Brazil Launches Credit Line to Promote Sustainability

Brazil Launches Credit Line to Promote Sustainability

Corporate Social Responsibility writer for Justmeans, Antonio Pasolini is a journalist based in Brazil who writes about alternative energy, green living and sustainability. He also edits Energyrefuge.com, a top web destination for news and comment on rene
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Corporate Social Responsibility writer for Justmeans, Antonio Pasolini is a journalist based in Brazil who writes about alternative energy,

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Brazil's Minister of Environment Izabella Teixeira and Brazilian National Development Bank (BNDES) President Luciano Coutinho have announced the launch of a new credit line to support sustainability projects focused on greenhouse gas reduction and climate change solutions.

The credit line was established under Brazil's National Climate Change Fund, a new financing instrument aims to encourage private, municipal and state investments that support the objectives set by Brazil's National Policy on Climate Change in 2009, including reducing greenhouse gas emissions, reducing vulnerability to the adverse effects of climate change, and preparing to compete in a low-carbon economy.

It covers projects in efficient transportation models, efficient machinery and equipment, renewable energy, waste with energy potential, vegetable charcoal and combating desertification, which refers to projects that restore biomes and develop sustainable production activities that involve timber, fiber and fruits in the country's Northeast region.

"The Climate Fund is one of the main instruments in Brazil's climate change policy," said Minister Teixeira at the launch event earlier this week. "By 2014 it has the potential to provide up to R$ 1 billion in financing to support Brazil's national commitment to reducing greenhouse gas emissions."

Part of the National Climate Change Fund comes from Brazil's oil exploration revenues (60 per cent of the total). These are deposited into a special account held by the Ministry of Environment and split into two categories: reimbursable, which are managed by BNDES; and non-reimbursable, managed by the Ministry of Environment. In 2011 the total set aside for the two categories was approximately R$ 230 million (US$ 133.7 million). The reimbursable category is expected to receive a total of R$ 360 million (US$ 209.3 million) in 2012.

BNDES has offered its lowest interest rates ever for the new credit line, starting from 2.5 percent per annum, depending on which sub-program category the investment support. The program's loan terms vary and can reach up to 25 years, which is the maximum term permitted for urban railway transport investment projects. BNDES will help fund up to 90 percent of the projects in the eligible sub-programs.

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