Globalfields case study

Energy Efficiency in Brazil - Supporting Access to Climate Finance

As part of the ongoing global efforts to reach the targets of the Paris Agreement of containing global temperature rise within 2 degrees centigrade or preferably  to 1.5˚C, Brazil submitted its updated Nationally Determined Contribution (NDC) in December 2020. Despite the drop in greenhouse gas (GHG) emissions in 2020 (predominantly as a consequence of Covid-19 and the ensuing downturn in activity in the industrial sector), Brazil is still considered to be taking insufficient steps to avoid an emission rebound in 2021. There are still significant gaps in Brazilian policymaking for halting greenhouse gas emissions, in particular from deforestation and agriculture.To achieve the targets of its NDC, Brazil must reduce its overall energy consumption, stop deforestation and enhance natural carbon sinks, generate cleaner energy, and develop energy efficiency technologies.

In this context, energy efficiency can substantially contribute to Brazil’s mitigation targets of reducing GHG by 37% in 2025compared to 2005 levels and 43% in 2030, thus easing the pressure on clean energy generation, introducing significant co-benefits such as in more efficient water usage and reduced infrastructural costs, and supporting the implementation of the National Policy for EnergyEfficiency, which will enable energy savings of up to 106 TWh/year

Globalfields has recently supported the efforts of the German bilateral cooperation (GIZ) and the Brazilian development institutions Banco National de Desenvolvimento Economico e Social (BNDES) to develop the necessary financing mechanisms to attract international climate finance. This finance has the objective of scaling up investments in energy efficiency by mitigating some of the typical barriers that are encountered, such as lack of financing, limited financial knowledge, underdeveloped demand from the market, inconsistent energy management and application of standards, and technological risk, in particular for micro and small and medium-sized enterprises.

Unlocking the potential for energy efficiency in Brazil in the industrial, commercial and residential built environment will require a combination of interventions that deploy different financing instruments, such as capacity grants, credit lines and guarantees, so that each financial intervention can be structured to mitigate a specific barrier in the country. Such integrated approach is a blended structure that will strengthen both the enabling conditions and the investment volumes, in a way that will – with time – build the self-sustainability of the projects and contribute to the long-lasting transformational change of the energy systems in Brazil.

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This case study was written by Marta Simonetti, Founder and Managing Director of Globalfields. Visit Marta's bio or contact us today to discuss this project.

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