A new financial instrument will allow Brazil to increase its investment in urban infrastructure and make the country more energy efficient. The Financial Instruments for Brazil Energy Efficient Cities – FinBRAZEEC will catalyze resources from the private sector and climate funds to create new markets in the areas of efficient street lighting and industrial energy efficiency.
“With this project, CAIXA has the opportunity to develop innovative financing mechanisms that will attract new investors,” said Antonio Gil Padilha Bernardes Silveira, executive director of sanitation and infrastructure at Caixa. “We will work to support the development, implementation and financing of projects for public lighting in Brazilian municipalities and industrial energy efficiency.”
Brazil’s public sector funding declined in 2015 and 2016, exacerbating the gap in infrastructure financing and highlighting the urgency of bringing private funds into the financing equation. The country’s high urbanization rates (86% in 2018) make investments in urban energy efficiency crucial to address the 2030 SDG’s Energy Efficiency and National Determined Commitments (NDC) goals.
FinBRAZEEC will help Brazil increase investments in urban energy efficiency and meet the goal of improving energy efficiency in the electricity sector by 10% by 2030, set as part of its Nationally Determined Contribution under the Paris Agreement on climate change.
“The FinBRAZEEC project offers one of the first genuine project financing structures in the Brazilian market”, said Martin Raiser, the World Bank Director for Brazil. “Its innovative financing model will help us unlock investment potential in the street lighting and industrial energy efficiency sectors, which had previously been identified as particularly promising for market based solutions. But we hope the example will encourage similar approaches also in other areas”.
Under the project, which includes a US$ 200 million project IBRD loan combined with Green Climate Fund (GCF) and Clean Technology Fund (CTF) resources, the World Bank will partner with Caixa Econômica Federal (CEF), the second largest state-owned financial institution in Latin America and the fourth largest bank in Brazil, as the financial intermediary and borrower of IBRD and climate funds. CEF will lead the syndication of commercial lenders and will establish a Guarantee Facility that will provide partial credit guarantees to the commercial lenders participating in the syndication.
“The creative approach of FinBrazeec’s new financial instruments galvanizes the experience of the World Bank in strengthening a truly domestic, modern and de-risked infrastructure asset-class market for investors,” according to Antonio Barbalho, Practice Manager for Energy, Latin America and the Caribbean. “The World Bank developed a cutting-edge financial and risk mitigation product, opening new windows of opportunity for supporting infrastructure investments,” adds Barbalho. The instrument encompasses best practices in infrastructure project preparation and provides flexible features to mobilize private finance while managing and mitigating risks.
FinBRAZEEC is expected to mobilize more than US$ 1.1 billion for urban energy efficiency investments in Brazil. In addition to the US$200 million IBRD loan, it will count on US$180 million of counterpart funds, as well as US$195 million in climate funds from the GCF and US$25 million in climate funds from CTF. The Project’s goal is to leverage US$ 730 million in commercial debt and equity, making it an excellent example of the World Bank’s strategy of Maximizing Financing for Development.
The Project will also benefit from a strong technical assistance program, supported by a US$ 4 million GCF grant, as well as nearly US$1 million in Bank-executed funds from the Energy Sector Management Assistance Program (ESMAP) and the Global Infrastructure Facility (GIF). These funds will be used to increase CEF’s capacity to implement the innovative financial products and support sub-project pipeline development.
Towards smart sustainable cities: UNECE examines good practices to promote innovation
The world is urbanizing fast. Already today, half the population is living in cities. By 2050, that proportion is projected to rise to over two thirds. Cities are economic powerhouses, accounting for 80 percent of world GDP. They also have large ecological footprints, accounting for 60-80 percent of energy consumption and 75 percent of carbon emissions globally. If the world is to achieve the promise of the 2030 Agenda for Sustainable Development, of prosperity, within planetary boundaries, for all, cities will have to lead the way.
Many cities in the UNECE region have taken up this challenge. And innovation is key to meeting it. Leading cities are using innovative technologies and innovative ways of management and governance to deliver better environmental and economic performance and a better quality of life in an inclusive way.
Leading cities are hotbeds of this kind of innovation. They are dense eco-systems strong universities, innovative start-ups, small, medium and big companies, well-financed investors, deep and diverse talent pools, state of the art communication, transport and energy infrastructures, large local markets, good governance structures, and strong economic ties to the rest of the world. Innovation flourishes in these eco-systems.
But not all cities are there yet. Some are still more part of the problem than part of the solution. And often, innovative solutions pioneered in one city cannot be successfully replicated in others. At its annual session on 5-6 December 2019, the UNECE Team of Specialists on Innovation and Competitiveness Policies discussed what city administrations, citizens, businesses and national Governments can do to speed up the transition towards smart sustainable cities.
Networks exist at the national, regional and global levels where cities are exchanging experiences on innovative solutions for urban sustainability challenges. New technologies such as artificial intelligence and machine learning are key to generate the data and analysis that can make cities smart. But for leading cities, technology is not an end in itself. They use it to empower citizens – including marginalized and vulnerable groups – as well as businesses to identify local needs and to create innovative place-based solutions together with city administrations for people and the environment.
Leading cities provide spaces for experimentation such as living labs or test beds to scale up what is working and stop what is not. They invest in infrastructure and education to make sure everyone has access to new technologies and the opportunities they create. National Governments can support cities in their transition towards sustainability through smart regulation, including on data security and privacy, and through public procurement for innovation, as well as regional policies that bridge the gap between leading cities, their hinterland and smaller communities.
The results of the meeting will inform good practice recommendations to be presented to the UNECE Committee on Innovation, Competitiveness and Public-Private Partnerships in 2020. Subsequently, UNECE will use these good practices in its policy analysis and advice to help member States to further improve their policies in this important field.
The UNECE Team of Specialists on Innovation and Competitiveness Policies is a network of innovation policy experts representing Governments, government agencies, the business and academic communities and civil society from throughout the UNECE region.
Banking on nature: a Mexican city adapts to climate change
The Mexican city of Xalapa is surrounded by ecosystems that not only harbor stunning flora and fauna, but also provide crucial services to the city and its 580,000 people.
The cloud forest, an indigenous mountain rainforest neighbouring the city, provides 30 per cent of Xalapa’s water supply, while the diverse soil and vegetation around it is a vital store of carbon. But both these natural assets and the city itself are feeling the effects by climate change. Fluctuating temperatures and rainfall patterns are destabilizing the mountain slopes around the city, leading to frequent landslides, while intense rains in the mountains cascade into urban areas below, causing turmoil for the city’s residents.
“Human resilience to climate change depends on ecosystems, and we need urgent measures to protect them,” says Isabel Garcia, author of a study examining the climate vulnerability of Xalapa.
In particular, Garcia’s study identified urban expansion–and its effect on the surrounding environment—as an exacerbating factor in the climate-related risks facing the city.
“We have a city that has approximately 20,000 uninhabited homes, because they were built in inaccessible areas, without potable water and drainage services,” Xalapa’s Deputy Director of Planning, Angélica Moya, says.
“We have irregular settlements in areas that should have never been urbanized, and now we have landslides and floods.”
Focusing on natural solutions
Recognizing both the climate change impacts facing the city and the importance of Xalapa’s surrounding ecosystems for helping its people adapt to these changes, local authorities are now turning to natural solutions. Partnering with the UN Environment Programme (UNEP), they are working to restore and protect large areas of cloud forest around the city under the Global Environment Facility-backed CityAdapt project.
A five-year initiative, CityAdapt is working across Latin America and the Caribbean to support cities in their efforts to adapt to climate change, an issue that is increasingly a priority for municipalities around the region, according to UNEP’s Director for Latin America and the Caribbean, Leo Heileman.
“In Latin America and the Caribbean, where 80 per cent of the population lives in cities, we urgently need to shift from vicious cycles of degradation to the virtuous dynamic of resilient ecosystems,” Heileman says.
The CityAdapt project marks Xalapa as the first Latin American city to seize the potential of ecosystem-based adaptation–an approach that uses nature to adapt to climate change. By leveraging the natural environment–like the role of trees in regulating water flow and preventing landslides and erosion—ecosystem-based adaptation can help reduce both flood and drought, and is often much more cost-effective than engineered structures built to serve the same role.
“The main goal of this project is to enhance the capacity of local governments to face the adverse effects of climate change,” Sergio Angón, CityAdapt National Coordinator in Mexico, says.
Within the framework of the project, two reports have already been produced for Xalapa on climate change vulnerability and potential climate scenarios for 2039.
The vulnerability analysis identified areas most at risk from climate change. It also measured the adaptive capacity of the ecosystems that currently provide Xalapa with surface water supply, soil retention and carbon storage.
According to the analysis, Xalapa’s cloud forest—an ecosystem already reduced to just 1 per cent of its former range around Mexico—could see temperatures rise by as much as 1.8°C by 2039, impacting biodiversity, as well as potentially increasing the spread and intensity of diseases in the nearby coffee plantations.
Balancing people and nature
But by restoring the forest and working to limit the growing city’s negative impacts on the surrounding environment, CityAdapt is helping Xalapa strike a vital balance between people and nature.
“We need to move Xalapa in an orderly way towards a new model of territorial development, in which resilience is the key focus,” Xalapa mayor, Hipólito Rodríguez, says.
Alongside research and forest restoration, CityAdapt is backing other adaptation initiatives, such as enhanced watershed planning, and strengthening local livelihoods.
Rainwater harvesting systems are being introduced in public buildings and schools, ensuring adequate water supplies in the face of increasingly unpredictable rains, while the project is also teaching climate-resilient agricultural practices to local communities.
“This is an opportunity to rethink the way we build a city,” says Angelica Moya.
As urbanization grows, cities unveil sustainable development solutions on World Day
Over half of the world’s population now live in cities, with numbers expected to double by 2050, but while urbanization poses serious challenges, cities can also be powerhouses for sustainable development; something the UN is spotlighting on World Cities Day, marked 31 October.
The UN Educational, Scientific and Cultural Organisation (UNESCO) will host a celebration at its Paris Headquarters on Thursday, convening representatives from all corners of the world for discussions on how cities can combat the climate crisis, create more inclusive urban spaces, and contribute to technical innovation.
Cities provide a wealth of opportunities, jobs included, and generate over 80 per cent of gross national product across the globe, according to UN estimates. Urban areas also account for between 60 and 80 per cent of all energy consumption, despite only occupying three per cent of the planet’s surface and are responsible for three quarters of all greenhouse gas emissions.
In addressing these pros and cons, the Organisation has advocated for a “people-centred” development model, and aims to “re-humanise cities” in the face of trends impacting them, from population growth, demographic shifts, and increasing the risk of disasters induced by climate change.
This year’s theme: “Changing the world: innovations and better life for future generations” spotlights the role of technology and young people in building sustainable cities. To do so, Thursday’s commemorative event will be organized along four key discussion themes: ‘Cities 4 Sustainable Development Goals (SDGs)’, ‘Cities 4 Climate Action’, ‘Cities 4 Communities’, and ‘Cities 4 the Future’.
In line with its multidisciplinary mandate, UNESCO’s 2004 Creative Cities Network continues to harness the various ways cities spanning the globe are placing creativity and cultural industries at the heart of their development plans.
From gastronomy in Tucson, Arizona, to design in Nagoya, Japan, the network engages more than 246 cities, which integrate creative approaches in their development plans, 66 of which UNESCO announced as newcomers on the World Day. See the complete list of cities, and their creative undertakings here.
For World Cities Day this year, UNESCO is partnering with the UN”s Food and Agriculture Organisation (FAO), UN-Habitat, and refugee agency (UNHCR) to amplify the concerted action of the United Nations for cities alongside their planners and other urban players.
The UN-proclaimed World Day serves as a call for States, municipalities and city dwellers to work together for transformative change and sustainable strategies for cities, as urbanization continues to swell.
UN chief calls cities a battleground for climate crisis
Secretary-General António Guterres explained in a statement attributable to his spokesperson, that “the choices that will be made on urban infrastructure in the coming decades…will have decisive influence on the emissions curve. Indeed, cities are where the climate battle will largely be won or lost.”
From electric public transport to renewable and energy and better waste management systems, cities are “hubs of innovation and creativity, and young people are taking the lead.”
In addition, he highlighted that World Cities Day comes as “urban October” concludes, a month dedicated to raising awareness of urban challenges, and successes in sustainability.
“Let us commit to embracing innovation to ensure a better life for future generations and chart a path towards sustainable, inclusive urban development that benefits all”, he encouraged.
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