Finance mechanisms for low-carbon development

Project description

Title: Finance mechanisms for low-carbon development (FinanCC) – within the framework of the climate finance readiness programme
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Peru
Lead executing agency: Ministerio de Vivienda, Construcción y Saneamiento (MVCS)
Overall term: 2015 to 2017

Peru. © GIZ

Context
Over the course of COP 15, during the 2009 UN Climate Change Conference in Copenhagen, the international community agreed to mobilise 100 billion US dollars annually by 2020 from public and private sources for climate change mitigation and adaptation in developing countries. These resources are made available through the Green Climate Fund (GCF) of the United Nations.

Peru’s intended contribution to global climate change mitigation foresees a 30 per cent reduction in greenhouse gas emissions by 2030. Public institutions in the country are also seeking to use GCF resources to finance these efforts and must be accredited in order to be eligible for the direct award of funds. The institutional and political frameworks required for this purpose are in some instances not yet in place.

Even if international climate funds are set to play an important role in the future, in many cases mitigation activities are only sustainable if they are tied to national public finances and if private sector investment can be successfully mobilised.

Objective
Peruvian institutions mainstream climate issues in the development, refining and application of finance mechanisms.

Approach
GIZ is implementing the project on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). The project is being cofinanced by the US Agency for International Development (USAID). The in-country partners are the ministries of economy and finance; environment; housing, construction and sanitation; and transport and communications, as well as the national development bank for social housing and the national agricultural development bank.

Cooperation focuses on construction, urban transportation and sustainable land use. For example, the project is supporting:

  • the finance ministry on developing a carbon price for the promotion of clean technologies in public investment projects;
  • the construction ministry on the development of sustainable building standards and their application in public investments;
  • the transport ministry on designing a results-based programme budget to promote sustainable urban transportation measures;
  • the development bank for social housing on introducing a subsidised line of credit for ‘green’ homes;
  • the agricultural development bank on creating a line of credit to promote integrated small-scale agroforestry. 
© GIZ