March 27, 2019
On March 27, the Japan International Cooperation Agency (JICA) signed a limited partnership agreement to provide funding for the MGM Sustainable Energy Fund L.P. II (MSEF II), a fund for a variety of energy efficiency and renewable energy projects in developing regions of Latin America and the Caribbean. MSEF II is a follow-on to the MSEF I fund in which JICA invested in November 2014. The fund will assist economic growth in the developing regions of Latin America and the Caribbean while addressing issues related to climate change, including the reduction of greenhouse gases.
JICA will invest 30 million US dollars in this fund. In addition to JICA, institutions that have decided to invest in the fund include the European Investment Bank (EIB), the Global Energy Efficiency and Renewable Energy Fund (GEEREF), the Nederlandse Financierings–Maatschappij voor Ontwikkelingslanden N.V. (FMO) and IDB Lab (an innovation laboratory of the Inter-American Development Bank). Future investment by other international financial institutions and private companies is anticipated.
The demand for electricity in Latin America and the Caribbean is expected to grow at an annual rate of 2.4 percent up into the year 2040 . Currently, the region relies on fossil fuels for 74.3 percent of its energy production, and securing stable energy supplies and diversification of supply through development of environmentally friendly renewable energy sources are both present challenges. Promotion of energy conservation is also a pressing issue. On the other hand, progress is restricted by lack of understanding of the functions and benefits of energy-efficient products, lack of knowledge needed for product commercialization and lack of funds, all of which limit the diffusion and promotion of energy efficiency and renewable energy projects.
MSEF I has been highly recognized by both its customers and other stakeholders for its advanced business model, which utilizes highly durable and energy-efficient Japanese-made technology (such as solar panels and air conditioning facilities) for energy conservation and renewable energy in Latin America and the Caribbean. It is expected that MSEF II will lead to greater regional utilization of Japanese products and technology with consequent progress in combating climate change.
Investments by JICA to date in energy efficiency and renewable energy in Latin America and the Caribbean are not limited to MSEF I, but include a target of 3 billion US dollars in Japanese ODA loans for promotion and diffusion of energy conservation and renewable energy based on the “Co-financing for Renewable Energy and Energy Efficiency (CORE)” scheme that was developed in consultation with the IDB.
JICA will continue employing a variety of schemes to support climate change measures in developing regions of Latin America and the Caribbean.