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Urban Development

Brazil to power up investments in street lighting and energy efficiency

MD Staff

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Can you imagine how much money and natural resources could be saved if the world adopted energy efficiency as a priority in sectors such as public lighting or industry?

Although this is an essential concept for the future of infrastructure, it’s still little known in countries such as Brazil. In 2016, for example, when the American Council for an Energy-Efficient Economy (ACEEE) examined policies and performance of the world’s 23 top energy-consuming countries, the Latin American giant ranked 22nd.

Insufficient investment in infrastructure helps explain this outcome, as well as Brazil’s lagging economic growth over the past seven years. Over the last two decades, investments were well below the estimated cost to replace or repair existing infrastructure (estimated at 3 percent of GDP). Energy saw investments decrease from above 2 percent of GDP in the 1970s to 0.7 percent of GDP in 2016, according to a recent report.

However, a new initiative – combining financing and technology innovation – can help fill this gap, and render Brazil’s energy sector more efficient and sustainable. Over the next 15 years, the World Bank’s Financial Instruments for Brazil Energy Efficient Cities (FinBRAZEEC) Project will focus on two urban sectors that have the potential to attract private sector investment at scale: efficient street lighting and industrial energy efficiency.

With FinBRAZEEC, Brazilian cities can create subprojects to completely replace the current sodium-vapor lamps for LED. Also, industries will be able to update pumping systems, engines, furnaces and other types of equipment. Given Brazil’s 86% urbanization rate, these initiatives have tremendous potential to reduce energy use, pollution and greenhouse gas emissions.

Risk mitigation

To enable them, FinBRAZEEC is piloting one of the most innovative financing structures the World Bank has developed to date. 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 project’s financial intermediary.

Under the project, CEF will lead the co-lending arrangement comprising the Green Climate Fund (GCF), CEF, and commercial lenders to eligible efficient public street lighting and industrial energy efficiency projects.

In order to mitigate the credit risk of energy efficiency projects, commercial lenders will benefit from a partial credit guarantee offered by CEF. The guarantee product will be backstopped by a $200 million contingent loan from the World Bank and grants from the GCF and the Clean Technology Fund (CTF) – $195 million and $20 million, respectively –, providing additional credit enhancement by supporting the facility, when needed, to meet its debt obligations to commercial lenders.

Altogether, this financing facility is expected to make more than $1 billion available for urban energy efficiency projects, leveraging the concessional financing being provided by the World Bank and other international organizations.

FinBRAZEEC is expected to serve as a demonstration model for leveraging private sector capital for clean energy investments in Brazil. Once the model is proven, it can be replicated in other countries, and in other sectors in Brazil. Moreover, it will provide an example of how Brazil’s now scarce public-sector resources, particularly those of the public banks, can be used to leverage private sector capital for infrastructure investments.

Currently, while there is private investment in infrastructure, the majority – around 70 percent – comes from public sources, including state banks, where resources are increasingly limited.

Mobilizing private sector investments not only are essential to help Brazil fill its infrastructure gap: without them, meeting the United Nations Sustainable Development Goals (SDGs) targets by 2030 will be much harder. The United Nations Conference on Trade and Development (UNCTAD) estimates that developing countries alone would require annual investments of between 3.3 trillion and 4.5 trillion dollars. About 2.5 billion dollars a year are missing to fill that need.

Climate change contributions

FinBRAZEEC is expected to help Brazil avoid the equivalent of 12.5 million tons of CO2 equivalent over the life of the project, as well as to help the country meet its goal of improving energy efficiency in the power sector by 10 percent by 2030, set as part of its Nationally Determined Contribution under the Paris Agreement on climate change.

The facility will be complemented by support for technical assistance and project preparation being provided by the GCF, the Global Infrastructure Facility, and the World Bank’s Energy Sector Management Assistance Program (ESMAP).

FinBRAZEEC draws on a series of lessons learned from previous World Bank experience in Brazil. ESMAP technical assistance helped identify viable business models for investment in urban street lighting, industries, transport and public buildings, providing useful tools and lessons for designing the FinBRAZEEC project.

The project also builds on the experience of another recent World Bank contingent loan for Uruguay’s national power company, which provided the government with a new financial mechanism to mitigate the impact of drought – and resulting decrease in hydroelectric energy generation – on the cost of electricity and on public sector accounts.

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Urban Development

Coronavirus: Reshape the urban world to aid ‘ground zero’ pandemic cities

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A health worker distributes hygiene supplies to a family in Dhaka, Bangladesh. UN Women/Fahad Kaizer

Cities have proved to be “ground zero” the world over for the COVID-19 pandemic, the UN chief said on Tuesday, encouraging leaders everywhere to “rethink and reshape the urban world” as we recover. 

“Now is the moment to adapt to the reality of this and future pandemics”, Secretary-General António Guterres said in his recorded message launching the latest UN policy brief, “COVID-19 in an urban world”.

“And now is our chance to recover better, by building more resilient, inclusive and sustainable cities”, he added.

Even the scales

Mr. Guterres highlighted deeply rooted inequalities in the poorest areas, citing strained health systems, inadequate water and other challenges that cities are facing in common, with 90 per cent of reported coronavirus cases concentrated in urban areas.

However, the report reveals that urban density does not inevitably correlate with higher virus transmission, saying that vulnerabilities are largely a result of the choices made on how people live, work and travel, in and around them.

Hubs of resilience

But cities are also home to extraordinary solidarity and resilience. 

Pointing to the numerous examples of strangers helping each other, streets filling with citizens showing their support for essential workers, and local businesses donating life-saving supplies, Mr. Guterres maintained that “we have seen the best of the human spirit on display”.

“As we respond to the pandemic and work towards recovery, we look to our cities as hubs of community, human innovation and ingenuity”, the top UN official said. 

Halt inequalities

The UN released the guidance to reflect upon and reset how we live, interact and rebuild our cities.

In responding to the pandemic, the first line of business is to tackle inequalities and safeguard social cohesion, said Mr. Guterres.

“We must prioritize those who are the most vulnerable in our cities, including guaranteeing safe shelter for all and emergency housing to those without homes.”

Noting that nearly one-quarter of the world’s urban population lives in slums, he flagged that public services in many cities require “urgent attention”, particularly in informal settlements.

Since access to water and sanitation are vital, Mr. Guterres mentioned how some local governments have stepped up, “from prohibiting evictions during the crisis, to putting in place new clean water stations in the most vulnerable areas”.

Bolster local government

To support and strengthen local governments, the world’s top diplomat underscored the importance of deeper cooperation between local and national authorities. 
 

“Stimulus packages and other relief should support tailored responses and boost local government capacity”, he said.

Steering the future

Another key policy recommendation is for cities to pursue a green, resilient and inclusive economic recovery. 

Against the backdrop of new bike lanes and pedestrian zones to improve mobility, safety and air quality in cities, Mr. Guterres said that “we must act with the same urgency”.

He observed that by embracing widescale telecommuting away from offices, it showed that “societies can transform seemingly overnight to confront urgent threats”.

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Urban Development

Mapping the juxtaposition of sustainable-affordable housing in the post Covid world

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The pandemic has definitely taken a vice grip of the entire world’s institutional paraphernalia which has severely affected not only the public health mechanisms but also economies across the globe. However, the present piece shall be hovering over an offshoot of this pandemic which has been incessantly ignored by the world at large. The problem in question shall pertain to the issues of affordability as well as sustainability when it comes to housing. Sustainability has been echoed in various international instruments starting from Stockholm Declaration of 1972 to Montreal Protocol in 1987 to Earth Summit in the year 1992[1]. But the Millennium Development Goals and Sustainable Development Goals have put the sustainability debate at the forefront in the international legal regime. But, the inter-relationship of sustainability with the housing mechanism has not been explicitly recognised under the international legal regime. There have been passing references pertaining to clean water and sanitation[2], putting efforts for affordable and clean energy and making of sustainable cities and communities that have been provided in the Sustainable Development goals laid down in the year, 2015. The goals are absolutely silent on the issue of affordable-sustainable housing. However, United Nations Organization has been pragmatic in adopting the Geneva UN Charter on Sustainable Housing[3] in the year 2015 which is the first as well as the fundamental international convention on the issue in question. This international convention explicitly talks about the goal of achieving the sustainable housing system and also lays down the challenges emanating out of the same.

Sustainability- A term difficult to decipher

However, the term “sustainable” housing is difficult to comprehend completely. There cannot be a straight jacket solution in deducing its definition and there are innumerable connotations attached to it. One of the environmental economists Herman Daly has laid down three essentialities for a sustainable housing framework. These include the rate of use of renewable resources, rate of use of non-renewable resources in the premises and lastly, the controlling of pollution emissions. Also, Dow Jones had developed a sustainability index which delves into the parameters of an ideal sustainable framework[4]. But the parameters mentioned hereunder do not reflect an exhaustive list of things to be included in the sustainable and affordable housing framework.

Dichotomy of affordable-sustainable cities: International outlook

In the international domain, the researcher has critically analyzed three genres of models and decoded the sanctity of the same. The first model which was comprehensively evaluated was the USA model which was marked by Clear Act, 1963 but did not live up to the expectations pertaining to the issue in question. But later, U.S. Department of Housing and Urban Development (HUD) has laid down the criterion for affordable housing by attributing 30% of the gross household income but the sustainability factor was completely ignored. The UK Model brought the Geneva UN Charter on Sustainable Housing in the year 2015 deliberated upon the nuances of sustainability pertaining to housing mechanisms but did not take into consideration the affordability element. Lastly, the Australian Model discussed under the realms of Demographic International Housing Affordability Report of 2015 pointed out the soaring prices of housing facilities so deduced rules of affordable system of housing in the city of Melbourne. But, again one of the things the researcher inferred that there has been a necessary disjunct between affordability and sustainability in various legal institutional paraphernalia.  

The Indian approach: A questionable concern

In India, too, the legal mechanism adopted by the government under the realms of Pradhan Mantri Awas Yojana is called as “housing for all”. Under the mandate of the said scheme, the government intended to make houses for everyone at affordable prices. But, this scheme is absolutely silent on the issue of environmental sustainability. The ambiguity emanating out of this scheme needs to be addressed by the government as soon as possible. Even though there have been some governments like that of Trivendrum have been Good Samaritan in this direction by providing sustainable housing facilities at affordable prices as well. Even various private entrepreneurs have now become cautious in respect of their carbon-emissions and have started taking adequate action to substantially reduce them. This is in absolute sync with the Paris Climate Agreement of 2018. Sustainability is not only restricted to controlling and prevention of disparaging of the ecological structure of the world but also, helps in boosting the profits of the company in the long run. Sustainability has become one of the most debatable issues in the modern scenario. Any ideal housing mechanism has to be sustainable and affordable at the same time. Thus, the entire thrust of this research was on developing a sustainable as well as an affordable housing framework for the people in India as well.

But in the post Covid world, the international community needs to re-examine the structures of housing facilities wherein affordability should come in synchronization with the sustainability element as well. Recently, World Health Organization (WHO) deliberated upon the issue of housing so as to de-clutter those ill-made houses so that the spread of highly contagious virus can be contained. Though it has been rightly said by Robert Merton that “It is good to ask questions but it is always better to find solutions to those questions”, but such complex set of questions cannot be answered in one go. They need proper analysis of the problem and then only certain concrete measures could be thought of. The idea behind writing this piece was to ignite the spirit of empathy among the readers about the pitiable condition of the housing.  It would be highly falsified on our part if we bombard the readers with a special set of suggestions because the cost-benefit analysis of each of those suggestions would be varied and comprehensive. Thus, I have left the door ajar so that the readers are able to familiarize with the given set of problems which are staring us in this context and then accordingly ponder about the need of sensitization of the sustainable-affordable housing issue at the domestic as well as the global level. The governments have always exhibited callous behaviour towards environment, human rights and public health issues. Thus, a stern eye needs to be kept on these reckless corporate and governmental entities which have only been disparaging the housing issue since time immemorial.  


[1] JM Lavy CONTEMPORARY URBAN PLANNING, Pearson Education Publications 34-39 (4th edition 2009)

[2] Principle 6, Sustainable Development Goals by United Nations; https://www.undp.org/content/undp/en/home/sustainable-development-goals.html

[3]The Geneva United Nations Charter on Sustainable Housing; https://www.unece.org/fileadmin/DAM/hlm/documents/Publications/UNECE_Charter_EN.pdf

[4]Sustainability Assessment, ROBECOSAM,available athttp://www.sustainability-indices.com/ sustainability-assessment/index.jsp (last visited on 26th June, 2020).

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Urban Development

Building back better in Albania: UNECE supports housing sector reforms and urban ‎resilience ‎

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Albania has made considerable progress in the recent years in the provision of affordable adequate housing to all. Notably, the national government has been providing support to municipal programmes for housing construction; supporting investments into construction of affordable housing, including through public-private partners; and legalizing informal settlements to improve the living conditions of the population.

However, multiple challenges remain due to the lack of available public funds for housing construction and insufficient capacity of some of the municipalities to implement housing programmes. Moreover, natural disasters created new economic and financial challenges: the earthquake in Albania in November 2019 left 14,000 people or 2 per cent of the Albanian population homeless. Another earthquake struck Albania in January 2020, which brought  damage to both public and private properties  amounting to EUR 844 million. The cost of their reconstruction is estimated at EUR 1.07 billion:  about EUR 800 million is needed to rebuild homes while the remaining amount is for repair of damaged infrastructure, such as schools and health centres.

The COVID-19 pandemic further diminished the budget resources available for affordable housing. According to the Albanian Ministry of Finance and Economy, the first phase of the lockdown will cost the economy EUR 16 million in tax revenues. In this context, there is an urgent need to develop new approaches to financing housing construction in Albania.

To discuss opportunities for financing affordable housing, the Albanian Ministry of Economy and Finance and the United Nations Economic Commission for Europe (UNECE), in cooperation with Housing Europe, UN-Habitat, UNDP Tirana and the Union for Mediterranean, organized an online workshop on 18 June 2020 The workshop discussed housing finance challenges and opportunities and the future role of the National Housing Agency in Albania taking into account relevant international best practices. A wide group of housing finance and housing policy experts from Belgium, Croatia, Ireland, Portugal, Slovenia, Spain, Ukraine and other countries shared their experiences on the topics.

The outcomes of the workshop will contribute to the revision of Albania’s National Housing Strategy and its Action Plan. They will also help the formulation of the local housing plans for three municipalities, which will be selected on a competitive basis. Other municipalities will be supported through guidelines that will be developed based on results of tests on the pilot municipalities.

The workshop will benefit the UNECE-Housing Europe-UN-Habitat joint “#Housing2030 Initiative: Improving Housing Affordability in the UNECE region” through the best practices on affordable housing shared during the discussions.

The workshop also initiated the work on the second Country Profile on Urban Development, Housing and Land Management of Albania to be developed by UNECE in 2020-2021, in cooperation with the Government. The first Country Profile prepared for Albania in 2002 focused on the housing sector. The second Country Profile will assess the country’s progress in developing housing and urban development policies and will include a comprehensive set of policy recommendations to support the country’s efforts to overcome persisting challenges in areas such as informal settlements, low energy efficiency in buildings and lack of financial resources for housing construction and renovation.

Following the workshop, UNECE will also provide support to Albania in promoting urban resilience through its United Nations Development Account project “Urban economic and financial recovery and resilience building in the time of COVID-19”. The project will be implemented not only in Albania but in several other countries in the UNECE region as well in 2020-2021.

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