Multilateral Development Banks and energy transition finance: Lessons from Latin America and the Caribbean

ANDREA MOLINARI; TOFTUM NICOLE; BORTZ PABLO GABRIEL; CRETINI, IGNACIO

Amherst

Conferencia; Sovereign Debt and Climate Finance Conference; 2024

Climate change has strengthened the need to advance an energy transition (ET) to reduce greenhouse gas emissions. However, there are discrepancies regarding the conceptual scope of the ET, which is reflected in varying estimates of the required investments to cope with climate change and its effects. This paper examines the role of Multilateral Development Banks (MDBs) in financing these investments in Latin America and the Caribbean, and specifically in Argentina, based on a novel database of MDB loans to the region. We confirm previous findings that MDB financing did not present stability or significant magnitude in terms of volume. The instruments used to finance the ET in Argentina prioritized guarantees and market development strengthening over the actual financing of real investments. The results in terms of mobilizing private investments were limited.