apply this experience in Latin America. The expansion of renewable energy such as small hydro, wind, solar and geothermal energy is another focus of our work in the region. Germany has considerable experience with the integration of wind and solar power into power grids and contributes this experience through the projects supported by German development cooperation in Latin America. The high potential of geothermal energy in many countries is a particularity of Latin America. It is being addressed through the Geothermal Development Facility (GDF), an instrument designed by KfW to mitigate the exploration risk for new geothermal fields. KfW thus tailors its cooperation with Latin America to the specificities of the region, while bringing its own particular experience to bear.

 

IDB: Tackling an issue with the magnitude of climate change surely cannot be taken on alone. How do you see partnerships, such as that between Germany and the IDB, fitting into greater energy and climate change efforts?

KFW: Partnerships are essential for success. The IDB and KfW have an outstanding track record of many years of close and trustful cooperation in the field of mitigation and adaptation of climate change. On behalf of our government we have been a key supporter of the IDB’s Sustainable Energy and Climate Change Initiative (SECCI). And we are co-financing a pipeline of projects of more than $1 billion.

 

IDB: Energy efficiency is a shared priority of KfW and the IDB. That’s why in one endeavor, we’ve teamed up with the Mexican government to make low-carbon housing a reality. What can each actor bring to the table in such a collaboration?

KFW: This endeavor is an excellent example of how the two institutions have combined their skills and resources to foster a visionary low-carbon project in Mexico. The ECOCASA program has benefitted from the IDB’s longstanding relationship with the implementing agency SHF, KfW’s experience with targeted financing programs for energy-efficient housing in Germany, and the extensive technical know-how that German companies and research centers have acquired in that field over the past three decades. The respective strengths of each partner and the combined financial resources of the IDB-managed Clean Technology Fund (CTF), KfW and the German government contributed to ECOCASA’s widely recognized success.

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