Inter-American Development Bank

Technical assistance for implementing Paris goals

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

 

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Paris alignmentReasoning
TransformationalThe Bank encourages the implementation and revision of Nationally Determined Contributions (NDCs) within the Paris Agreement amongst the countries in its region.
Climate-related technical assistance at policy-levelNDC ambition increase goal?Non-NDC technical assistance
Created NDC Invest to support member country NDCs.Proactively seeks out NDC ambition that is 2C compatible and driving change to 1.5°C compatible where possible.IDB Group have technical assistance available on deep decarbonisation and fossil fuel subsidy reform.

Explanation

To support and enhance its regional and country-level initiatives, the IDB has a variety of focused technical assistance.

Nationally determined contributions

In 2016 the IDB launched a “one stop shop”, NDC Invest to support countries in translating their NDCs into investment plans and bankable projects (see box below).

NDC Invest – IDB

NDC Invest is the IDB’s collective effort to assist countries to translate Paris pledges – known as Nationally Determined Contributions (NDCs) – into investment plans and bankable projects. It is a one-stop shop with a comprehensive package of assistance for programming, policy development and delivery of investments and encompasses four components: (1) NDC Programmer helps public and private sector stakeholders to construct investment plans, policies and enabling environments to unleash investments at scale; (2) NDC Pipeline Accelerator is carrying out priority studies and additional activities to ensure technical and financial feasibility for bankable and sustainable projects; (3) NDC Market Booster uses additional non-reimbursable and reimbursable grants for innovative business models, financial instruments and market development services, helping private sector clients overcome market and other non-financial barriers; and, (4) NDC Finance Mobilizer mobilizes funding from internal and external sources together with the private arm of the IDB. 

Expected outcome: The platform has supported 264 initiatives across 25 member countries, both on country and regional levels. NDC Invest has put emphasis on engaging with ministries of finance and the private sector.

Transformational aspect: Interestingly, there are two sides of this program. On the one hand, it facilitates access to international climate finance and know-how by simplifying the associated cumbersome procedures, providing “bespoke” package support at the early stages. On the other hand, it also ensures that the internal process within the IDB aligns to provide cross-sectoral solutions to respond to the NDC’s objectives and to the Paris Agreement. Finally, NDC Invest has an emphasis on supporting a programmatic approach for NDC implementation, moving from a project-by-project approach to a comprehensive approach of portfolio and program development to deliver low carbon and resilient development.  

Furthermore, the IDB also has the NDC Pipeline Accelerator Multi-Donor Trust Fund (ACL) which supports subnational and national entities throughout the entire project cycle of sustainable investments. To support ambition raising among members, the “ambition framework” was developed  in 2019 by IDB Invest to drive ambition in the second round of NDC commitments.  This framework emphasises:

  • “Resilient and carbon-neutral long-term planning”;
  • “Effective institutional framework[s]” with coordination mechanisms among key actors;
  • Active inclusion of a wide variety of stakeholders; and
  • Realistic finance strategy to drive successful implementation.

Other technical assistance

IDB has also undertaken a regional project on deep decarbonisation pathways in Argentina, Colombia, Costa Rica, Ecuador, Mexico and Peru (see box below). This is designed to help policy makers make better informed decisions to shape long-term sustainability – as well as bringing transparency and ownership to the process. This is in line with IDB’s climate action plan to promote policy consistency so as to translate NDCs into investment. IDB was the first MDB to actively work on supporting 2050 Long Term Strategy pathway planning. Together, this work can be considered transformational.

In 2018, the Bank was involved in an oil and gas industry development project in Guyana, stating that these options were “cleaner” than traditional use of fossil fuels.  It is unclear if the Bank has excluded fossil fuels from it’s technical assistance or updated guidance on what energy sources are considered “clean”  since then or if the Bank has participated in any more technical assistance projects for the development of fossil fuels, so clarification from the Bank is welcome.

Deep Decarbonisation Pathways for Latin America and the Caribbean

Deep Decarbonisation Pathways for Latin America and the Caribbean is a project dedicated to improving the capacity of the region to rely on independent, domestic evaluations to assess their NDCs, emission reduction plans, and climate policies (see ‘Integration into country work’ page) . The project aims to increase the pool of available models and modelers in the region, to (1) train academic teams and/or think tanks in the development and use of models; (2) enhance collaboration between local modelers and policymakers;  (3) inform local policy debates about decarbonisation pathways and NDC planning, generating emission reduction pathways for their respective countries; (4) develop a regional community of practice to discuss modelling approaches and assessments of climate policies, share experiences and continue to develop expertise. The IBD has also stated in an interview that in the long term the project will hopefully contribute to improve the transparency of international stocktaking on NDCs with a more active participation of experts from LAC. The project is working in collaboration with the 2050 Pathways Platform, a multi-stakeholder initiative launched at COP 22 to support countries seeking to develop long-term pathways in line with the Paris Agreement.

Project status: The project is already working with experts from universities and think tanks in six countries – Argentina, Colombia, Costa Rica, Ecuador, Mexico and Peru – in the development of local models in collaboration with international experts chosen by the local teams.

Transformational aspect: Countries in Latin America need to design their NDCs and the policy packages that will deliver them. Key to the efficacy of the NDCs is their consistency with deep decarbonisation by the end of the century. To track progress, it is essential to also monitor how emission reductions are delivered, and whether all sectors are making progress.  This project is strengthening the capacity of local experts to contribute to understanding of pathways to achieve targets that are consistent with the long-term decarbonisation goal of the Paris Agreement.


IDB Invest
, The IDB Group’s private sector arm, also has technical assistance and advisory services that support NDC implementation and broader decarbonisation pathways. 

The IDB also runs the UK Sustainable Infrastructure Programme (UKSIP), which accelerates infrastructure development in line with NDC implementation with an array of instruments.

Fossil fuel subsidy reform

In terms of fiscal incentives, the IDB has estimated that fossil fuel subsidies in Latin America amounted to $84 billion per year, or 1.6% of regional GDP, before the price of oil fell in late 2014. It also estimates that for every $10 spent on energy subsidies across LAC only $1 reaches the poorest 20% of households.

IDB has supported various member countries in plans to “streamline” energy subsidies, for example in the Dominican Republic which receives a $500 million loan to finance the country’s plan to do so – a move that will help reduce the fiscal deficit. 

Recommendation: We recommend that as fossil fuel subsidies are “streamlined”, they be reinvested into helping vulnerable communities invest in more climate-safe energy options.

Last Update: November 2020

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