Brazil seeks little external funding for green economy

One of the problems for the country to carry out projects of infrastructure that respect the environment is not in the environmental legislation nor in the economic crisis that scarce the public investments. In some cases, international institutions have money available but are unable to lend to the country.

The evaluation is the Director of Studies, Economic Relations and International Policies of the Institute of Applied Economic Research (Ipea), Ivan Oliveira. During the 1st Regional Ministerial Conference of the Americas on Green Economy in Fortaleza, he called for more engagement from Brazil and from multilateral institutions (international banks with capital from several countries) to unlock financing for sustainable projects in the country.

For Oliveira, the most emblematic case occurs with the New Development Bank (NDB). Created in 2014 by the BRIC countries, a group that includes Brazil, Russia, India, China and South Africa, the China-based institution lent little resources to the country until today.

"Brazil today has fewer resources than it has for the NDB, which is a bank that has something to say about the green economy. Because it was created with a profile already of financing of infrastructures and sustainable projects. The sustainability agenda is in the bank's DNA, "he said.

According to the director of Ipea, the difficulty in proving the feasibility of projects may be a factor that has prevented Brazil's access to international financing. He cited the bullet train project between Rio de Janeiro, São Paulo and Campinas (SP), which would reduce the consumption of fossil fuels, but never left the paper because the cost-benefit analysis did not compensate. For him, the main challenge lies on both sides: in increasing the viability of projects and in the engagement of multilateral institutions.

"Multilateral banks need to have a more substantive funding role in this type of project. More than that, Brazil and several countries need to have a more proactive action in the viability of projects that are not financed by the lack of resources so that the debate on sustainable development gains depth and concreteness, "he said.

Oliveira also defended greater openness of the Brazilian economy, including in the financial sector, so that more banks operate in the country. Increased competition among institutions, he pointed out, would help reduce final interest rates and make projects that today can not be financed by private capital more viable. "More competition will put more pressure on [the banks'] profits, which will make viable projects, given the opportunity costs, become viable," he explained.

Carbon credit

Managing Director of the Mexican Carbon Platform, a voluntary carbon credits market on the Mexican Stock Exchange, Eduardo Piquero called for greater awareness among major investors in financing sustainable projects. Through the carbon market, companies and individuals offset carbon dioxide emissions through the purchase of bonds that finance eco-friendly projects that reduce poverty.

Pension funds, insurers and investment funds, Piquero said, have $ 15 trillion invested worldwide. One-third of this, $ 5 trillion, is invested in fossil fuel-intensive sectors that will not yield returns in a few years' time, such as oil refineries and coal plants. "You have to understand that climate change is a great risk, it's a great incentive. We have to direct capacity-building to the big investors so that they identify that what they invest today will not yield in a very short time, "he warned.


The president of the Committee for Economic Development, Productivity and Small Business of Ecuador's Parliament, Claudio Esteban Albornoz, said that regulation is important to encourage financing of ecologically sustainable projects.He cited as an example Ecuador's Energy Efficiency Law, which aims to reduce the number of fossil fuel vehicles in the country, while providing incentives to funds that finance sustainable energy projects and technologies.

"There is economic motivation, driven by consumer preference for green branded projects. There is an opportunity for investment. Therefore, I believe there should be a legal motivation for restrictions on the supply of goods and services [such as limiting fossil fuel cars]. This is a matter for regulation, "he said.

The 1st Regional Ministerial Conference of the Americas on Green Economy began yesterday (24) and will go until tomorrow (26) in the capital of Ceará. The meeting is being organized by the World Green Economy Organization (WGEO), the United Nations Office for South-South Cooperation (UNOSSC) and the Brazil Africa Institute (Ibraf). 
The event is supported by the government of Ceará and is done in partnership with the United Nations Secretariat for Climate Change (UNFCCC), the United Nations Development Program (UNDP) and the International Solar Alliance (ISA).

Posted by: Marina Carvejani
Author: Agência Brasil
Source: Agrolink