- European Investment Bank signs a LAIF grant agreement with the European Commission to complement a USD 100m loan for climate action projects in Peru
- The support for climate action projects via Peru’s development bank, COFIDE (Corporación Financiera de Desarrollo S.A), contributes to the achievement of a number of Sustainable Development Goals
- The announcement took place during COP 26 in Glasgow
The European Investment Bank and the European Commission today signed a grant agreement to strengthen support for climate action investment projects, primarily in the renewable energy and energy efficiency sectors in Peru. The signature took place during the UN Climate Change Conference COP 26, the annual meeting of global leaders and climate action experts.
The EUR 3.7m (USD 4.6m) EU Latin America Investment Facility (LAIF) grant agreement comprises of technical assistance support and an investment grant. The technical assistance support aims to strengthen COFIDE’s environmental and social risk management systems whilst enabling private investment in the sustainable energy sector in Peru. The investment grant component will focus on developing investment projects such as the decarbonisation of energy supply in the Amazon region. This is expected to lead to additional climate action private sector investment in the area.
The LAIF contribution complements the EIB loan signed with COFIDE last year. It is estimated that the combined EU support will contribute to the generation of circa 585 GWh/year of clean energy that will cover the demand of around 476,000 households in the Republic of Peru.
EIB Vice-President, Ricardo Mourinho Félix responsible for Latin America said: “This EU-Latin America Investment Facility grant will help COFIDE to improve their environmental and social risk management systems, whilst creating an environment enabling private investment in the sustainable energy sector. The agreement is a good example of joint EU efforts under “Team Europe”. It highlights our priorities in Latin America: contributing to inclusive growth whilst promoting Climate Action and Environmental Sustainability, in line with the EU Green Deal.”
Jolita Butkeviciene, DG INTPA’s Director for Latin America and the Caribbean, European Commission, said: “The European Commission is committed to the implementation of the EU Green Deal, also in its external dimension. In this sense, LAIF and EIB are collaborating in a Team Europe spirit to support climate action investment in Peru, while also working towards improving social risk management within COFIDE. This project marks a milestone in our partnership with COFIDE and at the same time stimulates private sector participation.”
Carlos Linares, President of COFIDE, said: “COFIDE is committed to become the financial institution of reference in the promotion of sustainable energy projects in Peru. In that sense, on December 18, 2020, COFIDE and the EIB signed a loan agreement for USD 100 million, called COFIDE Climate Action. The LAIF Grant complement this Loan Agreement and will contribute to mobilise private resources into these particular projects. Internally, the grant will develop capabilities to asses social and environmental risks and will create a better understanding of ESG international standards. Externally, it will enable a new regulatory framework and a policy proposal to enable private sector investment.”
EU Ambassador to Peru, Gaspar Frontini, said: “Assisting Peru, its public and private economic actors, in its energy transition, in its transition towards a circular economy, is one of our big priorities for the coming years, and right at the center of our future bilateral cooperation programme. Peru has all the potential for increasing the use of renewable, sustainable energy. We stand ready to work with our Peruvian partners, together with EU, Member States and EU private sector.”
Team Europe, the EU guarantee and the SDGs
The EU bank is providing this finance in the framework of the 2014-2020 lending mandate for Latin America and the agreement is covered by the EU guarantee. By supporting this project, the EIB is contributing to the achievement of the United Nations’ Sustainable Development Goals, ensuring access to affordable, reliable, sustainable and modern energy while fighting climate change. The loan is an example of joint EU efforts under “Team Europe” and highlights our priorities in Latin America: contributing to sustainable and inclusive growth and promoting Climate Action.
The EIB in Latin America
As the EU bank, the EIB supports the EU’s relationship with Latin America by financing projects that contribute to the EU’s external policy objectives: the development of economic, environmental and social infrastructure; private sector development; and climate change mitigation and adaptation.
In Latin America, the EIB has become a major promoter of renewable energy and energy efficiency. Climate change mitigation and adaptation is the EIB’s main priority in the region, where projects supported by the EU bank focus on the environment, and especially on boosting renewable energy, energy efficiency and sustainable public transport schemes. Climate change adaptation-related projects involve upgrading existing infrastructure to be more resilient in the face of more volatile and unpredictable weather patterns.
In Peru, the EIB has to date financed investment projects for a total financing amount of USD 360 million.
About LAIF: The Latin America Investment Facility (LAIF) is one of the European Union’s regional blending facilities, aiming to mobilize funding for development projects by combining EU grants with financial resources from European and regional financial institutions, governments and the private sector.
