Green Finance Opportunities
in Central America
and the Caribbean 2021

Report prepared by
Climate Bonds Initiative

Title bold: Subtitle book

Report sponsored by theCentral American Bank for
Economic Integration1Foreword by CABEIThe Central American Bank for Economic Integration (CABEI) was established in 1960 and its headquarters are based in
Honduras. CABEI´s mission is to promote economic integration and economic and social development in the Central
American region. CABEI is composed of founding and non-founding members and aligned with attending the interests of
all its member countries.
CABEI is the largest multilateral lender in Central America, contributing almost 50% of the total disbursements in the region.
To this end, the Bank grants loans and provides technical assistance to entities of the region’s member countries, mainly
focusing on public sector infrastructure projects although it also provides loans to the private sector.
CABEI has a double AA credit rating in the international capital markets, which makes it the highest credit rating in all of
Latin America, having built a global investor base for its medium- and long-term bond issuances. CABEI has a highly
diversified funding base and has maintained uninterrupted access to international capital markets, issuing bonds in 24
currencies and 23 markets.
In the last 10 years, CABEI has not had a single arrear from any sovereign debt; a one-day late payment on any loan isimmediately accounted as a delay.
In accordance with the Bank's commitment to Zero Carbon Emissions and its accreditations with global funds such as theGreen Climate Fund and the Adaptation Fund, the Green Bond issues will further strengthen the Institution's impact on
the Central America’s resilience to climate change. During the 2015-2018 period, CABEI approved funding of USD2.8bn forclimate change initiatives, which represents 35% of the Bank's total loan approvals for the same period and considers thechannelling of approximately USD847m in external financing from other developing partners.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative1

Introduction
Contents

This report has been prepared to help meet the growing demand forgreen investment opportunities – particularly green bonds – as wellas to support the transition to a low-carbon economy in Central
America and the Caribbean (CAC).1

The last 12 months

3

Executive summary

6Over the past 15 years, the CAC region has seen steady growth –recording an average annual GDP growth of about 4% – althoughsome economies have consistently grown more than others.2 Thecountries leading the pack include Costa Rica, the Dominican Republic,
and Panama, all of which have grown above the regional average overthe last 30 years.

Overview of climate initiatives in CAC

7

CAC green bond market

10Green infrastructure investment opportunities

14

Step-by-step guide to green financing

23

Overall, the economic growth rate in CAC has exceeded the Latin
American average and that of most developed economies. This canbe attributed to rapid productivity growth of over 2% per year
(accounting for an estimated 56% of the region’s GDP growth) and anincreasingly service-focused economy (compensating the drop inindustrialisation levels).3 Sound monetary and public finance policies
are another key factor.

Green debt instruments

25

Green finance leveraging mechanisms

27

Conclusions and considerations

28

Understanding green bonds

Looking ahead, more accommodative monetary policies may lead tofurther growth, with high levels of investment and household
consumption set to continue. According to Moody’s Investors Service
outlook for Latin American and the Caribbean, 2019 sovereign
creditworthiness was stable in the region, with economic conditions
remaining credit supportive.4

Green bonds
Green bonds are labelled debt instruments issued in order toraise finance for climate change solutions. They can be issued
by governments, banks, municipalities or corporations.

However, as is the case globally, the recession caused by COVID-19
presents real dangers. In Central America, CABEI expects a worst-casescenario where the region’s 2020 GDP contracts by 4.9% and public
debt increases by at least 7.6 percentage points of GDP.5

The green bond label can be applied to any debt format,
including private placements, securitisations, covered bonds,
and sukuk. Labelled green loans need to comply with theGreen Bond Principles or Green Loan Principles. The key is forthe proceeds to go to “green” assets.

This report primarily looks at green finance market development in
CAC and the potential for further growth in a number of key areas. It
provides a step-by-step guide for green bond issuance, as well as
overviews of green debt instruments.

Green definitions
The Climate Bonds Initiative uses the Climate Bonds Taxonomy,
which features eight categories: Energy, Buildings, Transport,
Water, Waste, Land use, Industry, and ICT.6

LAC represents 2% of total issuance, CAC 0.1%
250
200
150
USD Billions

100

CBI also develops Sector Criteria with expert input from theinternational science community and industry professionals.7
Issuers can certify their green issuance(s) under the Climate
Bonds Standard and Sector Criteria.8 Independent approved
verifiers provide a third party assessment that the use ofproceeds complies with the objective of capping global
warming at 20C.

Supranational
EuropeNorth America
Asia-Pacific
Latin America
Africa50

Inclusion in the CBI Green Bond Database0

Only bonds with at least 95% of proceeds dedicated to green
assets and projects that are aligned with the Climate Bonds
Taxonomy are included in the Climate Bonds Green Bond
Database and market figures. If there is insufficient informationon allocations, a bond may be excluded. The full version of the
CBI Green Bond Database Methodology is available on CBI’s
website.9 However, we are currently working on a revised
methodology, to be published in the coming months.

2013 2014 2015 2016 2017 2018 2019 2020 H1
Note: Total global issuance (2007 – 30 June 2020): USD868bn
LAC issuance (since first bond in 2014): USD19.6bn
CAC issuance (since first bond in 2016): USD981m

It also aims to facilitate greater engagement on green infrastructure
investment between asset owners and developers and investors.
Green infrastructure case studies for renewable energy, low-carbon
transport, sustainable water and waste management from eight CAC
countries are explored in the context of sector-by-sector reviews.

What is green infrastructure?

The report is intended for a range of stakeholders in the region andbeyond, including funds, asset managers and other regional andinternational investors, potential issuers, infrastructure owners anddevelopers, government bodies and policymakers, and the public.
Note: Unless stated otherwise, all analysis refers to amount issued (not numberof deals or issuers). The cut-off date for all data and charts is 30 June 2020.

In this report, green infrastructure refers to infrastructure
projects that are aligned to the Climate Bonds Taxonomy. The
taxonomy covers eight categories, but the key infrastructure
sectors are renewable energy, low-carbon transport, andsustainable water and waste management.
6789

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

2

The last 12 months
COVID-19
2020 was an exceptional year. The COVID-19 pandemic caught many off-guard, but the truth is pandemics are only one of the many
negative impacts we can expect to occur with increasing regularity in the face of environmental degradation.
Far from a reason to invest more in the social dimension at the expense of green, the COVID-19 pandemic is another confirmation of theinter-relationship between social and environmental woes, of the dangers we face as a species, and of our unpreparedness to deal withnegative shocks in a robust and resilient manner. In that sense, it could actually be an important catalyst for positive change.

Economic impacts
This is an unprecedented crisis; its impact is set to be greater thanthe Great Recession of 2008-09 and its magnitude comparable to
the Great Depression of 1930. 2020 will see the first increase inglobal poverty in over twenty years, delaying the goal of ending
poverty even further. The economic disruption and damage will
persist as governments clamour to stimulate a recovery.
Uncertainty regarding the duration of the pandemic and isolation
measures limits the ability to make inferences about the extent of
economic impacts in Latin and Central America. However, given theregion’s openness and integration with international markets, themain mechanisms of transmission of COVID-19 economic impacts
are expected to be through the external sector. The harshness will
depend on the behaviour of the US economy, a market accounting
for 35% of Latin American exports.
To inform CABEI’s management and decision-making, estimateshave been elaborated for two scenarios assuming an absolute haltof production in previously defined sensitive sectors; with a durationof four months for the hotel and restaurant sector (in bothscenarios), and two to three months for the remaining sectors.

This exercise results in estimated 2020 GDP growth ranging
between -2.5% and -4.9% for Central America. Economic growth will
be mainly impacted by the reduction of activities in commerce,
construction, transport, hotels and restaurants, and financial
intermediation.

Summary of policy measures in CABEI member countries

Financing the recovery
The sanitary measures promoted by thegovernments to attend the emergency causedby the COVID-19 will generate greater fiscal
spending as well as less economic activity and,
therefore, a fall in fiscal revenues. Coupledwith the public policy agenda for economic
recovery to boost each country, this will most
likely demand an increase in public debt.
In this context, estimates were made with theassumptions of two scenarios, resulting in
debt-to-GDP ratio increases of between, on
average, at least 4.7 and 7.6 percentage points
for the Central American region in 2020.
For many Developed Market (DM) countries,
the increase in debt should not pose asignificant problem given record low interest
rates and relatively strong debt affordability.
The pandemic has also maintained or even reduced the already low interest rates at which many DM governments can borrow, while
increasing the risk premium paid by many private sector players as well as countries perceived as riskier.10
Emerging Market (EM) countries will likely have it harder, given many – China excluded – started the crisis in a weaker position andtherefore less able to absorb the fiscal cost. While DM governments can run substantial deficits without driving interest rates and inflation
higher, most EM economies have tighter borrowing constraints, especially in an environment in which DM governments are also borrowing
heavily. In the EU, the pandemic recovery fund may allow more indebted countries to recover with support from Europe’s larger economies,
but the lack of such a bloc globally means that other mechanisms are needed to prevent meltdowns in many developing countries.
This is exacerbated by the fact that emerging economies are also already suffering from severe drops in foreign direct investment (FDI) as aresult of the pandemic. Flows to EM have been hit especially hard due to export-oriented and commodity-linked investments being among
the most affected. To make matters worse, the analysis also showed that international private sector flows to four out of ten key SDG areas
have failed to increase substantially since the adoption of the goals in 2015.11
Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative3

Development finance institutions can play a crucial role in ensuring that such action extends to developing countries facing higher risk
premiums. Initiatives like the EBRD’s EUR21bn Solidarity Package12 can be complemented by others that integrate the private sector, such as
the USD1bn Impact Rescue Facility targeting SMEs in Africa, Latin America and Southeast Asia.13 These can be effective, especially in the
short-to medium-term, but are still likely not to be enough and will need to be supplemented by more robust longer term solutions(potentially including debt restructuring).

Greening the stimulus
Any recovery efforts will need more capital. For emerging economies, rising public debt, combined with significant capital outflows andreduced exports, may leave the impression that financing green investments will be a ‘nice to have’ rather than a viable strategy once thedisruption from the pandemic subsides.
On the contrary. The most efficient stimulus packages will be those that are designed to create more jobs and support economic activity
over the short term, while also getting economies on track for rapid and sustainable growth post-COVID. Governments can use this spending
to make them ‘21st century-ready’ by investing in developing the skills of their population in a modern, low-carbon, climate-resilient
infrastructure system and a healthy environment.
Specifically, governments will need to address two crucial considerations when planning recovery measures:
1.

Resilience is key: The COVID-19 pandemic is not an isolated crisis; there will be more.

2.

Time for transition: The recovery presents an opportunity to move economies on to a more sustainability-focused pathway – to Build
Back Better.

Public sector interventions and measures for a green future
Governments, central banks, regulators and international financial institutions across the world are adopting a wide range of measures toprevent COVID-19 from causing long-lasting economic impacts. Below are some key measures that should be considered as steps towards ahealthier more resilient future:•

Investing in low carbon, climate-resilient (green) infrastructure.

•

Leveraging the role of development finance institutions.

•

Refinancing / restructuring sovereign and/or sub-sovereign debt using thematic labelled bonds.

•

Managing corporate bailouts.

For example, measures could include helping industry to cut emissions and investing in clean infrastructure such as renewable energy andpublic transport. Many energy and public transport projects take time to prepare, which is why these investments should be added tostimulus packages now – reviewing and updating existing plans – for the benefits to be realised in the coming years. With a committed
stimulus plan in green skills and the creation of green sector employment opportunities, Central American governments can buffer the
impacts of COVID-19 and simultaneously future-proof their economies.

Using green / sustainable capital markets
So far, two main types of bonds to finance recovery investments have been issued:•

General Purpose bonds, as part of a broader COVID-19 response plan by the issuer.

•

Use-of-Proceeds bonds, which can be issued under a framework that is aligned with the International Capital Market Association’s(ICMA) Green, Social & Sustainability Bond Principles (GSSBP) – or a specific COVID-19 response framework.

Sustainable – including green – finance presents a huge potential for governments, as well as other issuers, to tap global institutional
investors looking for responsible investments. The focus should be on investments that can be described as ‘Building Back Better’ to create
more resilient societies and economies.
By labelling their debt as ‘green’ or ‘sustainable’ in this way, as several sovereigns have already done, governments could send a clear
market signal while contributing to the development of domestic green bond markets, and attracting a more diversified investor base. Theseand other potential benefits of issuing ‘green’ are covered in Climate Bonds’ inaugural Green Bond Treasurer Survey 2020.14
Further, in 2019, Climate Bonds Initiative surveyed 48 of the largest Europe-based fixed income asset managers to gain a comprehensive
understanding of how the fixed income investment community is making investment decisions when addressing climate risks and otherenvironmental and social factors.15 The total AuM of respondents was in the order of EUR13.7tn, and their total fixed income AuM
EUR4.3tn. From this survey, it emerged that investors want more green EM debt, supported by an increasing appetite for local currencies
and longer tenors.
NB: For more detail see CABEI’s Economic Impact of COVID-19 report16 and Climate Bonds’ Sustainable Debt Global State of the Market H1 2020.17

Devastating 2020 hurricane season highlights the costs of not adapting
The most active Atlantic hurricane season ever recorded hit Central America with full force last November, with 30 named storms including
13 hurricanes and locals claiming they had never seen flooding like it. Altogether, over 200 people were killed and more than half a million
displaced, furthering regional poverty at a time when the pandemic had already debilitated revenue streams and increased expenses.
Building resilience is critical. Climate change will escalate the frequency and severity of storms, among other natural hazards. A 2017 UN
report estimates the economic costs of climate change at 1.5% to 5% of Latin America’s annual GDP if temperatures rise above 2°C by midcentury (as they are expected to) – while the cost of adapting is below 0.5% of GDP.18 Many Central American countries, already confronted
with poverty and debt, have struggled to prioritize this among so many other pressing needs, but it is now more important than ever.
Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

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CABEICABEI has been especially active in promoting sustainability over the last two years. The Bank’s focus in 2020 has naturally been on providing
essential support services in Central America in response to the COVID-19 pandemic, but apart from this and issuing its second green bondin November 2019, there have been other important developments in CABEI’s work – one was the agreement signed with its most recent
non-regional member, South Korea.
The list of CABEI’s non-regional member countries is now Mexico, Cuba, Taiwan, Argentina, Colombia, Spain, and the Republic of Korea.

What is the agreement’s purpose?
The entry of this new member solidifies CABEI as thestrategic ally of Central America, attracting and channelling
additional external resources to develop the region.19 The
agreement’s financial resources, to be received over the
next five years, will contribute to the development of
economic, financial and technical studies for the design andexecution of important projects in the Central American
region, especially those that look to enhance regional
integration and sustainable development amongst eligible
countries. South Korea will also channel technical assistanceand cooperation resources to support this mission.20
Combined, these resources will be used to identify andprepare projects that include international content,
technologies and best practices – especially from theRepublic of Korea – in relevant areas such as health, energy,social and productive infrastructure, freight and passenger
transportation, information and communication
technologies (ICT), and climate change adaptation andmitigation, among others.

Source: https://www.bcie.org/en/news-and-media/news/article/cabei-welcomes-korea-as-a-new-member

What funding does it entail?
The request for capital subscription of the Republic of Korea amounts to USD450m, which is expected to generate an increase in the amountof loans available by USD2.25bn, representing an expansion of CABEI’s portfolio from USD7bn to more than USD9bn. The first capital
payment was made in January 2020 for USD28m. The Republic of Korea’s official incorporation as CABEI’s latest extra-regional member
materialised with this first payment.
The subscribed capital of USD450m includes an equity participation of 7.2%. In addition, financing agreements have been signed with official
resources for public and private sector projects for USD750m.
As part of the overall funding, CABEI and Korea’s Ministry of Economy and Finance signed a US50m Grant Agreement for non-reimbursable
financial cooperation, to be channelled through a Trust Fund managed by CABEI.21 As part of this grant, South Korea made the first
disbursement (USD10m) to launch the Single Donor Trust Fund – the first in CABEI’s history – in August 2020.22 Its resources may cover
initiatives in the health, education, finance, and other sectors affected by the health emergency caused by COVID-19.

Other benefits
One major impact of Korea’s incorporation to CABEI was the strengthening of the Bank’s financial profile, as it increased the percentage of
CABEI’s capital from members with an investment-grade rating from 32% to 37%.23 This was the main driver behind rating upgrades from
Moody’s, Standard & Poor’s, and Japan’s Credit Rating Agency in 2019.
At AA/AA/Aa3, CABEI is now the most highly-rated bond issuer in Latin America.
The Bank’s financial solidity was further reinforced as the Board of Governors increased its authorised capital from USD5bn to USD7bn in
October 2019. This represented its eighth general capital increase and the second in the last decade.
In addition, the partnership with South Korea will strengthen institutional governance, while improving the benefits of the cooperation
scheme agreements signed between CABEI and Korean institutions in favour of the Bank's member countries.24 For instance, in October
2019, CABEI had signed a collaboration agreement with Korea Eximbank to promote electric mobility in the region.25
The most emblematic project for CABEI’s ambitions to develop clean transport in the region is the USD1.3bn TRP electric passenger train to
be constructed in the metropolitan area of San José, the capital of Costa Rica, for which the Bank has approved USD550m of financing.26
The Costa Rica TRP project is covered in more detail on page 18.

Wider context
The Republic of Korea has been an observer member of the Central American Integration System since 2012 and maintains importantcommercial links with the region, which will be further enhanced through its incorporation into CABEI and through the Free Trade
Agreement with Central America.27 The latter's negotiation process was also supported by the Bank.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

5

Executive summary
Key findings
Green infrastructure presents a huge investment opportunity globally, with an estimated USD100tn worth of climate-compatible
infrastructure required between now and 2030 in order to meet Paris Agreement emissions reduction targets.
CAC’s green bond market has only seen six deals so far – including CABEI’s – but is expanding, with more already planned. 2019 was apositive year for the region’s market, with a record number of new deals and several promising initiatives by a diverse group of players.
Further diversification of projects would be a welcome development and should be a focus for institutions in the region, including
development banks, other public sector issuers and financial corporates.
There is significant growth potential for more green bonds. Given the region’s geographical and economic profile, sustainable infrastructure,
agriculture, and the blue economy are areas that offer enhanced opportunities.
This report contains examples of green infrastructure investment opportunities in CAC in four key sectors: renewable energy, low-carbon
transport, sustainable water management, and sustainable waste management. These projects range from an almost USD2bn urban metro
project in Panama to a USD10m water treatment project in Belize.
Having common definitions of “green” across global markets allows investors, potential issuers and policymakers to identify green assets andattract investment more easily. CAC governments could adopt best practice standards in identifying green projects in their infrastructure plansand prioritising those that are in line with international green definitions for their future infrastructure pipelines.
A variety of green financial instruments could be developed to capture funding from different sources and effectively leverage capital.

Looking ahead
Green finance growth is expected across the region, with new issuers and countries joining the market driven by much needed financing ofgreen infrastructure. Investments in clean transport options, especially in the form of electrified public transport, are already happening andthis is expected to continue increasing. Sustainable agriculture and blue (ocean-based) activities also present considerable opportunities.
2020 has been an exceptional year so far, with the COVID-19 pandemic affecting global investments, including those related to climate solutions.
The effects on sustainable finance are already visible, with public sector issuers in particular prioritising investments in national health systems
and response packages. Going forward, we expect more focus on the social dimension but ultimately on “sustainability” as a whole.
Policies and initiatives targeted at channelling finance and introducing incentives for green projects are urgently needed. However, to do so,
closer co-operation and partnerships to share responsibilities and knowledge are key.
Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

6

Overview of climate policies and initiatives in CAC
The introduction of climate policies andrelated initiatives, especially around green
finance, has grown rapidly in LAC in the last
few years. Governments and industry
groups are increasingly aware of the urgent
need to invest in green infrastructure andpromote sustainable development, and are
becoming more active. Progress in CAC has
been slower, but there are nonethelessvarious examples in the region, especiallyaround environmental policy. A summary of
key policies and initiatives is shown on thenext three pages.

In order for NDCs (Nationally Determined
Contributions) to be met, green financeneeds to scale up significantly. Much moreneeds to be done on the policy front toachieve this, especially considering thedifferences between countries.
Governments should be bold in encouraging
investments in green projects and otherstakeholders, particularly financial market
participants such as stock exchanges, banks,and industry organisations, should form
alliances reflecting their shared commitment
to developing the space, for example bysigning protocols.

Although all countries-in-scope have NDC
targets, the country leading the way isclearly Costa Rica. Costa Rica now has close
to 100% of its energy generated fromrenewables,28 and after unchecked logging
destroyed two-thirds of the country’s
rainforests, strict regulation and marketbased incentives introduced during the
1980s via the National Forestry Fund havedoubled forest cover.29 While it has a GHG
emission reduction target of 44% by 2030
(versus 2005) under its NDCs, Costa Rica
plans to be carbon neutral by 2021.30

Costa Rica
Costa Rica is the most advanced CAC country in terms of climate performance and ambition, and aims to be one of the world’s firstcarbon-neutral countries (i.e. including offsets) by 2021. As part of its NDCs under the Paris Agreement, Costa Rica has defined a mitigation
target of 44% reduction in emissions against business as usual by 2030.31
To achieve this, Costa Rica has defined multiple sector-specific targets for 2030 in its National Decarbonisation Plan, launched by MINAE(Ministry of Environment and Energy, which also runs SINAC, the National System of Conservation Areas) in February 2019, such as:32•

Achieve and maintain a 100% renewable energy grid•

70% of buses and taxis to be zero emissions and passenger trains 100% electric•

100% of new commercial, residential, and institutional buildings designed and built with low-emission and climate-resilient systems.

BelizeGuatemalaBelize’s NDCs focus on improving sustainable forest
management and increasing renewable energy capacity.

As part of its NDCs, Guatemala has defined targets of 11.2%(unconditional) to 22.6% (conditional) reduction in GHG emissions
by 2030 compared to the business as usual scenario.34

Belize already has several structural policy framework plans inplace to help it achieve its climate targets, including:33

These targets are incorporated into Guatemala’s national
development plan known as the K'atun 2032 National
Development Plan.35 Specific targets included in the plan are:•Horizon 2010-2030•

Sustainable Energy Action Plan 2014-2033 (under which it
has an 85% renewable energy target by 2030)•

Achieve 80% of electricity from renewables by 2027•

Growth and Sustainable Development Strategy 2016-2019••

The National Climate Change Policy, Strategy and Action Plan
2015-2020.

Improve energy savings by 25% in the industry and commerce
sectors by 2027 against the 2013 baseline•

Reduce 15% in industrial use of firewood by 2027 against the2013 baseline.

Dominican Republic

PanamaThe Dominican Republic has defined a mitigation target of 25%
reduction of base year GHG emissions by 2030 under its NDCs.36

Under its NDCs, Panama has specific sectoral climate targets,primarily focusing on increasing carbon sinks, renewable energy,
and sustainable forestry:38

While the government does not have sector-specific targets, it
has several climate policies and initiatives in place, such as:•

Carbon tax, introduced in 2012•

Growing hydropower biodiesel capacity•

Established a forestry working group to improvesustainability in the forestry sector.

The Dominican Republic government is also looking to phase out
its fossil fuel generated electricity, which currently accounts for
90.5% of the country’s installed capacity.37•

Increase renewable energy capacity by 15% by 2030 and 30%
by 2050 compared to the 2014 base year•

Increase reforested areas by 1m hectares by 2030.

Other than these targets, Panama plans to continue
implementing the following climate policies:•

Participate in international emissions trading•

Boost investment in renewable energy sources such as solar,
wind and biomass.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative7

Honduras

Nicaragua

Honduras has the following climate targets as part of its NDCs:39

Nicaragua has defined the following targets under its NDCs:40•

Reduce national GHG emissions by 15% by 2030•

Achieve 60% of renewable energy by 2030•

Achieve 80% of electricity supply from renewable sources by
2038.

•

Increase forest absorption capacity of 20% by 2030.

In the context of the country’s NDC commitments, the Honduran
government aims to continue its progress towards creating a
climate policy framework, including:•Preparing a national investment plan in the face of climatechange•Focusing on water resources, risk management, agriculture,
forestry and biodiversity, and infrastructure and renewableenergy projects, which are core priorities of the National
Climate Change Agency.

Nicaragua’s National Climate Change Policy is currently in the
consultation phase. It will lay out the country’s plans and include
the following aspects:•

Increasing agricultural resilience•••

Creating a low-carbon development strategy
Solutions to human re-settlement due to climate change
Developing green infrastructure••

Achieving forest conservation and restoration
Promoting knowledge, research, and financing for climatechange mitigation and adaptation.

El Salvador
El Salvador aims to establish a National Plan of Climate Change Policy, including several regulatory frameworks goals within its NDCs:41•

Strengthening institutional and legal framework for National Climate Plan before 2019•

Establishing a sectoral nation-wide climate plan, to include agriculture, water, and infrastructure.

El Salvador’s climate targets, included in its Five-Year Development Plan (2014-2019), feature the following:42•

Reduce the economic losses caused by climate variability in agricultural sector by one percentage point of GDP•

Increase the number of municipalities in a situation of risk of early warning systems by 20%•

Restore 10,000 hectares of salty forest and surrounding ecosystems•

Renew 30% of the coffee park, thereby ensuring its resilience to climate change•

Reduce the number of threatened species or in danger of extinction by 10%•

Reduce the consumption of substances that deplete the ozone layer by 25%.

31 32 33 34 35 36 37 38 39 40 41 42

Market development initiatives
The last few years have seen a significant increase ininitiatives and measures to develop sustainable financemarkets in CAC. While these have involved a range ofstakeholders, stock exchanges are often key players andmain instigators of market development.
Until now, the focus has largely been on green finance instruments,and most of all green bonds. This makes sense given the pressing
need for climate solutions – especially in a region surrounded byseas and particularly vulnerable to the effects of climate change –and the fact that, within sustainable or responsible finance, thegreen segment is by far the most developed. This is clear bycomparing the size of the green bond market with that of social andsustainability bonds, for example.
However, with the increasing level of integration of both social andenvironmental dimensions in financial and investment decisions,attempts to develop the market will also require a consideration ofsocial factors, and cannot be limited to green finance only. Indeed,as the next section shows, various actors and initiatives are alreadyapproaching the issue from a ‘sustainability’, rather than simply‘green’, perspective. Further, given the ongoing COVID-19
pandemic, the importance of the social dimension – especiallyrelated to health, of course – is rapidly growing.

Within debt markets, the issuance of green bonds has visibly
declined in 2020 while that of social, sustainability, and newly
emerged ‘pandemic’ bonds has taken off versus previous years.
Issuers, particularly those from the public sector, are increasingly(and understandably) prioritising investments in health systems.
On this topic, Climate Bonds Initiative is currently creating aseparate database for other (i.e. non-green) sustainable debt labels,
and our Sustainable Debt State of the Market H1 2020 reportanalyses and sheds more light on this important ‘market segment’.

Stock exchanges’ commitment to green financing
Costa Rica leads the way in terms of green
stock exchanges initiatives. Its BNV publisheda Guide for the Definition and Management ofGreen Projects, targeted at potential green
bond issuers, as well as a Green Bond Guide
and Voluntary Guidance on ESG Reporting, in late 2018.43
The stock exchange has taken several other steps to develop thegreen bond market (see box below) and promote wider
sustainability engagement and market development. It has also
released guides for Social Bond and Sustainability Bond issuance,44
and launched the BNV Sustainability Awards in 2019 to reward
capital market participants across several sustainability categories.45

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative8

Costa Rica stock exchange initiatives
In 2018, Costa Rica’s Stock Exchange (BNV) became the firstfrom Central America to join the UN’s SSE programme.46 In thiscontext, it has developed a number of initiatives to develop thegreen bond market:47•

Dedicated green bond webpage with relevant information•

Separate green bond listing via label, in which a ‘V’ (for‘Verde’, i.e. ‘Green’) is incorporated in the ISIN•

Green Bonds Standard based on ICMA’s GBPs, which listedbonds must comply with, including a requirement for
issuers to obtain an external review•

Differentiated fees, as well as multiple support services(such as advice during the issuance process andorganisation of a promotional road show) for issuers•

Green bond training for investors, issuers and otherstakeholders via seminars and other events. For instance, it
recently organised a Responsible Investment Bootcamp
with institutional investors48•

Various online green bond training resources•

More broadly, launching the Green Economy Principles topromote a low carbon economy, after hosting thecountry’s first Green Economy Investment Summit.

46 47 48In the Dominican Republic, the stock exchange(BVRD) launched the first ‘Green Finance
Forum’ in July 2019, bringing together financial
sector, corporate and public sector players.49
The aim is to develop green finance instruments, particularly green
bonds, in the country. During the event, BVRD released a Green
Bond Guide for interested parties.50
Panama’s stock exchange (BVP) is anotherpartner of the UN’s SSE initiative and has
recently released a Green, Social andSustainable Bonds Guide.51 It has also started tooffer a Green Bond Bootcamp and further educational events.
Specifically in the green finance space, the BNV and BVP organised ameeting last November to expand knowledge aroundgreen/sustainable finance among regional stock exchanges.52
Ecuador’s BVQ also attended the event, which counted with training
from Climate Bonds Initiative staff.
More broadly, Central American stock exchanges are increasingly
integrated.53 Panama’s BVP has an agreement with the El Salvador
stock exchange (BVES) to create an integrated model whereby
authorized ‘foreign’ brokerage houses – “remote operators” – havedirect access to the ‘local’ trading system and can trade on behalf of
their clients directly.
The remote operators basically have the same obligations andbenefits of any other brokerage house, which includes sharing of
data, reporting, systems, information, etc. The two exchanges also
have an MOU in place with the Nicaraguan exchange (BVDN), andthere are ongoing conversations with all the exchanges from
AMERCA54 (Americas Capital Market Association).

Other green & sustainable finance initiatives
Some stock exchanges are also involved in, or even leading, othergreen and/or sustainable finance initiatives. We expect these todevelop further and expand to more countries in the region.

Costa Rica hosted the PRE COP 25 last October, which comprised
high-level meetings and events on a range of climate topics.55 In
the blue theme of COP 25, several discussions were related tomitigation and adaptation in oceans. Costa Rica’s BNV hosted apanel on sustainable finance, with a focus on green bonds. During
the event, a group of Costa Rican banks and regulators signed ahistoric green protocol for the banking industry.56
Also in Costa Rica, two regulators and the Climate Change
Directorate (CCD) have been coordinating a working group in thefinancial system to promote green finance, with the BNV
participating in the discussions.57 The CCD has also developed a
Climate Change Metrics National System (SINAMECC), an inventoryof GHG emissions by sector/activity aimed at measuring progress
towards Costa Rica’s climate goals.58
Furthermore, as well as supporting other stock exchanges in theregion, the BNV is collaborating with several national entities todevelop the green finance space. For instance, it is currently
working with the country’s Ministry of Finance on the topic ofsustainable bonds, with support from MexiCO2 (a subsidiary of
Mexico’s national stock exchange, the BMV).59 In terms of pushingregulation, the BNV is working with pension fund and insurance
regulators to promote responsible investment frameworks anddisclosure. The former has already incorporated this into its newinvestment regulation, but it is not yet mandatory.60
In Panama, the BVP has led a National Sustainable FinanceWorkgroup since September 2018, with public and private sector
representatives such as the Ministry of Economy/Finance, Ministryof Environment, regulators, industry associations, NGOs, UNEP-Fi
and the IDB. Its main goal is to develop a roadmap to make Panamaa Sustainable Finance Hub in 24 months. Having played a major role
behind CIFI’s inaugural green bond in the country, the workgroup iscomprised of four committees: taxonomy, socio-environmental risk
analysis, environmental disclosure, and investments.61

The Caribbean leading the way on blue initiatives
Perhaps due to their smaller size, or geographical features, some ofthe smallest Caribbean states are leading the way on blue finance,
i.e. policies and initiatives aimed at financing ocean conservationand sustainable management of marine resources.
•

The Organisation of Eastern Caribbean States (OECS) is
implementing a Caribbean Regional Ocean Policy in conjunction
with the World Bank to facilitate co-operation for the transition
to a blue economy, while Barbados has established a Ministry of
Maritime Affairs and the Blue Economy (MMABE).62•

At a smaller scale, Grenada launched its Blue Growth Coastal
Master Plan in 2016.63 It includes an integrated coastal zone
management policy for the tri-island State of Grenada,
Carriacou and Petite Martinique, as well as a Blue Innovation
Institute that identified potential investment options valued atover USD1bn (around 200% of Grenada’s GDP!).

•A number of public-private partnerships (PPP) to co-manage
Caribbean marine areas are also underway, for example
developed by the NGO Blue Finance with the Caribbean
Environmental Programme (CEP). In the Dominican Republic’s
second largest marine protected area (MPA), Arrecifes delSureste, Blue Finance designed a 10-year agreement to comanage the area in 2018. It secured debt financing from impact
investors through Althelia’s Sustainable Ocean Fund, blended
with philanthropic grants.64

Given the importance of ocean-based activities in the CAC region, a
dedicated section with more commentary on the blue economy,
including blue financing, is provided on pages 12-13.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

9

CAC green bond market
Six green bonds from the CAC region have been issued so far.
Banco Nacional de Costa Rica (BNCR), the country’s largest bankand the second largest in Central America by assets, entered themarket with a 5-year senior unsecured USD500m deal in April 2016.
Fully state-owned, BNCR is the only government-backed entity in
LAC apart from ISA CTEEP (Brazil) to have issued green debt. It isalso one of only six LAC banks to have done so. Although theproceeds were aimed at financing solar, wind, hydro andwastewater projects, they were only used for renewable energy.
Moody’s assigned the bond a GB2 Green Bond Assessment.
The second green bond from CAC was issued by the Central
American Bank for Economic Integration (CABEI), the region’s
supranational development bank, as a “demonstration” or“thematic” bond in August 2016. The deal was a 5-year unsecured
green MTN of ZAR1.0bn (USD74m) to fund renewable energy.
2019 was the most active year for the region’s green bond market.
Williams Caribbean Capital (WCC) issued CAC’s first Certified
Climate Bond, becoming the tenth LAC issuer to do so. CIFI thenbecame the first infrastructure bank from LAC to issue a green
bond. Ecosolutions, a Costa Rican provider of energy efficiency
solutions, issued a USD3.5m private placement to refinance twopellet-based biomass boilers in August. Finally, in November, CABEI
issued its second green bond and the second largest in CAC, a 5year USD375m deal. The eligible categories included sustainable
land use, renewable energy, sustainable water management andclean transport, but only energy and water have been funded.
All six bonds finance energy projects. CABEI’s and CIFI’s can alsofinance other categories, but like BNCR’s bonds, it remains to be
seen whether all three eligible categories will be funded by CIFI’s
programme. Greater project diversification would be a welcome
development, especially to fund transport, industry, waste andwater infrastructure and land use – namely forestry and agriculture.

Energy accounts for two thirds of allocations
in CAC - further project diversification needed66%

USD981m

2%10%
1%

10% 9%
2%

EnergyBuildings
Transport
Water
Waste
Land use
Industry
ICT
Unalloc. A&R

CAC issuers use a variety of external reviews. WCC’s was the only
Certified Climate Bond from the region so far (Solar Criteria), with
Sustainalytics as the verifier. BNCR’s had a Green Bond Rating, while
CIFI’s and CABEI’s second green bond had SPOs from Sustainalytics.
CABEI’s first deal and Ecosolutions’ did not obtain an external review.

Certified Climate Bond: Williams Caribbean Capital
In June 2019, Wiliiams Caribbean Capital, a Barbados
company, issued a BBD3m (USD1.5m) green bond, which wascertified in August. It was a “first” in several ways:
•
•
•
•
•

CAC’s first Certified Climate Bond (under Solar Criteria)
CAC’s first green bond from a non-financial corporate
CAC’s first green private placement
First green bond from Barbados
First ever green bond issued in BBD

The proceeds will fund PV solar installation on rooftops andland via leases. For example, one project involves 2MWp PV
solar systems installed on rooftops owned by the Barbados
Investment & Development Corporation government agency;
another is 5MWp of PV solar on land at Foursquare Estate,
where the Barbados Water Authority has water pumps.
Williams Caribbean Capital is an investment and businessdevelopment company formed as a JV in 2017.

Green bond from infrastructure bank: CIFI
Panamanian financing institution Corporación Interamericana
para el Financiamiento de Infraestructura (CIFI) announced a
USD200m senior unsecured green bond programme in
September 2019. Only two tranches (3- and 5-year terms),
totalling USD27m, have been issued so far.
This is the first (and only) green bond from Panama, the first bya financial corporate from CAC, and the only issued by a Latin
American infrastructure bank so far. The proceeds are expected
to finance infrastructure projects in the areas of energy, water
and waste management. Within energy, wind, solar (including
cogeneration), geothermal and hydro (up to 25MW) power may
be funded.
CIFI is an infrastructure bank based in Panama, and is owned byprivate banks, investment funds and multilateral agencies. It
operates across the region.
The deals by BNCR, CIFI, CABEI (2nd) and Ecosolutions, representing
over 92% of the amount issued, were denominated in USD. WCC’s
was issued in BBD, the only globally in this currency so far. CABEI’s
first bond, denominated in ZAR, is the only green bond from LAC to
be issued in a non-local currency other than USD and EUR.
Denominating in USD tends to attract international investors.
Notably, one project finance loan was not included in CBI’s
database because it was unlabelled. In 2018, USA-based Ormat
Technologies obtained an USD115m loan from OPIC to finance thedevelopment of a 35MW geothermal power plant in Honduras; hadit been labelled, it could have qualified for inclusion.

IssuerCountry

Amount issued

Issue dateIssuer typeUse of proceeds

Banco Nacional de Costa Rica

Costa Rica

USD500m

Apr 2016

Govt-Backed

Energy*CABEISupranational

ZAR1bn (USD74m)

Aug 2016

Energy, Buildings, Industry

USD375m

Nov 2019

Development
Bank

Williams Caribbean Capital

Barbados

BBD3m (USD1.5m)

Jun 2019

Non-Finan. Corp.

EnergyEcosolutions

Costa Rica

USD3.5m

Aug 2019

Non-Finan. Corp.

EnergyCIFIPanamaUSD27m**Sep 2019

Financial Corp.

Energy, Waste, Water

Energy, Water*

Notes: *BNCR had Water as eligible, but only Energy was funded. CABEI also had Land use and Transport eligible. **USD200m GB programme but only USD27m issued.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

10

CABEI green bonds
As a multilateral development bank (MDB), CABEI finances andhelps to implement projects and programmes that stimulate theeconomic development of member countries, whilst also aiming to
reduce poverty and inequality. A variety of financial instruments are
deployed by CABEI through projects in sectors such as agriculture,energy, human development, and transport.
While the bank’s activities and initiatives have always incorporated
environmental and social standards, in recent years CABEI has
strengthened and focused its sustainable development strategy withenvironmental and social commitments. The ultimate objective is to
not only improve the quality of life in its member countries, but also
strive for sustainable development and resource use.
CABEI became one of Latin America’s first green bond issuers inAugust 2016, with an inaugural ZAR1bn (USD74m) “demonstrationbond” to finance renewable energy projects; this also marked thefirst green bond by a supranational entity from LAC.

In 2019, the bank reiterated its commitment to green finance byformalising a Green Bond Framework – including a Second Party
Opinion (SPO) by Sustainalytics – with the intention to redirect
finance to strategic sectors for the transition to a low-carbon
economy, including:65,66•

Sustainable Land Use: namely forestry and agriculture•

Renewable Energy: wind, solar, geothermal, bioenergy andhydropower•

Sustainable Water Management: water distribution, water
treatment, and flood defences•

Clean Transport: public transport (e.g. trains and clean buses),and clean vehicles and supporting infrastructure

In November, CABEI issued its second green bond, a USD375m
deal. Below is some information about its use of proceeds (UoP)
and impacts.

2019 CABEI green bond
As is good market practice, CABEI will provide annual reports on the UoP and impacts of its 2019 green bond, including details on each project.67
As of June 2020, USD314m of the proceeds (84%) had been disbursed to projects. Of this, USD305m (97%) was spent on refinancing previous
debt, with the rest provided as new loans to projects. The remaining USD61m of the proceeds have been allocated to projects but have yet to be
disbursed (these will be new loans, not refinancing).

The proceeds finance 12 eligible projects in total, located across 5 countries (Honduras, Nicaragua, Costa Rica, El Salvador, and Panama):68--

6 related to renewable energy: 4 wind (Honduras, Nicaragua, and Panama) and 2 hydropower (Honduras and Nicaragua)oA total of 417MW of installed capacityo1.2TWh of annual energy generationo793,065 tonnes of CO2 avoided per year

6 related to sustainable water management: various projects linked to water supply / distribution, drinking water treatment, andsewage (Honduras, Nicaragua, Costa Rica, El Salvador)o1.08 m3/s of water producedo

89 facilities built and 80 facilities upgradedo337,305 new connections to drinking water supply and 14,188 to sewerage systemsoOver 1.2m people with access to drinking water in Costa Rica alone
El Salvador: 1

Green bond allocation

Honduras: 4
Renewable Energy
39%

Nicaragua: 4
Costa Rica: 2
Panama: 1

Sustainable Water
Management
61%

Renewable Energy
Sustainable Water Management

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

11

CAC green bond market offers huge growth potential
There is a strong desire to tackle climate change in CAC, particularly
given the region’s vulnerability to extreme weather events andrising water levels.
Due to their scale, it may also be easier for smaller countries totransition to a green economy, even more if acting together. As
noted above, there are already initiatives by governments and stock
exchanges aimed at supporting this, particularly in Costa Rica.
Linked to this, there may be even more potential for sovereign
green (or blue) bonds in CAC compared to the rest of LAC, as longas the state of public finances permits. Sovereigns have the power
to boost green financing while sending an important signal to themarket and wider public.
We also see potential for smaller public sector issuers to become
green bond issuers. From a screening exercise of existing issuers,
Caribbean entities such as Trinidad & Tobago’s Water & Sewerage
Authority, its Housing Development Corp, the Virgin Islands’ Public
Finance Authority or the Development Bank of Jamaica wereidentified as potential green bond issuers for climate projects.

CAC’s wider labelled sustainability market has yet to take off.
Sustainable, SDG, and even social bonds can play a role and are
becoming popular globally, including among financial institutions.
Panamanian Banistmo, for example, issued LAC’s first gender social
bond in June 2019 to finance female-owned SMEs69; in Chile,
BancoEstado issued a social bond to fund gender, SME, housing andsocial inclusion projects.70 Social and climate goals can, of course, be
combined. For example, the sustainability bond issued by Colombian
development bank Financiera de Desarrollo Nacional (FDN) financed
the acquisition of public buses for Bogotá’s TransMilenio bus rapidtransit system (a project that would qualify as a green bond).71
Assistance from multilateral agencies could be effective indeveloping CAC’s capital markets and helping financial institutions
come to market. This could have a leveraging effect, with banks
being able to lend to various local infrastructure projects. In July
2019, for example, the IFC lent USD35m to Davivienda Costa Rica tofinance renewable energy and sustainable buildings, with potential
for a green bond issuance to support this.72
For these reasons, we believe CAC’s green finance market
presents many growth opportunities in the years ahead.

Financing sustainable agriculture and the blue economy
A large part of global green bond proceeds finances green
infrastructure.73 While there is a deep and urgent need for suchinvestments in CAC, which we cover in the upcoming ‘GreenInfrastructure Investment Opportunities’ section, here we focus
on two other sectors that are highly important for the region andfar less funded by green bonds: agriculture and marine activities.

Agriculture
Caribbean agriculture employs between 20-30% of the region’s
workforce, whilst in some Central American countries, such as
Honduras, Nicaragua, and Guatemala, this rises to above 30%.
As well as highly important economically, the sector is particularly
at risk from climate change. Agricultural productivity is heavily
reliant on rainfall and vulnerable to extreme weather, especiallyfor crop-growing under traditional farming methods. Following a2010 drought in the Dominican Republic, for example, banana
production dropped nearly 45% year-on-year.
Sustainable agriculture can contribute significantly towards climate
mitigation and countries’ NDCs, while also increasing food security
and reversing other negative environmental effects.

could be developed to creatively eliminate barriers to sustainableagriculture.

Green bonds for agriculture
Green – and SDG/sustainable/social – bonds could be a powerfulmechanism to fund sustainable agriculture. There has been nosuch issuance in CAC so far.
On the private sector side, larger agricultural producers could issue
green bonds, whilst financial institutions could aggregate smaller
projects and fund them via green bonds. Issuance from sovereigns,
development banks, government-backed entities, and local
governments (if the institutional capabilities exist) could all form
part of public sector support for agri-finance.
Finally, development banks could support policy interventions, e.g.
by offering loans and guarantees, and strengthen institutionalframeworks, e.g. via technical assistance. In Peru, for example,
USAID pairs loan guarantees with technical assistance to linkproducers with both financing and buyers for premium cacao. A
range of other organisations working in the region, such as theInternational Centre for Tropical Agriculture (CIAT) andInternational Fund for Agricultural Development (IFAD), and social
investors like Root Capital, could also provide support, bothtechnical and financial.

Sustainable agri-financing in CAC
The public sector has traditionally been heavily involved inagricultural planning and financing, mainly for small rural
producers, but few public sector instruments targeting sustainableagriculture exist in the region. One of the best examples is Costa
Rica’s new National Financing Programme for adaptation andmitigation in agriculture. Elsewhere in LAC, Brazil has the mostadvanced system of public sector financing for agriculture,including for sustainable methods; the Low-Carbon Agriculture(ABC) programme is the main one, and could be adapted in CAC.
Incentives for sustainable production could be strengthened.
Building on international initiatives such as the Tropical Landscapes
Financing Facility, the Responsible Commodities Facility and the
Biodiversity Finance Initiative (BIOFIN), and others such as Costa
Rica’s NFP or Mexico’s MasAgro, closer public-private partnerships

Blue economy
CAC offers enhanced opportunities related to the blue economy.
More than a quarter of the region’s population – almost 100% in
the Caribbean – lives on the coast. Close to 275m people work infishing/aquaculture, which contributes around USD20bn to GDP.
Coastal tourism provides an additional USD6-8bn in the Caribbean
alone. The region holds 30% of global biodiversity and is home to
six of the world’s 17 mega-diverse countries.
As in other places, however, many drivers are harming CAC’s
marine resources. These include habitat loss, over-exploitation,
invasive species, plastic pollution and climate change-relatedchanges to sea level, currents, temperature, and water chemistry.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative12

Sustainable solutions and governanceBlue bonds

Recognising the real long-term value of marine resources andbiodiversity is key. A 2018 Coral Reef Economy study estimatesthat investing in coral reef health in Central America throughprotected areas could provide returns on investment of 44:1 due
to impacts on tourism, commercial fisheries and coastal
development, estimates. A live shark in the Galapagos, forexample, can bring in over USD5m in tourism revenue over its
lifetime; a shark killed for its fin is only worth USD280.

Blue bonds by public sector and multilateral issuers are more likely
than by private sector players. Private resources can still be
involved in project implementation though, and corporates
operating in ocean-based activities could issue blue bonds toreduce or eliminate the negative impacts of their operations.

Increasingly, modern governance structures must address issues
with a holistic, circular, and ecosystems-based approach, rather
than by focusing on single activities. Close cooperation between
national and international stakeholders is also needed. Regional
bodies could be leveraged – at the moment, they are mainly fromthe Caribbean and include OLDEPESCA, OSPESCA, COPPESAALC
and the CRFM, but more could be developed.
As explored on page 9, a number of interesting initiatives to comanage marine areas in the Caribbean are already underway.
Combining these with elements of financing programmes could
provide effective ways to sustainably manage the region’s oceans.

The blue finance landscape is evolving
The first global framework for sustainable ocean financing, theSustainable Blue Economy Finance Principles, was launched by theEuropean Commission and UNEP FI only in 2018.
One reason for the lack of investment and policies in this space isthe shared nature of coastal and ocean-based assets. Another one
is the higher risk associated with assets directly threatened byclimate change.
Policymakers could help reduce financing costs by reducing,managing, transferring, and compensating for risks. UNDP’s Derisking Renewable Energy Investment framework assists
policymakers looking to achieve a risk-return profile that catalyses
private sector investment at scale.
While there is still a lack of adequate policy, several promisingfinancing initiatives have been developed; they invariably involve a
network-based, multi-stakeholder approach.
By catalysing private sector investment, these creative solutions
are especially pertinent in an environment where fiscal space isconstrained, public debt is elevated and aid resources are limited,which is the case in much of the Caribbean. Some examples
include the specialist international NGO Blue Finance, initiatives by
The Nature Conservancy, ADB’s Oceans Financing Initiative, andthe IDB’s Sustainable Islands Platform and Natural Capital Lab.

So far, only two have been issued, both by public sector issuers.
Public sector issuers – particularly from island nations – can deploy
blue bonds for climate-related projects. Sovereign blue bonds,
such as the Republic of Seychelles’ in 2018, are especiallypromising. But, in some cases, local governments and state-owned
companies can become issuers to finance blue projects.

CASE STUDY: World’s first sovereign blue bondIn October 2018, the Republic of Seychelles issued the world’s
first sovereign blue bond, a USD15m private placement. The
proceeds will support the expansion of MPAs, improved
governance of fisheries and the development of the
Seychelles’ blue economy. A USD5m partial guarantee fromthe World Bank (IBRD) and a further USD5m concessional loan
from the Global Environment Facility (GEF) will partially coverinterest payments. This illustrates how international agencies
can help to de-risk and scale up sustainable investments.
Similarly, national and international agencies, including MDBs andcross-border associations such as the Pacific Alliance, could
become blue bond issuers. As an example, the Nordic Investment
Bank issued a blue bond earlier this year to fund various waterprojects in the Baltic Sea and around Stockholm.

CASE STUDY: First Nordic-Baltic blue bond
The Nordic Investment Bank (NIB) issued the first ever NordicBaltic blue bond in January. SEB acted as the lead arranger for
the SEK2bn (USD221m) senior unsecured deal, which targets
sustainable investors by supporting water projects around theBaltic Sea. Eligible projects include wastewater treatment,water pollution prevention and water-related adaptation.
Overall, CAC presents opportunities for blue finance including via a
growing blue bond market, especially as the region’s capital
markets develop further. Some studies indicate that SDG 14 isreceiving the least investment globally of all the SDGs; increasing
this would also contribute to many other SDGs (see below).
We note that these topics are explored in considerably more detailin our LAC Green Finance State of the Market 2019 report.74

Co-benefits of SDG 14: Life below water targets on other SDGs75

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

13

Green infrastructure investment opportunities
Green infrastructure presents a hugeinvestment opportunity globally, with anestimated USD100tn worth of climate
compatible infrastructure required between
now and 2030 in order to meet Paris
Agreement emissions reduction targets.
However, there remains a lack of identifiable,
investment-ready projects.
Most CAC countries do not have a clear
national pipeline of infrastructure projects.
Publicly available pipelines did not specify
whether or not projects are green. Researchusing publicly available resources reveals thatgreen infrastructure projects and assets ofdifferent sizes and technologies exist acrossthe region.
This section showcases examples of green
infrastructure investment opportunities in
CAC in renewable energy, low-carbon
transport, sustainable water management,
and sustainable waste management.
A list of 24 projects has also been compiled
into a sample green project pipeline (seeAnnex 1). These projects range from analmost USD2bn urban metro project inPanama through to an almost USD10m
water treatment project in Nicaragua.

What is green infrastructure?

Investment pathways

This report uses the globally recognised
Climate Bonds Taxonomy and Sector Criteria
to determine which projects are green. Other
international standards that could beapplicable include the IDB Sustainable
Infrastructure Platform; Effective energy
management systems (EnMS)/ISO 50001;
SOURCE; GRESB Infrastructure ESG
Benchmark; Standard for Sustainable andResilient Infrastructure (SuRe); and Envision(see Annex 2).

The possible investment pathways forinvestors to gain exposure will varydepending on asset ownership structure(public, private, a mix), the stage in theasset’s financing lifecycle, and the investor’s
mandate. Various metrics were used toclassify the green investment opportunities
by status:

When it comes to criteria for green projects,
investors have too few tools to ensure that
their investments are making a significant
impact. Having common or aligned
definitions of ‘green’ across global markets,allows investors, potential issuers andpolicymakers to identify green assets andattract investment more easily.
Ideally, CAC governments could adopt a bestpractice standard to identify green projects intheir infrastructure plans, then prioritise
projects that are in line with international
definitions for ‘green’ in future infrastructure
pipelines.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative•••

Completed projects: high profile,recently completed projects
Projects under construction: major
projects that are under construction
Planned projects: major projects thathave not yet begun construction but
have been announced and/or haveundergone business case planning
and/or have been allocated budget.

The case studies and pipeline present green
investment opportunities available in the
short- to medium term.
Providing this level of visibility for could
facilitate access to private sector capital for
CAC’s transition to a low-carbon economy
and help meet global institutional investor
demand for green assets.

14

Renewable energy
Energy generation, transmission orstorage technology that has low orzero carbon emissions. This can
include solar, wind and geothermalenergy, bioenergy, hydropower,
marine energy, or any otherrenewable energy source.
Sector overview
One in ten Central Americans lives without
access to electricity: an estimated 7m people
live too far from established grids.76 There issignificant potential for renewables toprovide power supply and facilitate better
connectivity in remote locations.
Central America is rich in renewable energy
resources: in 2016, the region had a total
installed generation capacity of 12GW.77
Sources in the region include solar, wind,biomass, geothermal and hydropower.
In the past, energy production in Central
America was dominated by hydropower.
However, its share shrank as fossil fuel power
generation became more popular.

Fortunately, the share of renewables has
increased in the last 15 years along withchanging attitudes towards sustainability.
Central America is home to one of theworld’s most ambitious national energy
policies. Due to government intervention,
Costa Rica has generated 98.53% of its
electricity from renewable sources in the last
four years.78 As of October 2018, its
electricity was generated throughhydropower (72.2%), wind (16.1%),
geothermal (8.9%), biomass (0.8%) and solar(0.1%).79 The government aims rely solely on
renewable energy by 2030.80
Other Central American countries have set
similarly ambitious goals, and thanks toinitiatives like the Regional Clean Energy
Initiative (RCEI) more Central American areas
will have increased access to renewable
power. Funded by USAID and regulated by
Tetra Tech and the International Renewable
Energy Agency (IRENA),1 RCEI aims to build
the capacity for and promote investment inrenewable energy as well as encourage
energy efficiency in the region.81

Case study 1

Solar farm

Title

Capella Solar Plant (140 MW) 82

Proponent

Neoen

Location

Department of La Paz, El Salvador

StatusUnder construction, completion expected in 2020

Classification

Energy (solar) generation facilities

Description

100% owned by Neoen, a French renewable energy
producer. The solar plant, combined with a 3
MW/1.5 MWh lithium-ion battery, will be the largest
storage facility deployed in Central America.

Investment pathways
Most generation and distribution assets in
CAC are privately owned. Banks, specialised
project financiers, debt clubs, investment
funds, direct investors and the capital
markets could potentially provide funding.
Green bonds are very well suited to large
projects or portfolios and can be structured
in a number of ways, including projectbonds, corporate bonds, covered bonds or
ABS. Aggregation of smaller projects can bedone through securitisation or by banks
originating green loans and refinancing in thegreen bond market (especially for smaller
projects / issuers with low credit ratings,
which could affect the ability of someinternational investors to get involved).
Renewable energy funds are being used tosupport greenfield projects and stimulateinnovation.
All six bonds issued in CAC have financed
renewable energy (see page 10). Based on
the disclosure at issuance, the main type ofenergy funded is solar, followed by wind,hydro and geothermal.

El Salvador

Source: https://www.pv-magazine.com/2018/11/29/neoen-announcesfinancial-close-for-140-mw-dc-pv-plant-in-el-salvador/

The government will purchase the energy produced at a competitive price, at a tariff of USD 49.6/MWh, lower than grid
parity. This price is considered the most competitive electricity price in El Salvador to date.
Output

The project will reduce El Salvador’s dependency on fossil fuels and increase its energy security, as the country currently
imports electricity. The solar plant is expected to supply around 298 GWh of green electricity every year. Socially, theproject is also expected to create about 600 direct and indirect local jobs over the next five years.

Cost

USD150m

Financial
structure

A loan from Netherlands Development Finance Company FMO, IDB Invest and PROPARCO, a French Development
Financial Institution (DFI), to Neoen.83

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

15

Case study 2

Solar farm

Title

Solar PV Bósforo (100 MW) Project 84

Proponent

Bósforo, LTDA de C.V.

LocationCentral, Western and Eastern zones of El Salvador(Departments of La Unión, San Miguel, Usulután, San
Salvador, Santa Ana, and Sonsonate).

StatusIn operation

Classification

Solar energy generation facilities

Description

Bósforo, LTDA. de C.V. (Bósforo LTDA.) was created on
the 10th March 2016 for the development of thisproject. The entity is 50% owned by AES Soluciones
LTDA. de C.V. and 50% by CMI Solaris Investments SL.

El Salvador

Source: https://www.sica.int/busqueda/Noticias.aspx?IDItem=
113178&IDCat=3&IdEnt=1225&Idm=1&IdmStyle=1

The project is composed of three phases, and isdivided into 10 plants, each with a capacity of 10MW.
Under the PPA, a tentative minimum price for theelectricity generated was set at USD 92.25 / MWh,with a maximum price of USD 145 / MWh.
OutputSimilarly to the Capella solar plant, the Bósforo project will contribute towards El Salvador reducing its use of fossil fuels
while increasing its energy security. In total, the solar plant is expected to supply around 204 GWh of green electricity per
year. Socially, the project created an estimated 504 direct temporary jobs during the construction phase, and 18
permanent jobs when operating commercially.

Cost

USD160m

Financial
structure

CABEI is acting as the structuring agent for about 70% of the project’s financing (c. USD112m).

Case study 3

Wind farm

Title

Cerro de Hula I Wind (102 MW) Project 85

Proponent

Energía Eólica de Honduras S.A. (EEHSA)

Location

The Project is located 24kms south of Tegucigalpa in
the Municipalities of Santa Ana and San Buenaventura,in the Francisco Morazán Department of Honduras.

StatusIn operation

Classification

Wind power generation facilities

Description

Energía Eólica de Honduras S.A.’s main shareholder is
Energías Renovables de Mesoamérica (ERM) with
99.2%, commercially known as Mesoamérica Energy
and located in Costa Rica.
The energy sale price for the project will be maintainedat USD112.5 / MWh, in line with the standing price for2012 stipulated by the current PPA (CDH 1).

Honduras

Source: https://ejatlas.org/conflict/proyecto-eolico-del-cerro-de-hulahonduras

Output

The project focuses on contributing towards the electric energy demand by making use of wind resources in acompetitive, efficient, and sustainable manner; the aim is to improve the quality of electric energy service in the area ofinfluence. The wind power plant is expected to supply around 353GWh of green electricity per year.

Cost

USD264m

Financial
structure

The total cost of the project is estimated at up to USD264.2m, for which the funding is structured as USD66m EEHSA,USD60m CABEI and USD138.2m Ex-Im Bank.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative16

Low-carbon transport
Transportation modes and ancillary
infrastructure that produce low orzero direct carbon emissions. For
example, this can include national
and urban passenger rail and freightrail networks, Bus Rapid Transit (BRT)systems, electric vehicles, and bicycletransport systems.

BRT systems.88 In CAC, BRT systems exist in
Panama, El Salvador, and Guatemala.

Sector overview

The share of electric buses will also grow. In
Costa Rica, the Regulatory Authority of PublicServices is developing an electric tariff forelectric bus charging to facilitate theincorporation of this type of technology inthe fleet of regular route buses. At the sametime, Banco Popular and the National Bankare each developing special lines of credit forelectric buses, electric taxis, electric businessfleets and electric private vehicles.91

Railways were historically used across Central
America to transport agricultural goods.
However, most of these networks were
decommissioned by the end of the 1990s,
with (full or partial) railways remaining in
Honduras, Costa Rica, Panama, El Salvador,and Guatemala.
Underground metro systems are even lesscommon in CAC. The first metro in the region
was developed in Panama and wasinaugurated in early 2014, with additionallines planned for the future.86,87 There is also
a metro system serving the city of Santo
Domingo in the Dominican Republic.
However, the number of light rail systems(LRT) – trams and monorails – is predicted toincrease in Central America.
Three important projects in the pipeline are:•Costa Rica’s TRP, currently in tender
process with construction planned tostart in 2021. CABEI is a prime lender
for this project (see case study 4).

•

Managua LRT in Nicaragua.

•

Metro Riel in Guatemala, which should
be complete by 2021 (see case study 6).

This follows on from the success of bus rapidtransit (BRT) in the region. Latin America is a
global leader in deployed BRT network lengthand the number of cities with operational

The average number of passengers
transported per bus per kilometre for cities in
Latin America is high, which, along with thelower cost of deployment compared withmost rail systems, is spurring further BRT
development.89 It is estimated that over the
next 10 years, 23% of the world’s future BRTs
will be located in Latin America.90

EV charging infrastructure for private vehicles
is being developed as the share of EVs grows.
In 2019, the first station in Panama wasinstalled,92 and, in El Salvador, a station will
be installed in Plaza Malta soon.93
Future investment opportunities exist in EV,
LRT and BRT as well as in public transporttechnology such as advanced payment
systems, fare collection, ticketing
innovations and passenger information.94

Investment pathways
Many funding structures are available toencourage private sector involvement in thelong-term financing required for low-carbon
transport projects including green bonds,
outright asset acquisitions, public private
partnerships (PPPs) and the securitization ofgreen financial assets.
Government-backed concessional loans are a
new structure, which provides greater
leverage against revenue streams fromtransport operations (i.e. fares).

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

Another innovative mechanism is ‘value
capture’, which refers to the value that is
generated for private landowners from
infrastructure and surrounding business
operations. This is explored in more detail inthe ‘Green finance leveraging mechanisms’
section on page 27, including one of themost well-known examples, from Hong Kong.
While there have been no green bonds used
to fund transport projects in CAC, there havebeen several in LAC.
The Republic of Chile’s sovereign green
bonds from 2019 and 2020 will
predominantly finance upgrades and the
expansion of Santiago’s metro lines, but also
electric vehicle infrastructure (e.g. charging
stations and electric buses). Mexico City andBrazilian pulp & paper manufacturer Klabin
have also raised funds for low-carbon
transport projects.
In CAC, low-carbon transport infrastructure
is typically owned by government entities.
Green bond issuance from the public sector
can provide indirect exposure for investors
to specific projects and assets and provides
attractive credit and liquidity credentials for
institutional investors. Tagging issuance as“green” in advance can raise the assets’profile as potential sustainable investments.
As private sector appetite increases, funding
sources should continue to diversify,
supporting accelerated investment. Investors
already fund bonds from rail and othertransport companies globally.
More direct investment pathways include
participation in consortium debt
arrangements and/or equity stakes inindividual projects via PPPs or other publicprivate ownership and financing structures.

17

Case study 4

Mass Rapid Transit

Costa Rica

Title

Rapid Passenger Train (TRP) of the Greater
Metropolitan Area (GAM)

Proponent

Incofer (Instituto Costarricense de Ferrocarriles),Republic of Costa Rica

Location

Greater Metropolitan Area (San José, Alajuela,
Cartago, Heredia)

StatusPlanned. Feasibility study completed, currently inconcession tender/bidding process withconstruction planned to start in 2022.

Classification

Transport, public passenger transport, trains

Description

The construction, equipment, andoperationalization of a 74km electric train network
covering Costa Rica’s Greater Metropolitan Area.

Technical

The TRP project will electrify almost all the existing railway (85km) and replace the currently used fossil fuel-poweredtrains with electric train-trams; given the very high share of renewables in Costa Rica’s energy matrix, this will result in
considerable GHG emission reductions.

Source: https://www.elmundo.cr/opinion/el-proyecto-del-tren-rapido-depasajeros-debe-seguir-a-las-proximas-etapas/

The project will also introduce double tracks to allow for safer and smoother crossings between opposing trains, since thecurrent railway is entirely single-track, as well as improved signalling and communication systems, improved stations andsupporting infrastructure, and the acquisition of rolling stock (84 vehicles in total). The new vehicles will be about 70mlong and each able to carry 600 passengers, with a maximum interurban speed of 80km/h and 50km/h in urban areas.
Output

The expected benefits of the project include:•

Benefitting over 4.5m inhabitants of the GAM (of which about 34% are women)•

GHG emissions avoided: 2.5m tonnes of CO2e (over the project lifetime)•

Reduction of congestion and accidents (both on road and in the current railway)•

Increased efficiency and reliability of service via improved rolling stock•

About 1,000 temporary jobs during the construction phase•

Generating 461 permanent jobs during operation (of which at least 22% women)•

Generating 189 temporary ancillary jobs (of which 20% women).

Cost

The total planned cost is USD1.54bn. USD1.30bn (84.2%) for CAPEX, i.e. infrastructure and systems, rolling stock, anddesign & implementation; USD197m (12.8%) for financial and admin costs, guarantees, and insurance; and USD46m (3%)
for expropriations / land acquisition.

Financial
structure

The project will be executed under a concession contract model, with funding from various sources. A USD550m loan
from CABEI to the Costa Rican Government, with a 25-year term and 5-year grace period, will partially finance theprojected CAPEX. A further USD945m will be financed by the concession holder (a private developer and operator) – theconcession is granted by Incofer (Costa Rican Railways Institute), an autonomous entity of the Costa Rican Ministry of
Public Works and Transport which has established an ‘Executing Unit’ taskforce dedicated to the project. Finally, theCosta Rican Government will directly provide USD46m for the purpose of expropriations.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative18

Case study 5

Metro line

Title

Panama City Metro Line 2 95

Proponent

Metro de Panama S.A.

Location

San Miguelito to San Antonia, Panama City

StatusCompleted in April 2019

Classification

Transport, public passenger transport, trains

Description

The construction of the 21km Panama Metro Line 2
extension begun on October 2015 and was carriedout by a consortium including Odebrecht
Infrastructure and FCC Construction.

PanamaSource: https://railway-news.com/panama-metro-line-2-opening/

The metro line features energy efficiency technology. To optimize energy consumption, the electrical power supply
system is equipped with a technology that transfers more than 99% of the energy generated from the train into stations
services, such as escalators, lighting and ventilation.96
Output

The line capacity is 40,000 passengers per hour in each direction. Ultimately, reducing congestion and air pollution.

Cost

USD1.86bn

Financial
structure

The project was partially funded through a senior secure debt. SPARC EM SPC, an issuance vehicle company, completed
the offering of USD619m aggregate principal amount of Series 2017-1 Senior Secured Notes due 2022 to partially financeits CDNO purchase commitment to the Consortium.97 UBS won the sole mandate, the project was securitized by apromissory note certificates from the line’s 100% Metro Panamá, paid monthly.98

Case study 6

City Light Rail

Title

Guatemala City Metro Rail Project 99

Proponent

Pronacom, Fegua, and Guatemala City Local
Government

Location

Guatemala City, Guatemala

StatusPlanned. Feasibility study completed in 2017.

Classification

Transport, public-passenger transport, light rail

Description

The Metro Riel would have 20 stations, covering
about 20km of rail and with a maximum speed of
70 km/hour. This project will be further
integrated into the existing Guatemala urban
transport network.

GuatemalaSource: https://www.prensalibre.com/ciudades/el-metro-subterraneometro-riel-y-el-corredor-eo-se-haran-realidad-solo-con-un-plan-maestrometropolitano/

OutputThis project is expected to reduce total travel time to and from the centre of the city by 40 minutes. Overall, it will
improve traffic congestion in the city. The execution of this project will also generate about 3,500 jobs and an additional
1,500 during operation.100

Cost

USD772m

Financial
structure

This project will be implemented by Guatemala’s National Agency for the Development of Economic Infrastructure(Anadie) on a public-private partnership basis.101

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

19

Sustainable water management
Assets that do not increase or aim
at reducing GHG emissions over theoperational lifetime of the asset,
address adaptation, and increase
the resilience of the surrounding
environments. This could include
water capture, collection andstorage, water treatment withmethane emissions treatment, floodand drought defence, stormwater
management, and ecologicalrestoration/management.
This includes built as well as naturebased water infrastructure.
Sector overview
The CAC region is highly vulnerable toclimate change, particularly the increasing
frequency and severity of drought periods.
In 2016, the Central American Dry Corridor
experienced the worst drought in 10 years,
with 33% of the population in need ofhumanitarian assistance.102,103
These conditions exacerbate an alreadychallenging situation, with poor watersupply and safety resulting in poor health,food security and environmental conditions.
For example, in Honduras, 623,000 people

lack access to safe drinking water, while
1.63m lack access to basic sanitation.104
Significant investment in water andsanitation infrastructure is required in CAC
in order for governments to promote
development and achieve the 17 UN
Sustainable Development Goals. CAC
countries need to invest at least 0.41% of
their annual GDP in order to meet their SDG
commitments.105 This refers to investment
for developing new projects as well as
rehabilitating existing assets.
The potential for improved water coverageand infrastructure development issignificant: CAC currently uses only about
10% of their available water resources.106
Further, the wastewater treatment market
is expected to offer opportunities, driven by
population growth and the requirements ofenvironmental regulations, given that only
50% of municipalities in LAC havewastewater treatment plants.107

Investment pathways
The majority of water infrastructure in CAC
countries is publicly owned. The waterauthorities are owned by local government
and funded by the respective treasuries.
Green bonds issued by local governments(provinces, cities, or utility companies

Case study 7

Water treatment

Title

Water Supply on Ambergris Caye 108

Proponent

Belize Water Services Limited (BWSL)

Location

Ambergis Caye, Belize

StatusIn operation

Classification

Water treatment, water storage

Description

Belize Water Services Limited is looking to improve its
water system on the island of Ambergis Caye. The
project will allow it to expand its production capacity by
investing in additional Reverse Osmosis infrastructure. It
also includes the expansion of water and seweragesystems on the island, preventing further shortages. This
will become increasingly important given the future
effects of climate change.

owned by them) could be one of the mainmeans of funding water; however, no local
government issuance for water has
occurred in LAC, and issuance from otherpublic sector issuers has been limited.
As previously highlighted, 62% of theproceeds raised through CABEI’s 2019
green bond financed water management
projects in various CAC countries.
CIFI, a Panama-based infrastructure bank,issued the country’s first green bond in
September 2019. The proceeds may bepartly used to finance wastewater
treatment, but it remains to be seen how
they will be deployed. Banco Nacional de
Costa Rica also had water as an eligible
category but ended up financing renewableenergy only.
The largest water-focused green bondissuer from the LAC region is Chilean
company Aguas Andinas. Its two deals in
the last two years raised funds for the
implementation of potable water andwastewater treatment projects.
Further investment pathways exist in theconstruction, ownership and refinancing of
new types of infrastructure such as water
desalination assets and commercial /industrial water infrastructure.

BelizeSource: https://tacogirl.com/ever-wondered-about-belize-waterand-how-the-plant-works/

Output

The expansion of water treatment capacity and storage are expected to increase water security on the island,
including preventing water shortages which have affected both residents and tourists in the past.

Cost

USD8.5m

Financial structureThis project is funded by a USD8.5m loan from the Caribbean Development Bank (CDB).

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative20

Case study 8

Sustainable water

Nicaragua

Title

Sustainable Rural Water Supply and Sanitation Sector Project109

Proponent

Republic of Nicaragua, Emergency Social Investment Fund (FISE)

Location

Nationwide

StatusUnder construction

Classification

Water, water infrastructure, water storage

Description

The Sustainable Rural Water Supply and Sanitation Project is anationwide water supply and sanitary (WSS) initiative inNicaragua. The goal of the project is to improve access tosustainable WSS services in poor and rural areas, and increase
Nicaragua’s capacity to respond to water stress.

Source: https://florencechristian.org/rain-harvestingsystems-nicaragua/

Output

The completion of the project increases Nicaragua’s water supply coverage and water security, especially in poor andrural areas.

Cost

USD32mFinancial structure

Funded by a grant and loan provided by the World Bank.

Sustainable waste management
The efficient use of resources to cut
down on waste production, coupledwith collection and disposal systems
that promote reuse and recycle,
thereby minimising residual waste
going into waste-to-energy facilities.
Where waste must go to land fill,
there are gas capture systems
installed to minimise emissions aswell as measures to minimise run-of
and other negative impacts on
surrounding environments.

large amount of waste that is not disposedor treated adequately, with prolific open-air
dumps, which causes health andenvironmental issues.

Sector overview

In CAC, a large share of MSW is organic
waste, which could represent economic andenergy generation benefits, where over
50% could be recovered and converted into
compost or biogas production.115 Biogas aswell as waste-to-energy plants have huge
potential. Municipalities in the region haveexpressed interest in implementing suchtechnology, with several plants alreadyoperational across CAC.

Urbanization typically drives the volume ofwaste production. The LAC region has thesecond highest rate of urbanization in theworld, with almost 80% of the population
living in cities.110,111 Despite the relatively
high municipal solid waste (MSW) collection
rate for these populations (89.9% of the
population, when the global average is
73.6%), adequate final MSW disposal
coverage is only at 55%.112 Further, only
2.2% of all MSW in LAC is formally recycled(with some recyclable recovery completed
by the informal sector).113 There is still a

The low sustainable waste management
rate in the region could be attributed to thelack of suitable policies and a financing gap
for facility development.
Fortunately, the level of interest from theprivate sector in waste recovery is
increasing. In the Dominican Republic, there
are two plastic recycling initiatives and theregion’s first metal recycling facility wasbuilt on the island.114

Investment pathways
Most major waste management assets andprojects in CAC are publicly owned, with

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

public financing used mainly for waste
treatment, waste-to-energy facilities, andsanitary refill infrastructure.
Green bonds issued by local governments
or government-backed entities could be ameans of funding sustainable waste
management, but no issuance from such
entities has occurred in LAC yet.
In CAC, only CIFI (Panama) has issued agreen bond that may finance waste
projects. In the wider LAC region, a few
non-financial corporates (BRF, Klabin,
CMPC), private bank Banco Galicia(Argentina) and development banks CAF
and Bancóldex (Colombia) have issued
green bonds to finance waste projects.
Most projects are related to waste
treatment, recycling, and pollution
prevention/control.
Privately owned asset and projects, which
include recycling facilities and waste toenergy facilities, offer other means of debt
and equity investment. There are alsoinnovative approaches used in LAC, such as
the microenterprise organizations in Lima
and La Paz that outsource contracts for
waste management facilities withmunicipalities.116

21Case study 9

Recycling

Title

Three-in-one metal recycling plant

Proponent

Cibao Metal Recycling (CIMER) Srl

Location

Dominican Republic

StatusComplete

Classification

Waste, recycling, facilities for recycling materials

Description

This will be the first recycling plant for metals
and metal compounds in the Caribbean.
The plant has a capacity to process up to one
tonne per hour of oil filters, two tonnes p/ hourof electronic scrap, and approximately fivetonnes p/ hour of car parts and metal sheets.117

Dominican Republic

Source: http://www.greenantilles.com/caribbeans-first-comprehensivemetal-recycling-plant-commissioned-in-the-dominican-republic/

ANDRITZ MeWa, a part of international technology group ANDRITZ, was contracted to develop the complete three-inone recycling plant. The project underwent rigorous environmental management plan, place evaluations, made by the
Ministry of Environment and Natural Resources, to grant the environmental license.118
Output

The plant will be able to process oil filters shredded down to a particle size of less than 30 mm and separated into
three basic output materials: roughly 40% metals, 20% centrifuged motor oil, and 40% rubber and paper. 119 Ideally,
having a plant located in the region will make recycling more economically viable, and therefore more widespread.

Cost

N/A

Financial
structure

The recycling facility is owned by CIMER Srl, a subsidiary of the YeYo Ochoa Group. The new plant was capital
expenditure/ private investment by YeYo Ocha Group.

Case study 10

Waste-to-energy

Title

Waste-to-energy gasification plant

Proponent

Total Waste Energy Solutions (TWES)

Location

Costa Rica

StatusPlanned projectClassification

Waste, waste-to-energy

Description

TWES has submitted its proposal to build the wasteto-energy gasification plant in 2018. The project
would be the largest solid waste energy park in Latin
America. This park will include waste management
features, some of them include reconversion
processor, bio-fuel facility, and ethanol refinery.120

Costa Rica

Source: https://thecostaricanews.com/total-energy-waste-solutionsannounces-new-solid-waste-energy-park/

OutputThis plant will process municipal solid waste into electricity, contributing to Costa Rica’s national target to achieve total
environmental sustainability by 2021.

Cost

N/A

Financial
structure

Technical and financial model are currently still at preliminary stage.
The proposed structure is private investment, with 100% investor-owned, 100% non-recourse finance at 5.0%, 20
years amortization, with conservative calculations showing IRR is 16% at 25/75 equity/debt ratio.121

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

22

Step-by-step guide to green financing
Entities have a wide range of options tochoose from when seeking to finance green
projects. The optimal financing structure will
depend on the company and project-specificfactors, as well as regulations and generalmarket conditions. As each financing
structure entails specific procedures, thesteps provided below are intended to be ahigh-level guide highlighting the major
aspects an entity should consider whenplanning to raise capital for a green project.

Step 1: Develop green asset
strategy and process
The first step for any private or public sector
entity looking to finance a green project is todevelop a green investment strategy anddefine a framework laying out the selection
process and eligibility criteria for identifying
the projects to be financed.
Procedures for the tracking and reporting of
allocated and unallocated funds also need to
be defined. Further, more and moreinvestors are looking for impact reporting,so it is advisable to identify suitable metrics
and initiate a monitoring process.

Who can issue green bonds?
Any entity which has suitable green assets tofinance can issue green bonds or obtain agreen loan. The key aspect of green financeis that the proponent commits to investing
the funds raised in green assets such as
renewable power generation, low-carbon
transport, low-carbon buildings, sustainable
water management, sustainable waste
management, sustainable land use, etc.
and/or climate change adaptation orresilience measures such as flood defences.
An overview of the Climate Bonds Taxonomy
categories is provided on the back cover.

Is there guidance available?
When pursuing green bonds and green
loans, the Green Bond Principles (GBP)
developed by the International CapitalMarkets Association (ICMA) and the Green
Loan Principles (GLP) published by the Loan
Market Association (LMA) provide usefulguidance on four key aspects:122,123••••

Setting eligibility criteria
Asset / project screening
Management of proceeds
Post-issuance reporting.

The Climate Bonds Taxonomy builds upon
the GBP and provides definitions for asset
and project types compliant with the Paris
Agreement, i.e. full decarbonisation by 2050
and limiting global warming to 2oC.9

Country-specific and any future regionalguidelines and frameworks should beconsidered. Several regional countries havepublished green bond guidelines (see pages
8-9).

What’s best practice?
It is market best practice to engage anexternal reviewer to evaluate the green
credentials of the selected projects as wellas the transparency and clarity of theframework. External reviews provide
additional comfort to investors. There are avariety of external review formats (see box).
The Climate Bonds Initiative has developed
the Climate Bonds Standard and sector
specific criteria for a variety of asset
categories – solar, wind, geothermal andmarine renewable energy, low-carbon
buildings, low-carbon transport, water
infrastructure, forestry – and continues todevelop metrics and criteria.

External reviews
External reviews from an independent
party, which confirm alignment with theGreen Bond Principles (GBP) / Green Loan
Principles (GLP) and/or compliance with
the Climate Bonds Standard, have becomecommon practice. The most common
forms of review are:•Assurance report: an external party
confirmation of compliance with GBP.

•

Second Party Opinion: an external
assessment of the issuer’s green bondframework, confirming GBP
compliance and analysing the“greenness” of eligible categories.

•

Green rating: an evaluation of thegreen bond or related framework
against a third-party rating
methodology, which considers theenvironmental aspects of theinvestments. These include products
developed by international anddomestic rating agencies, e.g.
Moody’s, S&P and RAM Malaysia.

•

Verification reports for Certified
Climate Bonds: third party verification,pre- and post-issuance, which
confirms that the use of proceeds
adheres to the Climate Bonds
Standard and Sector Criteria.

Step 2: Source of financing
Once the assets have been identified, theentity needs to determine the most suitable
way to obtain the required funding. Direct
investments are most common, but it may
be possible to create an indirect investment
platform (e.g. an investment fund).

Step 3: Deal structuring
The deal structure can entail a combinationof different sources of financing, dependingon the company, asset characteristics andmacroeconomic factors.

Step 4: Debt origination
Debt origination involves a number ofparties that help the issuer structure andexecute the transaction. Highlighting thedeal’s green credentials by developing a
Green Bond Framework and obtaining an
external review demonstrates a high level oftransparency which can benefit theorigination process and attract investors.

Step 5: Post-issuance reporting
After a green bond, or loan, is issued, issuers
should publish a public report annually on
proceeds allocations, with details on thefinanced projects and the management of
any unallocated proceeds. Disclosing theenvironmental impacts of financed projects
using appropriate metrics and benchmarks isaligned to best practice.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

Certified Climate Bonds
Issuers can certify bonds, loans or sukuk
under the Climate Bonds Standard.
Certification confirms that the bond isaligned to the Paris Agreement and to
keeping global warming under 2°C.
In order to receive the Certified Climate
Bonds stamp of approval, a prospective
issuer must appoint an Approved Verifier,
who will assess the assets and issue averification report to confirm that thebond meets the Climate Bonds Standard.
The Climate Bond Standard allows
Certification of a bond prior to issuance,
which enables the issuer to use the
Climate Bond Certification Mark in thebond marketing efforts and investor
roadshows. After the bond has been
issued and allocation of the bondproceeds has begun, the issuer must
confirm the Certification by obtaining a
post issuance verification report annually
to maintain its Certified status.

23

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative24

Green debt instruments
Green financing instruments continue to evolve. The green label can be applied to a wide variety of instruments – the main requirement is thatthe proceeds finance climate solutions. Beyond green loans and bonds, Malaysian, Indonesian and UAE issuers have issued green sukuk, forexample, while two Australian banks have launched green deposit schemes, and another created a green loan portfolio funding structure.
In the table below we have listed the more common green debt formats and, where possible, picked LAC or CAC examples.

Debt
Instrument

Definition

Examples (from LAC as much as possible)

Supranational andsovereign green
bonds

Proceeds are allocated to nominated projects andassets. Debt securities carry the credit rating of
the issuing State. However, an independent rating
may be assigned by ratings agencies.

Supranational: CABEI issued LAC’s first supranational green bondof ZAR1bn (USD74m) to support energy efficiency, renewableenergy and power infrastructure projects in 2016. It issued asecond green bond, for USD375m, in late 2019 to financerenewable energy and sustainable water projects (covered on page11). CAF (Corporación Andina de Fomento) issued three green
bonds worth USD52m, USD50m and USD30m to finance a range ofenvironmental projects in LAC.
Sovereign: No green sovereign bonds have been issued from the
CAC region yet. The Republic of Chile issued LAC’s first green
sovereign bonds (USD6.2bn in total). The proceeds will finance a
range of projects across transport, buildings, water and energy,
the vast majority going toward transport, especially to improveand expand Santiago’s metro system.

Sub-sovereign
green bonds(green statetreasury andmunicipal bonds)

Proceeds are allocated to nominated projects andassets within the sponsoring region. Credit rating
is based on that of the issuing municipality andthe credit quality of the underlying assets.

No green sub-sovereign bonds issued from CAC issuers yet.
Mexico City became the first local government in LAC to issue
green debt. Its two green bonds (2016: MXN1bn/USD50m, 2018:
MXN1.1bn/USD54m) were earmarked for transport, water,buildings, and adaptation/resilience projects.
Local governments in Argentina have also issued green bonds. The
Province of la Rioja funded wind farms with its two green bonds(USD100m and USD200m), while the Province of Jujuy issued a
USD210m bond for the development of a 300MW solar park.

General obligation
green bondProceeds are allocated to nominated projects andassets. As the green bonds are backed by generalbalance sheet assets from the issuer (rather thanbeing secured on a specific project or asset), they
carry the credit rating of the issuing entity.

State-owned Banco Nacional de Costa Rica (BNCR) issued a seniorunsecured green bond in the amount of USD500m to financevarious renewable energy and wastewater projects.

Green projectbond

Proceeds are allocated to nominated projects andassets. The investor has direct exposure to therisk of the project(s), with or without potential
recourse to the issuer. The credit rating is basedon the quality of the backing green assets and thereturns stream of the underlying project.

No green project bonds issued from CAC issuers yet.
Wind energy producer Energia Eólica (Peru) became LAC’s firstgreen bond issuer in 2014 with a USD204m senior secured green
project bond used to refinance Cupisnique and Talara windfarms,
which benefit from a 20-year guaranteed Power Purchase
Agreement under Peru’s Renewable Energy Resource Program.124
Ormat Technologies Inc. (Honduras) obtained a non-recourse
USD115m project loan from US development finance institution
Overseas Private Investment Corporation (OPIC) to finance a
35MW geothermal power plant.

Green revenue
bond

Proceeds are allocated to nominated projects andassets. As the green bonds are backed at least
partially by the issuer’s revenue stream, they
carry the credit rating of the issuing entity. Local
governments often issue revenue bonds, i.e. bondbacked by future revenue receipts, e.g. from taxes
or fees.

No green revenue bonds issued from LAC issuers yet. However, in
El Salvador, the municipality of San Salvador issued a USD10.5bn
securitisation to finance major public projects backed by the future
municipality’s revenue flows.125
An example of a green revenue bond is the State of Hawaii’s GEMS
2014-1, an ABS deal secured on the green infrastructure feecollected by three state utility companies via electricity bills. The
bond raised funds for the Hawaii Green Infrastructure Loan
Program, which aims at providing loans to finance the installationof renewable energy systems and for energy efficiency projects.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative25

Dual recourse
bonds

Proceeds are used to fund a cover pool offinancial assets. Investors rely primarily on theissuer for bond payments and repayment, but thecover pool provides an alternative source forrecovery if the bond defaults. Credit risk is
reduced thanks to the cover pool security.
Covered bonds legislation and credit history canfurther boost credit ratings for mortgage coveredbonds (the most common).

No green covered bonds issued from LAC issuers.
German mortgage bank Berlin Hyp was the first to issue a green
covered bond in 2015, with a cover pool of mortgages in multiple
European countries. In 2018, Swedish Landshypotek Bank issued agreen covered bond with a cover pool comprising mortgages oncertified and sustainably managed forestry assets.
Bank of China issued a dual-recourse bond with a cover poolcomprising unlabelled climate-aligned bonds in 2016.

Green
securitisation /green tranches in
ABS and MBS
deals

Debt securities backed by a pool of underlying
assets. Proceeds are allocated only to nominatedprojects and assets. An independent credit rating
is often issued by a rating agency, but this is not arequirement. The credit risk is dependent on theasset risks. The only source of repayment is the
cash flow of the assets.

No green securitisation bonds issued from CAC issuers yet.

Green structured
financeandMezzanine andsubordinated debt

Proceeds are allocated to nominated projects andassets. These are hybrid capital investments fromdevelopment banks seeking to support private
investment in the senior debt or from investors
with a higher risk appetite.

In 2017, the Inter-American Investment Corporation (IIC), a
multilateral institution with an exclusive focus on providing direct
and indirect financing to SMEs in LAC, arranged a USD136m 20year B-bond to finance a 70MW wind farm in Uruguay developed
by US-based energy company Invenergy. The bond was sold toinstitutional investors to refinance the A/B loan provided by IIC
and DNB Bank for the construction of the wind farm.

Green convertiblebond

Proceeds are allocated to nominated projects andassets. The security can be converted into apredetermined amount of the company’scommon stock. The bond will carry the credit
rating of the issuing entity.

No green convertible bonds issued from LAC issuers yet.

Environmental
impact bonds /pay-for-results
green bonds

Proceeds allocated to nominated green
projects/assets. Part of the project’s risk istransferred from the issuer to investors. The
payments to investors are conditional on the
project achieving an expected outcome after athird-party evaluation has been conducted.

No pay-for-result green bonds issued from LAC issuers yet.

Private placement

Green bond placed directly with the investor/s.
Details of the deal such as pricing and maturity
may remain confidential, but the issuer is
expected to disclose details on the nominatedprojects and assets to be financed.

Williams Caribbean Capital from Barbados issued a BBD3m(USD1.5m) green structured bond to fund a variety of solar PV
projects across the country. The structure was backed by the IDB,
through their private sector branch IDB Invest.

These instruments provide lending to encourage
market development in climate-aligned sectors inline with the Climate Bonds Taxonomy and incompliance with the Green Loan Principles.
Interest rates are based on borrower credit scoresor an ESG score assigned by an ESG rating agency.

Green loans have yet to appear in CAC countries.

Green loans

Securitisations have been used primarily to bundle building
mortgages and loan and lease receivables, e.g. from solar.
In LAC, they are most common in Brazil given the nationally
relevant CRA (Agribusiness Receivables Certificate) and CRI (Real
Estate Receivables Certificate) securitised instruments. Multiple
Brazilian issuers have come to market with labelled ABS deals,
especially CRAs related to forestry. For example, Suzano Papel e
Celulose, a large pulp and paper producer, issued a BRL1bn(USD295m) green CRA in 2016, using the proceeds to invest inreforestation, expansion of certified forests and renewable energy.

Japan-based Sumitomo Forestry issued the first green convertible
in September 2018 to refinance the acquisition of 30,000 hectaresof FSC-certified timberlands and plantation forests in Nelson, New
Zealand.

In 2016, District of Columbia Water and Sewer Authority (USA)issued a USD25m private placement to fund the construction of
infrastructure to absorb and slow surges of stormwater during
periods of heavy rainfall. If the project does not meet
expectations, DC Water will make an outcome payment toinvestors; if it does, no contingent payment will be due; and if it
exceeds expectations, investors will make a Risk Payment Share of
USD3.3m to DC Water.126

Private placements are common in LAC, e.g. IFC subscribed in fullto the green bonds issued by Bancolombia and Davivienda(Colombia) and Banco Galicia (Argentina).

Iberdrola Mexico obtained LAC’s first green loan in 2018. The
syndicated facility was signed with ten banks, led by BBVA. It willrefinance three windfarms in Mexico and was reviewed externallyby Vigeo Eiris, in compliance with the Green Loan Principles.
Agrosuper, Chile’s largest producer of animal protein, obtained
USD100m to finance the acquisition of two salmon producers, thecontinued reduction in antibiotic use in production, and thecertification of new centres under ASC. The loan was arranged by
Rabobank, which has a strong presence in agri-finance.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

26

Green finance leveraging mechanisms
Blended finance
Blended finance structures combine public
and private investments, channelling capital
flows into the pipeline to deliver adjusted
risks and improved bankability of projects.
An example on what can be delivered
through the employment of blended financestructure is the Risk Mitigation Instrumentfor Land Restoration project by Global
Environmental Facility (GEF), which ismanaged by the Inter-American
Development Bank. The combination of
USD15m funds from GEF and USD120m in
co-financing were used to provide
guarantees and subordinated loans to
restore degraded landing in Latin
America.127

Value capture
The value capture model can support thepayment for the initial costs of the projects
by monetising the revenues generated by
the assets’ appreciation.
One of the best examples is Hong Kong’s
MTR, a pioneer of financing public transit
through real estate and the value capture
model since it started developing Hong
Kong’s urban metro system in 1975. Its “railplus property” model allows Hong Kong’s
public transport company to self-finance bycapturing the increase in above-groundproperty value once railways are built.

Credit guarantees
Guarantees can fully or partially absorb
different types of risks that can range fromproject level risks to operation default
exposure. They can help borrowers
overcome financial structuring challenges,
high up-front payments, long paybacks oreven improve one’s technical capacity.
Credit guarantees can enhance the credit
worthiness of a project by providing
coverage for a portion or the whole debt
obligation subscribed by private investors,
attracting, as well, a wider pool of investors
and potentially achieving better deals.
These mechanisms can be particularly
helpful for the financing of green projects inemerging markets, which usually have ahigher-risk profile. For example, theRepublic of Seychelles issued a USD15m
sovereign blue bond in October 2018, which
benefits from a USD5m guarantee provided
by the World Bank as well as a USD5m
concessional loan from the Global
Environment Facility (GEF) (see page 13).

The Clean Energy Finance Facility for the
Caribbean and Central America (CEFF-CCA)
is a financing initiative of USAID that aims to
support energy efficiency projects in theregion through the provision of loans,guarantees, political risk insurance andinvestment fund support.128 And, in Peru, itoffers a matching facility, linking producers
with financing, and buyers for premium
cacao. It combines the provision of loan
guarantees with technical assistance tocacao farmers. The technical assistance
supports the adoption of sustainable farming
practices, while the loan guarantees improvethe deal credit metrics, facilitating access tofinancing at more favourable terms.
Mexican development bank FIRA offers
credit guarantees, training, technicalassistance and other activities that support
stakeholders from the agriculture, fishingand forestry sectors.

The role of development banks
Multilateral banks can play an importantrole on helping issuers overcome financing
obstacles and attract private investments,
through de-risking mechanisms that may
also increase capital flows. The provision ofsuch tools can not only leverage credit
worthiness, but also protect borrowers andlenders from political uncertainty or
currency exchange volatility.
IDB Invest’s B-bond structure, for example,
aims at sharing investment risks andcrowding-in institutional investment. The Bbond (bridge-bond) allows IDB Invest to
involve institutional investors that typically
prefer to invest in developed markets.

The Central American Mezzanine
Infrastructure Fund II (CAMIF II) is a
USD250m private equity fund, which
provides mezzanine loans and equity tosmall and medium infrastructure projects in
CAC.131 Similar to CAMIF I (USD210m),
CAMIF II will focus on traditional
infrastructure such as renewable energy,transportation and water and sanitation, but
it will also invest in natural resources, healthand education, real estate, manufacturing,and tourism.
Set up by Latin American Partners (LAP) LLC,a private equity firm based in Washington
DC, its investors include the IDB, the IFC andEuropean banks.132 Their commitments areallocated into three tranches: senior loan,mezzanine and equity. CAMIF provides themwith exposure to transactions that are
difficult to originate and structure, which inmost cases would not be visible to investors,
in a region that is currently underserved byinstitutional investors.
Amundi Planet Emerging Green One, which
is a USD2bn fund initiated by the IFC andmanaged by global asset manager Amundi,
launched in March 2018. It can provide
credit enhancement mechanisms,
supporting green issuance and issuers andconnecting investors to climate-smart
investment opportunities.133 The fundinvests in the green bonds of emerging
markets financial institutions, thus using
international and institutional capital tosupport local lending to the real economy,
leveraging both capital markets and local
banks’ market experience and expertise.

US-based Invenergy issued USD102m for theconstruction of a solar and wind power plantin La Jacinta, Uruguay. IDB Invest arranged a
USD65m B-bond which was sold to a special
purpose vehicle and then privately placedwith an institutional investor. IDB Invest
provided the remaining USD3.6m A-loan,
thus raising USD68.6m for Invenergy.129

The Currency Exchange Fund (TCX), set up in
2007, is funded by 22 development financeinstitutions and microfinance investment
vehicles, with the support of the Dutch andGerman governments. TCX aims to offer
currency risk hedging solutions in developing
and frontier markets. This is made possible
by pooling the risk of currencies for which
there are no long-term hedging products, or,in some cases, no market at all.

Uruguayan renewable energy company Atlas
Renewable Energy issued a similar USD114m
A/B structured bond to finance solar energy
projects. The deal’s structure included seniorand subordinated note tranches, with IDB
Invest as the lender of record.130

TCX provides hedging tools in local
currencies in Nicaragua, Honduras,
Guatemala, Jamaica, Costa Rica, Haiti andthe Dominican Republic.134

Multilaterals can – and do – also offer green
finance leveraging solutions, acting as
anchor investors, initiating emerging market
investments funds and platforms, andproviding technical assistance related toboth sustainable business and financing.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

Currency risk can be a significant barrier toattracting international capital to emerging
markets. Therefore, hedging mechanisms for
local currency risk or when deals are backed
by local currency revenues, are vital for derisking deals. Creating a currency market canalso support the development and opening
up of local financial markets.
27

Conclusion and considerations

There is huge potential for green finance in CAC. 2019 was a positive
year for the market, with a record number of new deals by various
issuers and several promising initiatives by a diverse group of players.
2020 has, of course, been an exceptional year so far, with the COVID19 pandemic affecting global investments, including those related toclimate solutions. This has produced a clear shift in sustainablefinance markets, with the volume of green bonds falling considerablywhile that of other sustainable debt labels has grown. Public sector
issuers in particular are, understandably, prioritising investments innational health systems and response packages. However, social andenvironmental issues are intrinsically connected, and pandemics are agreat example of this. As economic and financial systems around theworld increasingly take account of social and environmental impacts,
the discussion will likely move towards ‘sustainability’ as an
overarching theme rather than looking at its individual components.
Nonetheless, we expect to see the following in the green financespace going forward:
1. Continued growth in green bond issuance, with new issuers andcountries joining the market: Progress to date has laid thegroundwork for the opportunities lying ahead. Future
development can rely on existing regional markets and initiatives,
and will benefit from issuers’ best practice on the use of external
reviews to showcase their green credentials. There is special
potential for green finance to support investments in green
infrastructure, especially linked to energy, transport, water andwaste. Growth in most countries will also come from issuer typediversification. Labelling bonds from existing climate-aligned
issuers as they refinance presents an additional opportunity tobring visibility to CAC’s green finance market.
2. Investment in sustainable agriculture and blue projects: As well as
green infrastructure investments, given the importance ofagriculture and ocean-based activities in much of CAC, special
focus is needed to develop these sectors sustainably whilst
increasing their adaptive capacity to climate shocks. Policies thatdrive investment in sustainable agriculture and ocean projects, byboth the public and private sector, should be a priority forpolicymakers across the region. Sovereign green bonds could also
be particularly useful to achieve this.
3. Green bond issuance from the public sector to finance national
development goals under the Paris Agreement: This is all themore important in CAC given the need for investments in green
and more resilient infrastructure, likely to be undertaken by the
public sector. While public sector issuance in CAC is limited,
looking at Latin America overall, the green sovereign bonds from
Chile, deals from local governments in Mexico and Argentina, andmultiple issuances from development banks across the region,
have set the stage for further issuance from the public sector tomobilise funding for green infrastructure. With Peru, Colombia
and Mexico announcing potential sovereign issuances, we see
significant opportunities for CAC governments to scale up green
finance while increasing its visibility among the general public.
4. Development banks leveraging their expertise and financial
capabilities to support local market development: Multilateral
players such as the IDB and IFC, and regional ones such as CABEI,CAF and the IDB, are expected to continue to facilitate green
bond issuance by acting as ‘anchor investors’ for local issuers. This
provides a signal to foreign investors that borrowers are credible.
Supranational institutions have already implemented somemeasures to spur market growth, such as guarantees, de-risking
mechanisms, investment funds, platforms for collaboration andknowledge exchange, and support on the issuance process.
Together with direct investment in projects, these could be built
on and expanded more systematically throughout LAC.
5. Increased engagement of the wider banking and finance sector ingreen bond issuance: International initiatives such as the Network
for Greening the Financial System, the International Network of
Financial Centres for Sustainability, and the Sustainable Banking
Network, and national ones such as Mexico’s CCFC and Panama’s
Sustainable Finance Workgroup, can disseminate knowledge,
ensure consistent messages and provide support to lenders toscale up green lending. More research on innovative instruments,
such as through IDB’s Natural Capital Lab, could support thisfurther. Stock exchanges and banks also have a key role to play –several in CAC have already been active in enabling andpromoting green finance and this work should be strengthened.
6. The introduction of further policies, incentives and guidelines
around green finance: The market is a function of and responds tothe architecture of the system. Coherent and supportive policy isthus instrumental in scaling up investment in green projects.
While substantial and comprehensive policies are still lacking bothin CAC, LAC and globally, several regional governments havealready taken steps in the right direction; for example, somecountries have developed Green and/or Social Bond Guidelines(although these don’t yet exist at a regional level). Governments
could also consider providing financial support for issuers to coveradditional costs, such as those of obtaining external reviews.
Further support could come from a platform providing aggregatedinformation about the green bond market.
Naturally, all of these are interconnected. Success in growing green
finance requires a concerted effort by market participants and aholistic understanding of the system. Close co-operation, open
dialogue, knowledge sharing, and common frameworks andobjectives, are a necessity.

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative28

Annex 1: Sample green project pipeline
This sample pipeline includes ‘green’ and ‘potentially green’ projects taken from various public sources, including government documents, media
articles and World Bank publications. The assessment of the ‘greenness’ of each project was based on the Climate Bonds Taxonomy. This sample
pipeline is not comprehensive.

Country

BelizeCosta Rica

Dominican
Republic

El Salvador

SectorProject nameLocation

StatusEnergyMollejon Hydroelectric Plant overhaul 135

Macal River, Belize

Completed

Transport

Solar LED streetlights in three provinces 136

San Ignacio Town; San Narciso Village,
Corozal District; Belize City

Completed

Water

Water treatment on Ambergris Caye 137

Ambergris Caye

Under
construction

Waste

Belmopan Sewer Waste Biogas 138

Belmopan, Belize

PlannedEnergyLas Pailas II geothermal plant 139

Curubandé de Liberia

Completed

Transport

LRT System 140

San José metropolitan area

PlannedWater

Las Trancas-Bahía de Papagayo aqueduct 141

Carrillo, Guanacaste

Completed

Waste

TWES Waste-to-energy gasification plant 142

Costa RIca

PlannedEnergyMonte Grande Hydropower 143

Yaque del Sur River, Barahona province

Completed

Transport

Santo Domingo Metro Line 2 144

Water

Mirador Norte-La Zurza Wastewater
Treatment Plant 145

Greater Santo Domingo, Dominican
Republic
Santo Domingo North, Dominican
Republic

Waste

CIMER Three-in-one metal recycling plant 146

Dominican Republic

Completed

EnergyCapella Solar Plant (140 MW) 147

Department of La Paz

Under
construction

Transport

El Salvador Pacific Railway 148

Nationwide, El Salvador

Planned

Water

Renovation of Las Pavas Drinking Water
Treatment 149

El Salvador

Under
construction

Waste

Nejapa Biogas Landfill Site 150

Chalatenango, El Salvador

Completed

EnergyHorus I Photovoltaic Plant 151

Santa Rosa area, Guatemala

Completed

Transport

Guatemala City Metro Rail Project 152

Guatemala City

Planned

Water

Quetzaltenango Wastewater Treatment
System 153

Municipality of Quetzaltenango,
GuatemalaPlannedWaste

AMSA Waste-to-Energy 154

Lake Amatitlan region, Guatemala

Completed

EnergySula Valley Biomass Plant (43 MW) 155

Sula Valley

Completed

Transport

BRT System extension 156

Tegucigalpa

Under
construction

Water

Sanitary Sewerage and Wastewater
Treatment Plant Works 157

Municipality of Guajiquiro, Departmentof La Paz

PlannedWaste

INVEMA PET Recycling expansion 158

San Pedro Sula, Honduras

Completed

EnergyEolo Wind Farm (44 MW) 159

Province of Rivas, Lake Nicaragua

Completed

Transport

Managua LRT 160

City of Managua

Planned

Water

Sustainable Rural Water Supply andSanitation Sector Project 161

Nationwide

Underconstruction

Waste

Gravita Nicaragua Recycling Plant 162

Managua, Nicaragua

Completed

EnergyPenonome Wind Farm 163

Central Province of Coclé

Completed

Transport

Panama City Metro Line 2 164

Panama City

Completed

165

Burunga, Arraiján District, Panama

PlannedCerro Patacón waste-to-energy landfill 166

Ancon, Panama District, Panama Province

Completed

GuatemalaHonduras

Nicaragua

Water
PanamaWaste

Burunga Wastewater Management ProjectNote: ‘Potentially green’ projects are projects that could be green, but more information would be needed to determine this.
Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

Completed
CompletedAnnex 2: International green standards
The Climate Bonds Taxonomy is used to identify green projects /assets which are aligned with achieving the goals of the Paris
Agreement. It covers energy, transport, buildings, sustainable water
and waste management, sustainable land use and marine resources,
ICT and industry. It excludes fossil fuel power generation, ICE personalvehicles, and freight rail primarily used for fossil fuel transport.167
The EU has significantly ramped up its sustainable finance efforts inthe last couple of years, with the European Commission creating a
dedicated Sustainable Finance work stream through which it hasdeveloped an EU Green Bond Standard. More broadly, it is also
currently working on a Taxonomy of Sustainable Activities and an
International Platform on Sustainable Finance.168
The IDB Sustainable Infrastructure Platform is a framework ofsustainability criteria that covers an integrated spectrum of economic,
financial, environmental, social, and institutional dimensions forinfrastructure projects. The framework addresses three key stages ofinfrastructure delivery: policy and planning (or upstream level),project preparation and design, and financing. It consolidates thefundamental environmental, social, institutional, economic, andfinancial principles for implementing sustainable infrastructure
investments and is applicable throughout the entire project cycle andacross different sectors and regions.169
The Effective Energy Management Systems (EnMS /ISO 50001)
standard establishes an international framework for the supply, use
and consumption of energy in industrial, commercial, and institutionalorganizations. Implement an ISO 50001 compliant sustainable energy
management system and demonstrate organization’s commitment tocontinuously improving energy performance, leading to economic
benefits and reduced greenhouse gas emissions.170
SOURCE is a global standard created by Sustainable Infrastructure
Foundation (SIF). It offers governments a global, reliable, secure, anduser-friendly project preparation software to maximize public sector
users financing options including PPPs by providing well-preparedprojects in a consistent and transparent way to the international
community of contractors, investors, and lenders.171
GRESB Infrastructure ESG Benchmark uses the GRESB Infrastructure
Assessment, which comprises two components: Fund Assessment andAsset Assessment. There is also a third component that is optional: aResilience Module. The Infrastructure Fund Assessment assesses the
ESG performance of infrastructure funds, and the Infrastructure Asset
Assessment assesses ESG performance at the asset level for
infrastructure asset operators, fund managers and investors thatinvest directly in infrastructure.172
The Standard for Sustainable and Resilient Infrastructure (SuRe) is a
global voluntary standard which integrates key criteria ofsustainability and resilience into infrastructure development andupgrade, through 14 themes covering 61 criteria across governance,social and environmental factors.173
Envision is a framework that includes 64 sustainability and resilience
indicators, called ‘credits’, organized around five categories: Qualityof Life, Leadership, Resource Allocation, Natural World, and Climate
and Resilience. These collectively address areas of human wellbeing,mobility, community development, collaboration, planning, economy,materials, energy, water, conservation, ecology, emissions, andresilience.174

Endnotes
1

Specifically, the countries in the Central American
Integration System (SICA): Guatemala, El Salvador,
Honduras, Nicaragua, Costa Rica, Belize, Panama, and theDominican Republic.
2
McKinsey, Unlocking the economic potential of Central
America and the Caribbean, 20193
McKinsey, Unlocking the economic potential of Central
America and the Caribbean, 20194
Moody's, Stable outlook for Latin America and Caribbean
sovereigns, 20195
OECD Development Matters, Adapting to the new normal:
Economic impact of COVID-19 on Central America, 2020
6
CBI, Climate Bonds Taxonomy
7
CBI, Sector Criteria
8
CBI, Sector Criteria Available for Certification
9
CBI, Labelled Green Bonds Data
10
Energy Transitions Commission, COVID Recovery Letter,
2020
11
UNCTAD, World Investment Report 2020
12
EBRD, EBRD’s coronavirus Solidarity Package
13
EF, 'Impact rescue facility', 2020
14
CBI, Green Bond Treasurer Survey 2020
15
CBI, Green Bond European Investor Survey 201916
CABEI, Economic Impact of COVID-19, 2020
17
CBI, Sustainable Debt Global State of the Market H1 2020
18
Reuters, Storms that slammed Central America in 2020 justa preview, 2020.
19
CABEI, CABEI welcomes Korea as a new member, 2020
20
CABEI, Republic of Korea
21
CABEI, The Republic of Korea and CABEI sign a US$50
million Trust Fund, 2020
22
CABEI, Korea has become the first member country toestablish a Single Donor Trust Fund, 202023
Euromoney, CABEI a stronger regional player making abigger impact, 2020
24
CABEI, CABEI welcomes Korea as a new member, 2020
25
CABEI, CABEI signs collaboration agreement with Korea
Eximbank, 201926
Euromoney, CABEI a stronger regional player making abigger impact, 2020

27

CABEI, Republic of Korea
ThinkGeoEnergy, Costa Rica hits record electricity
generation, 201929
World Economic Forum, Costa Rica doubles its tropicalrainforests, 201930
Vox, Costa Rica has an ambitious new climate policy, 201831
Costa Rica, NDCs, 201532
Costa Rica, Plan Nacional de Descarbonización 2018-2050
33
Belize, NDCs
34
Guatemala, NDCs
35
K'atun Nuestra Guatemala 2032
36
Guatemala, NDCs
37
Climate Change Legislation in Dominican Republic
38
Panama, NDCs, 201639
Honduras, NDCs, 201540
Nicaragua, NDCs, 201841
El Salvador, NDCs, 201542
El Salvador, Plan Quinquenal de Desarollo 2014-2019
43
Bolsa Nacional de Valores, Guía para la Definición y Gestiónde Proyectos Verdes. Bolsa Nacional de Valores, Estandarpara la Emisión de Bonos Verdes. Bolsa Nacional de
Valores, Guía Voluntaria para la creación de Reportes deSostenibilidad.
44
Bolsa Nacional de Valores, Estandar para la Emisión deBonos Sociales. Bolsa Nacional de Valores, Estandar para la
Emisión de Bonos Sostenibles.
45
Rumbo Economico, BNV premió empresas, 201946
SSE Initiative, Costa Rica Joins Exchanges Committed to
Sustainability, 201847
BNV, Bonos Verdes
48
UNEP FI, Responsible Investment Training Workshop in
Costa Rica, 2019
49
ECORED, BVRD realiza el primer Foro Internacional deFinanzas Verdes, 201950
BVRD, Guía de Bonos Verdes
51
Panabolsa, Guía para Emisión de Valores Sociales, Verdes y
Sostenibles
52
BNV, BNV lidera impulso a la Sostenibilidad, 201953
Latin Finance, Central America bets on integration to boost
stock markets, 201828

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

54

Dominican Republic, Ecuador, Guatemala, Honduras, El
Salvador, Nicaragua, Costa Rica, and Panama.
SDG IISD, Pre-COP to the Santiago Climate Change
Conference, 201956
Revista Summa, Cámara de Bancos e Instituciones
Financieras suscriben histórico Protocolo Verde, 201957
Dirección de Cambio Climático de Costa Rica
58
DCC, Sistema Nacional de Métrica para el Cambio Climático
(SINAMECC)
59
E&N Finanzas, Bolsa Nacional de Valores lanza bonos
sostenibles, 201960
SUPEN, Reglamento De Gestión De Activos, 2018
61
SBP, Grupo de Trabajo de Finanzas Sostenibles
62
UNDP, Leveraging innovative finance for Caribbean blue
economy growth, 2018
63
World Bank, Grenada: Blue Growth Coastal Master Plan,
2016
64
Blue Finance, Dominican Republic project65
CABEI, Green Bond Framework, 201966
CABEI, Second Party Opinion, 201967
CABEI, Green Bond Reports
68
Two water supply and treatment projects in El Salvador
and Nicaragua were 100% financed by the green bond; theother 10 projects receive additional funding from CABEI
that does not derive from the green bond’s proceeds.
69
Banistmo, Primer Bono Social de Género en América Latina,
2019
70
BancoEstado, BancoEstado marca un hito al emitir elprimer bono social, 2018
71
Valora Analitik, FDN colocó bonos para renovación de flota
TransMilenio, 201972
Revista Summa, IFC presta US$35m a Davivienda Costa
Rica, 201973
In 2019, Energy, Buildings and Transport accounted forover 80% of allocations (an increasing share), with Water
and Waste comfortably in 4th and 5th place. See our recent
Green Bonds Global State of the Market 2019 report.
74
CBI, LAC Green Finance State of the Market 2019. See thereport for sources.
55

30

75

European Commission, International Oceans Governance –Scientific Support, 2018. Bubbles show the relative size of net
co-benefits. Full impacts in Singh et. Al, Marine Policy, A
rapid assessment of co-benefits and trade-offs among
Sustainable Development Goals, 2018.
76
Borgen Project, The Green Dream: Sustainability in Central
America, 201877
Norton Rose Fulbright, Renewable energy in Latin America:
Central America, 201678
Under 30 Experiences, Costa Rica has run on 100%
renewable energy for 299 Days, 2019
79
IRENA: Coalition for Action, Towards 100% Renewable
Energy, 2019
80
IRENA: Coalition for Action, Towards 100% Renewable
Energy, 201981
Climate Links, USAID Regional Clean Energy Initiative –Central America, 201682
Proparco, El Salvador Capella Solar
83
Photon.info, FMO Finances 140MW Capella Solar PV Plant,
201884
SICA, AES/CMI inauguran la primera planta solar delproyecto Bósforo, 201885
Environmental Justice Atlas, Proyecto eólico del Cerro de
Hula86
Metro de Panama, Acerca
87
Metro de Panama, Visita de la Comisión de Infraestructura
Pública y Asuntos del Canal, 201988
Global Mass Transit, BRT systems in Latin America: A
comparative analysis, 201789
UITP Latin America, Sources of revenue of public transportsystems in Latin America
90Intelligent Transport, The importance of public transport in
Latin America, 2016
91
Central America Data, New Boost for Electric Car Sales,
2019
92
Central America Data, Electric Vehicles: First Recharging
Station, 2019
93
Central America Data, Electric Vehicles: New Charging
Station, 201994Intelligent Transport, The importance of public transport in
Latin America, 201695
IRJ, Panama City metro Line 2 inaugurated, 2019
96
Alstom, Alstom’s innovative solutions for Line 2 of Panama
Metro, 201997
Global Legal Chronicle, Sparc EM SPC’s $619m Notes
Offering, 201798
Global Capital, Panama Metro Line to Tunnel for MoreDebt, 201799
BNAmericas, Feasibility study US$770m Guatemala City
light rail project, 2008
100
DCA, Reciben propuestas para el Metro Riel, 2019101
IRJ, Guatemala City LRT right-of-way agreement signed,
2019
102
GWP, Integrated Water Resources Management in Central
America, 2016
103
World Bank Blogs, Guaranteeing water security, a priority
for Central America, 2019

104

Ecoviva, Millions lack access to clean water in Central
America, 2019
105
World Bank Blogs, Guaranteeing water security, a priority
for Central America, 2019106
ReliefWeb, Central America Hashes Out Agenda Water,
2017
107
Smart Water Magazine, Water Challenges andOpportunities in Latin America, 2019108
San Pedro Sun, BWSL takes over CWBL on Ambergris Caye,
2019
109
World Bank, NI Sustainable Rural Water Supply andSanitation Sector Project, 2019110
MDPI / Recycling, Municipal Solid Waste Management in
LAC, 2018111
UN Habitat, State of LAC Cities 2012112
IDB, Solid Waste Management in LAC, 2015113
MDPI / Recycling, Municipal Solid Waste Management in
LAC, 2018
114
Central America Data, Recycling: A Business with Future
Potential, 2019115
MDPI / Recycling, Municipal Solid Waste Management in
LAC, 2018116
MDPI / Recycling, Municipal Solid Waste Management in
LAC, 2018
117
ANDRITZ, ANDRITZ to supply first Caribbean recycling plant,
2016
118
Yeyo Ochoa Group, 3 en 1 | Manejo adecuado, 2018
119
ANDRITZ, ANDRITZ to supply first Caribbean recycling plant,
2016
120
Costa Rica News, Total Energy Waste Solutions Announces
New Solid Waste Energy Park121
WTE International, 547,500 ton per year MSW to Plant in
Costa Rica
122
ICMA Group, Green Bond Principles, 2018123
Loan Market Association, Green Loan Principles, 2018
124
Climate Bonds Initiative, Last reviews of the year: Peru’s
Energia Eolica ($204m), 2014
125
Central America Data, San Salvador Issues Second
Securitization, 2013126
Goldman Sachs, Dc Water, Goldman Sachs and Calvert
Foundation Pioneer Environmental Impact Bond, 2016
127
GEF, Innovations in Blended Finance: A Summary
128
USAID, Clean Energy Finance Facility for CAC, 2015
129
IDB, What is a B-bond?, 2018
130
Atlas Renewable Energy, Atlas Renewable Energy Wins
Structured Bond Deal of The Year, 2018131
FMO, CAMIF II - Central American Mezzanine Infrastructure
Fund
132
SIFEM, Central American Mezzanine Infrastructure Fund Ii
133
Amundi IFC, Emerging Market Green Bonds Report 2018
134
TCX, About the Fund
135
Power Engineering International, American Hydro wins
overhaul deal in Belize, 2017136
Government of Belize, Ministry of Public Service. 2019137
The San Pedro Sun, Ambergris Caye Lacks Adequate Solid
Sewage Waste Management, 2020
138
Renewable Energy Caribbean, 2017

139

ThinkGeoEnergy, 55 MW Las Pailas II geothermal power
plant officially inaugurated in Costa Rica, 2019140
Subways. San Jose Planned Right Rail141
ICT. Las Trancas-Papagayo Aqueduct Will Supply Carrillo
Communities and Tourist Developments.
142
New Energy, Costa Rica looks to waste gasification, 2018143
Water Power & Dam Construction, Bauer completes cut-off
wall construction at Monte Grande Dam, 2020
144
Metro of Santo Domingo, Metros in DR: Santo Domingo
145
Incantema Consulting & Engineering, Water Tests
Underway at Mirador Norte La Zurza WWTP, 2020
146
Global Recycling, A Recycling Plant for the Dominican
Republic
147
Solar News, FMO Finances 140MW Capella Solar148
BNAmericas, Project Spotlight: El Salvador’s Pacific
Railway, 2019149
SUEZ, SUEZ wins first contract in El Salvador, 2018
150
JICA, Master Plan for the Development of Renewable
Energy In El Salvador, 2012
151
Energy News, Horus Energy largest PV plant in Central
America, 2015
152
Central America Data, Guatemala: Metro Rail to Cost
$770m, 2016
153
Central America Data, Tender for Sewer System Expansion,
2019
154
Simpson Environmental Corporation, Closure of AMSA
Landfill WTE Project
155
Bioenergy Insight, Honduran Green Power opens biomass
plant in Honduras, 2016
156
BNAmericas, CABEI to finance BRT extension in
Tegucigalpa, 2014
157
Garcia & Bodan, Sanitary Sewerage and Wastewater
Treatment Plant in Honduras, 2019
158
Plasteurope, Recycler in Honduras installs Herbold
processing line, 2017
159
EV Wind, Globeleo Inaugurates 44 MW Eolo Wind Farm in
Nicaragua, 2013.
160
Global Mass Transit, Project Update: Latin America
161
World Bank, NI Sustainable Rural Water Supply andSanitation Sector Project, 2019
162
Central America Data, New Recycling Plant in Nicaragua,
2017
163
UNFCC. Project 7839: Penonome Wind Farm
164
Railway Technology, Panama City metro Line 2 begins
commercial service, 2019165
World Bank, Panama – Buringa Wastewater Management
Project, 2017
166
Central America Data, Panama: Energy Produced in
Landfill, 2014
167
CBI, Climate Bonds Taxonomy
168
European Commission, Sustainable Finance169
IDB, IDBG Framework for Planning, Preparing, andFinancing Sustainable Infrastructure Projects
170ISO, ISO 50001: Energy Management Systems
171
SIF: Source
172
GRESB, ESG Benchmark for Real Assets
173
SURE: Standard for Sustainable and Resilience
Infrastructure
174
Institute for Sustainable Infrastructure, Envision

1 Specif ically, the countries in the Ce ntra l American Integration System (SICA): Guate mala, El Salvador, H onduras, Nicaragua, C osta Rica, Be lize, Pana ma, and the Dominican Re public.
2 McKinsey, Unlocking the econ omic p ote ntia l of Central America and the Caribbean, 2019
3 McKinsey, Unlocking the econ omic p ote ntia l of Central America and the Caribbean, 2019
4 Moody's, Stable outlook f or Latin Ame rica and Carib bean sovereigns , 2019
5 OE CD De velopme nt Matters, Adapting to the ne w normal: Ec on omic impact of COV ID-19 on Cen tral America , 2020
6 CBI, Clima te Bonds Taxonomy
7 CBI, Sector Criteria
8 CBI, Sector Criteria Availab le f or Ce rtif ication
9 CBI, Labelled Gre en Bonds Data
10 Energy Transitions Commission, COVID Rec overy Lette r, 2020
11 UN CTAD, World In vestme nt Rep ort 2020
12 EBRD, E BRD’s coronavirus Solidarity Package
13 EF, 'I mpact rescue facility' , 2020
14 CBI, Green Bond Treasurer Survey 2020
15 CBI, Green Bond European In vestor Survey 201916 CABE I, Ec onomic Impact of COVID-19, 2020
17 CBI, Sustainable Debt Global S tate of the Market H1 2020
18 Reute rs, Storms that slammed Central America in 2020 just a previe w, 2020.
19 CABE I, CABEI we lcomes K orea as a new membe r, 2020
20 CABE I, Republic of K orea
21 CABE I, The Republic of K orea and CABEI sign a US$50 million Trust Fund , 2020
22 CABE I, K orea has become the f irst me mber country to estab lish a Single D onor Trust Fund , 2020
23 Euromoney, CABEI a stronger regional player making a bigger impact, 2020
24 CABE I, CABEI we lcomes K orea as a new membe r, 2020
25 CABE I, CABEI signs collab oration agreeme nt with K orea Ex imban k, 201926 Euromoney, CABEI a stronger regional player making a bigger impact, 2020
27 CABE I, Republic of K orea
28 ThinkGe oEnergy, Costa Rica hits record elec tric ity gene ration, 2019
29 World Econ omic Foru m, Costa Rica doubles its trop ical rain forests , 201930 Vox, Costa Rica has an a mbitious new climate policy , 201831 Costa Rica, N DCs , 201532 Costa Rica, Plan Nacional de Descarbonizac ión 2018-2050
33 Be lize, ND Cs
34 Guatemala, NDCs
35 K'atun Nuestra Guatemala 2032
36 Guatemala, NDCs
37 Clima te Change Legisla tion in D ominica n Republic
38 Panama, ND Cs , 2016
39 Honduras, ND Cs , 2015
40 Nicaragua, ND Cs , 2018
41 El Salvador, NDCs , 2015
42 El Salvador, Plan Quinquenal de Desarollo 2014-2019
43 Bolsa Nacional de Va lores, Guía para la De fin ición y Gestión de Proyectos Ve rdes . Bolsa Nacional de Va lores, Esta ndar para la E misión de Bon os Ve rdes . Bolsa Nacional de Va lores, Guía Voluntaria para la c reación de Re portes de S ostenib ilidad .
44 Bolsa Nacional de Va lores, Esta ndar para la E misión de Bon os Soc iales . Bolsa Nacional de Valores, Estandar para la Emisión de Bonos S ostenibles .
45 Rumbo Ec on omic o, BNV premió e mpresas , 201946 SSE In itia tive, Costa Rica Joins Exchanges Committed to Sustainab ility , 2018
47 BN V, Bon os Ve rdes
48 UNE P FI, Responsible Investmen t Tra ining Workshop in Costa Rica , 201949 ECORE D, BV RD rea liza el primer Foro I nternacional de Finanzas Ve rdes , 201950 BV RD, Guía de Bonos Verdes
51 Panabolsa, Guía pa ra Emisión de Valores Socia les, Verdes y S ostenibles
52 BN V, BNV lidera impulso a la Sosten ibilidad , 2019
53 Latin Financ e, Central Ame rica bets on integra tion to boost stoc k markets, 2018
54 Domin ican Republic, Ecuador, Guatemala, Honduras, El Salvador, N icaragua, Costa Rica, and Panama.
55 SDG I ISD, Pre-COP to the Santiago Climate Change Conference, 201956 Re vista Summa, Cámara de Bancos e Instituciones Financ ieras suscriben histórico Protocolo Verde , 201957 Direcc ión de Cambio Climátic o de Costa Rica
58 DCC, Siste ma Nacional de Métrica para el Camb io Climá tico (SIN AMECC)
59 E&N Finanzas, Bolsa Nacional de Valores la nza b on os sostenibles , 201960 SUPE N, Reglamen to De Gestión De Ac tivos , 2018
61 SBP, Grup o de T rabajo de Finan zas Sosten ibles
62 UND P, Le veraging in novative fina nce f or Caribbean blue ec on omy growth , 2018
63 World Ban k, G renada: Blue G rowth Coastal Master Plan, 2016
64 Blue Finance, D ominica n Republic p rojec t
65 CABE I, G reen Bond Frame work, 201966 CABE I, Second Pa rty Opinion, 201967 CABE I, G reen Bond Reports
68 Two wa ter supply a nd treatme nt projects in E l Salvador and N icaragua were 100% financed by the green bond; the other 10 p rojec ts rece ive additional funding f rom CABEI that does n ot derive from the g reen bond’s proceeds.
69 Ban istmo, Primer Bono Soc ial de Género e n Amé rica Latina , 2019
70 Banc oEstado, Banc oEstado marca un hito al emitir e l p rimer b on o soc ial, 2018
71 Valora Analitik, FDN c olocó bon os para ren ovación de flota Tra nsMilen io, 2019
72 Re vista Summa, I FC presta US$35 m a Davivienda Costa Rica , 2019
73 In 2019, Energy, Buildings and Transp ort accounted for over 80% of allo cations (an increasing share), with Wate r and Waste comfortably in 4th and 5th place. See our rece nt Green Bonds G loba l State of the Marke t 2019 rep ort.
74 CBI, LAC Green Finance State of the Market 2019 . See the report f or sources.
75 European Commission, In terna tional Oceans G ove rnance – Scien tif ic Support, 2018. Bubb les show the re lative size of ne t c o-benef its. Full impac ts in Singh e t. Al, Ma rine P olicy, A rapid assessment of co-be nefits and trade-offs a mong Sustainable Developme nt Goals , 2018.
76 Borgen Project, The Gree n Drea m: Sustainab ility in Central Ame rica , 2018
77 Norton Rose Fulbright, Re newab le e nergy in Latin America: Ce ntra l America , 201678 Under 30 Ex perie nces, Costa Rica has run on 100% rene wable ene rgy for 299 Days , 201979 IRENA: Coalition f or Ac tion, Towards 100% Renewab le E nergy , 201980 IRENA: Coalition f or Ac tion, Towards 100% Renewab le E nergy , 201981 Clima te L in ks, US AID Regional Clean E nergy In itiative – Cen tral America , 201682 Proparco, El Salvador Capella Sola r
83 Photon.in fo, FM O Finances 140MW Ca pella Solar PV Plant, 2018
84 SICA, AES/CMI inauguran la prime ra p lanta solar de l p royecto Bósforo, 201885 Environ men tal Justice Atlas, Proyecto eólico del Ce rro de Hula86 Metro de Pana ma, Ace rca
87 Metro de Pana ma, Visita de la Comisión de Inf raestructura Pública y Asuntos del Canal, 2019
88 Global Mass Transit, BRT systems in Latin America: A comparative a nalysis , 201789 UIT P La tin America, Sources of revenue of public transp ort systems in Latin America
90 Inte lligent T ransport, The imp orta nce of public transport in Latin America , 2016
91 Cen tral America Data, New Boost for E lectric Car Sa les , 2019
92 Cen tral America Data, Electric Vehicles: First Recharging Sta tion, 2019
93 Cen tral America Data, Electric Vehicles: Ne w Charging Station, 2019
94 Inte lligent T ransport, The imp orta nce of public transport in Latin America , 2016
95 IRJ, Panama City metro Line 2 inaugurated, 2019
96 Alstom, Alstom’s inn ovative solutions for Line 2 of Panama Metro, 201997 Global Legal Chron icle, S parc EM SPC’s $619m Notes Of fering , 201798 Global Capital, Panama Metro Line to Tunnel for M ore Debt, 201799 BN Americas, Feasibility study US$770 m Guate mala City light rail p rojec t, 2008
100 DCA, Recibe n p ropuestas para el Metro Riel, 2019
101 IRJ, Guatemala City L RT right-of- way agree ment signed , 2019
102 GWP, I ntegrated Wa ter Resources Managemen t in Cen tral America , 2016
103 World Ban k Blogs, Guarantee ing water security, a priority for Central America , 2019104 Ecov iva, M illions lack access to clean wate r in Cen tral America , 2019
105 World Ban k Blogs, Guarantee ing water security, a priority for Central America , 2019
106 Re lief Web, Cen tral America Hashes Out Agenda Wate r, 2017
107 Smart Water Magazine, Wa ter Challe nges and Opportunities in Latin Ame rica , 2019108 San Ped ro Sun, BWSL takes ove r CWBL on Amb ergris Caye, 2019
109 World Ban k, NI Sustainab le Rural Wa ter Supp ly and San itation Sector Project, 2019110 MDPI / Recycling, Mun icipal Solid Waste Managemen t in LAC, 2018
111 UN Habitat, S tate of LAC Cities 2012112 ID B, Solid Waste Managemen t in LAC, 2015
113 MDPI / Recycling, Mun icipal Solid Waste Managemen t in LAC, 2018
114 Cen tral America Data , Recycling: A Business with Future Poten tial, 2019
115 MDPI / Recycling, Mun icipal Solid Waste Managemen t in LAC, 2018
116 MDPI / Recycling, Mun icipal Solid Waste Managemen t in LAC, 2018117 AND RIT Z, AND RITZ to supply f irst Caribbean recycling pla nt, 2016
118 Yeyo Ochoa Group, 3 e n 1 | Mane jo adecuado, 2018
119 AND RIT Z, AND RITZ to supply f irst Caribbean recycling pla nt, 2016
120 Costa Rica News, Total Energy Waste Solutions Announces New Solid Waste En ergy Park
121 WTE Internationa l, 547,500 ton per year MS W to Plan t in Costa Rica
122 ICMA Group, Green Bond Principles, 2018
123 Loan Market Association, Gree n L oan Princip les, 2018
124 Clima te Bonds In itia tive, Last revie ws of the year: Peru’s Energ ia Eolica ($204m), 2014
125 Cen tral America Data, San Salvad or Issues Second Securitization, 2013
126 Gold man Sachs, Dc Wate r, Goldman Sachs and Ca lvert Foundation Pioneer Env ironme ntal I mpact Bond, 2016
127 GEF, Inn ovations in Blended Financ e: A Summa ry
128 USAID, Clean Energy Fina nce Facility f or CAC, 2015
129 ID B, What is a B-bond?, 2018
130 Atlas Re newab le E nergy, Atlas Renewab le E nergy Wins S tructured Bond Deal of The Year, 2018
131 FM O, CAM IF II - Cen tral America n Me zzanine Infrastructure Fund132 SIFEM, Ce ntra l American Mezzan ine Inf rastructure Fund I i
133 Amundi IFC, E merging Marke t G reen Bonds Report 2018
134 TCX, Ab out the Fund
135 Power Enginee ring In terna tional, Ame rican Hydro wins ov erhaul deal in Be lize, 2017
136 Gove rnme nt of Be lize, Ministry of Public Serv ice. 2019137 The San Ped ro Sun, Ambergris Caye Lacks Adequate Solid Sewage Waste Manageme nt, 2020
138 Ren ewable Ene rgy Caribbean, 2017
139 ThinkGe oEnergy, 55 MW Las Pailas I I geotherma l p owe r p lant off icially inaugurated in Costa Rica, 2019
140 Subways. San Jose P lanned Right Ra il
141 ICT. Las Trancas-Papagayo Aqueduct Will Supp ly Ca rrillo Communities and Tourist Deve lop ments .
142 New Energy, Costa Rica looks to waste gasification, 2018
143 Wate r Power & Da m Construction, Bauer c ompletes cut- off wall c onstruction at Mon te G rande Da m, 2020
144 Metro of San to Domingo, Metros in D R: San to Doming o
145 Incan tema Consulting & Enginee ring, Wate r Tests Underway at Mirador Norte La Zurza WWT P, 2020
146 Global Recycling, A Re cycling Plan t f or the Dominican Re public
147 Solar Ne ws, FM O Fina nces 140M W Capella Sola r
148 BN Americas, Project Spotlight: E l Salvad or’s Pacific Railway, 2019149 SUEZ, SUE Z wins f irst con tract in El Salvador, 2018
150 JICA, Master Plan f or the Deve lop men t of Rene wable Energy I n E l Salvad or, 2012
151 Energy Ne ws, Horus Energy largest PV plan t in Cen tral America , 2015
152 Cen tral America Data, Guatemala: Metro Rail to Cost $770m, 2016
153 Cen tral America Data, Tender for Sewe r System Expansion, 2019154 Simpson E nviron menta l Corpora tion, Closure of AMS A Landfill WTE Project155 Bioene rgy Insight, H onduran Green Powe r opens b iomass plant in Honduras, 2016
156 BN Americas, CABEI to f inance BRT extension in Tegucigalpa , 2014
157 Garcia & Bodan, Sanitary Sewe rage and Waste water Treatment Plant in Honduras , 2019
158 Plasteurope, Recycler in Honduras installs Herb old proc essing line, 2017
159 EV Wind, Globele o I naugurates 44 M W Eolo Wind Farm in Nicaragua , 2013 .
160 Global Mass Transit, Projec t Update: Latin Ame rica
161 World Ban k, NI Sustainab le Rural Wa ter Supp ly and San itation Sector Project, 2019
162 Cen tral America Data, New Recycling Plan t in Nicaragua, 2017
163 UN FCC. Project 7839: Pe non ome Wind Farm
164 Railway Technology, Pana ma City me tro L ine 2 begins commerc ial service, 2019
165 World Ban k, Panama – Buringa Wastewa ter Managemen t Project, 2017
166 Cen tral America Data, Panama: Energy Produced in Landfill, 2014
167 CBI, Clima te Bonds Taxonomy
168 European Commission, Sustainable Finance
169 ID B, ID BG Fra mework f or Plan ning, Prepa ring, and F inanc ing Sustainable I nfrastructure Projects
170 ISO, ISO 50001: Ene rgy Managemen t Systems
171 SIF: Source
172 GRES B, ESG Benchmark f or Real Assets
173 SURE: Standard for Sustainable and Resilience Inf rastructure
174 Institute f or Sustainable Inf rastructure, En vision

Green finance opportunities in Central America and the Caribbean © Climate Bonds Initiative

31

Climate Bonds Taxonomy
The Climate Bonds Taxonomy identifies the assets and projects needed to deliver a low
carbon economy and gives GHG emissions screening criteria consistent with the 2-degree
global warming target set by the COP 21 Paris Agreement. More information is available athttps://www.climatebonds.net/standard/taxonomy.

ENERGY

WATER

Solar

Private transport

Water monitoring

Residential

Agriculture

Cementproduction

Preparation

Broadband
networks

Wind

Public passenger
transport

Water storage

Commercial

Commercial
Forestry

Steel, iron &aluminium
production

Reuse

Telecommuting
software andservice

Geothermal

Freight rail

Water treatment

Products &systems for
efficiency

Ecosystem
conservation& restoration

Glass
production

Recycling

Data hubs

Bioenergy

Aviation

Water distribution

Urban
development

Fisheries &aquaculture

Chemicalproduction

BiologicaltreatmentPowermanagement

Hydropower

Water-borne

Flood defence

Supply chain
management

Fuel production

Waste to energy

MarineRenewables

BUILDINGSLAND USE &MARINERESOURCES

TRANSPORTINDUSTRY

Nature-based
solutions

Transmission &distribution
Storage

WASTE

ICT

Landfill

Certification Criteria approved

Radioactive waste
management

Criteria under development
Due to commence

Nuclear10/2020

Report prepared by Climate Bonds Initiative

Report sponsored by the Central American Bank
for Economic Integration

Lead author: Miguel Almeida
Co-authors: Julia Ambrosano, Kristiane Davidson,
Monica Filkova, and Nabilla Gunawan
Design: Godfrey Design© Published by Climate Bonds Initiative, March 2021
www.climatebonds.net
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference
to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds
Initiative accepts no responsibility for content on external websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt
instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any
investment decision. Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit
worthiness of the designated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts noliability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in parton any information contained within this, or any other Climate Bonds Initiative public communication.