The need of sustainable infrastructure development is urgent and even more in a region where climate change impacts are a clear threat. Luckily, the Latin American and Caribbean countries have made strong climate change commitments that could drive sustainable infrastructure investments. And new opportunities are emerging to help the region lead the way. Let’s see how
In Paris, countries committed to keeping temperature rise well below 2 °C above pre-industrial levels. In practice this means reaching net zero emissions before the end of this century. Current projections for emissions are far away from the deep decarbonization required to meet these targets. In particular, it is estimated that about 70 percent of the increase in currently projected future emissions will be associated with infrastructure yet to be built.
Put simply, therefore, if the Paris goals are to be met we must build a different kind of infrastructure. Sustainable infrastructure that is low carbon and climate resilient.
In the Latin America and Caribbean (LAC) region this presents a big challenge, but an even bigger opportunity. The level and quality of infrastructure in the LAC region is inadequate and is one of the principal barriers to growth and development. To close this ‘infrastructure gap’, the region will need to raise its investment levels in this area to at least 5% of its GDP, which equates to additional infrastructure investment of about 2-2.5% of GDP annually, or around US$ 120–150 billion a year over an extended period. At the same time, this investment needs to be directed to low carbon climate resilient infrastructure to deliver on the ambitious pledges set out by countries in the region.
While countries gather at COP23 to take forward the historic agreements made in Paris, perhaps the more important work is now taking place in national and local governments in the region to determine how to deliver on the NDC infrastructure challenge.
The IDB Group is focused on supporting countries in these efforts. In 2016, the IDB launched the NDC Invest Platform to support countries in the range of activities that will be needed to deliver NDCs:
- planning and policy,
- pipeline acceleration,
- market development, and
- mobilizing financed.
The Platform is already supporting work in more than 10 countries. The IDBG is also working with different stakeholders and tool providers to develop the concept of sustainable infrastructure to help align public and private investments in infrastructure to low carbon climate resilient outcomes.
And the IDBG’s capacity to support ambitious action in the region is set to increase. At COP, the UK announced a new partnership with IDB – the UK Sustainable Infrastructure Program (SIP). SIP aims to partner with countries to accelerate sustainable infrastructure development in the region by catalyzing private sector investment for the implementation of the Nationally Determined Contributions (NDCs) of the Paris Agreement. The UK will provide an initial contribution of more than US$230 million, providing a range of instruments to comprehensively address barriers to private sector investment in sustainable low carbon infrastructure. This includes grants for technical cooperation to support planning, policy reform and market creation, as well as blended finance investments for private sector infrastructure projects such as loans, guarantees, equity and local currency financing.
Initially the program will support four countries: Brazil, Colombia, Mexico and Peru. These countries already have made ambitious plans to develop their infrastructure but moreover have the potential to demonstrate the innovative approaches, technological innovation and ways to mobilize the significant private sector investment which will be required to deliver the investment required and ensure implementation is “Paris compatible”. Through these new types of partnership such as the UK SIP, we can ensure that the Latin America and Caribbean region leads the way towards sustainable development.
PHOTO: COPYRIGHT © – Eneas De Troya – Flickr