Background
In recent years, Latin America and the Caribbean (LAC) have made important inroads to the transition from high-carbon energy matrices, to matrices with a high proportion of energy generated from renewable sources.
According to the Latin American Energy Organization, the nationally determined contributions to the energy sector of countries in the region aim to reduce greenhouse gas emissions by 25-30% by 2030, thus avoiding discharging 511 million tons of carbon dioxide equivalents into the environment.
A significant investment is expected in the electric power transmission grids of many countries of the region that are experiencing an increase in their volumes of renewable energy. Accordingly, it is important to promote an appropriate framework and incentives that help to effectively and technically recognize the benefits of renewable energy transport
The IDB Group has vast experience in the development of clean energy projects involving generation, distribution and transmission of power. This development has led to creating innovative solutions adapted to the needs of each country, based on lessons learned, and to improving effectiveness of investments, reducing cost and time, and promoting more sustainable development in LAC.
Market opportunity
To fulfill the emission reduction commitments of the Paris Agreement, Latin America and the Caribbean must reduce greenhouse gas emissions in the energy sector by 25 to 30 percent until 2030. Achieving this requires investment in clean energy and infrastructure. Investment in the transmission network of the countries is necessary to successfully transport the increase in renewable energy generated, and the transmission and distribution of electricity is important to achieve decarbonization in the region.
Power outages in the region (16%) exceed the global average (8%), while more than 5% of inhabitants lack access to energy, evidencing the indisputable need to invest in transmission and distribution grids. According to the IDB, it has been calculated that these investments will account for approximately 5 to 8% of annual GDP, and generate business opportunities on the order of US$1 billion per year for the next 20 years.
Assessment and identification methodology under the GTL Standard
The methodology developed by IDB Invest to assess and identify projects under the GTL Standard takes into account the following criteria
- Percentage of renewable energy transported
- Percentage of loss reduction in the incoming power system
- Increased system resilience
- Compliance with IDB Invest’s Environmental and Social Sustainability Policy (PSAS, in Spanish)
- Implementation of environmental and social excellence actions that go beyond those required by the PSAS
The GTL Certificate
GTL certificates reflect compliance with GTL Standard metrics at the time of issuance of the Certificate by IDB Invest. The GTL Certificate does not certify or guarantee, and IDB Invest does not evaluate or opine on, any compliance with applicable laws or regulations, likelihood of project success, results to be obtained from the project, any tax or other regulatory treatment to be afforded to the project, or compliance with or certification under the standards of any other organization or body. The GTL Certificate is granted to the identified project(s) and not to the Applicant.