Context
Industry is responsible for one third of Brazil’s final energy consumption and eight percent of the country’s greenhouse gas (GHG) emissions, amounting to 183 million tonnes of CO2e per year. Until now, Brazil’s energy efficiency (EE) market has been negligible, and the vast potential for energy savings remains untapped, despite the existence of federal regulations and programmes, financial mechanisms and a limited degree of technical assistance initiatives.
Goals and approach to transformational change
The “Transformative Investments for Energy Efficiency in Industries in Brazil (PotencializEE)” project aims to promote industrial energy efficiency investments in Brazil and deliver a transformative push to Brazil’s energy efficiency market. PotencializEE focuses on industrial small- and medium-sized enterprises (SMEs) within the region of São Paulo, the supply chain for energy efficiency (including energy service companies, consultants and suppliers) and on public and private financial institutions. It develops local banks’ capacities and enhances their familiarity with assessing and investing in energy efficiency projects, allowing them to offer more attractive financial products. By the end of the project, the energy efficiency service companies and technology providers will be capable of facilitating a steady, low-risk pipeline of energy efficiency projects. It will also support the government to further improve its energy efficiency policies.
Components and support mechanisms
Regarding the Financial Cooperation (FC) component,
(i) EUR 8 million will be allocated to establish a Guarantee Fund within Desenvolve SP (DSP) to unlock the EUR 64 million in loans primarily from the DSP itself but also from private co-financiers during the first cycle of the project. The Guarantee Fund is designed to also incentivise thermal EE projects with high GHG mitigation potential and mobilise commercial banks qualified to refinance the EE portfolio; and
(ii) EUR 3 million will be used to quality proof all loan requests submitted to DSP.
After PotencializEE successfully established an ecosystem for energy efficiency investments in industrial companies in the state of São Paulo, the project was extended until 2027 and received additional financing of EUR 6 million for scaling up to at least five more states across Brazil’s major regions. As part of Brazil’s energy transition policies and its green neo-industrialization agenda, the project will directly support additional 1,000 SMEs and indirectly benefit 10,000 MSMEs nationwide, leveraging resources mobilized by the Brazilian federal government from the National Energy Conservation Fund (PROCEL) and the National Micro and Small Business Support Service (SEBRAE).
The scaling activities of the Technical Cooperation (TC) component will ensure the necessary technical support for the development of bankable energy efficiency projects that lead to impactful GHG mitigation investments.
Long-term impact
PotencializEE is expected to have directly avoided more than 370,000 tCO2e at the end of the project and 1.1 MtCO2e over the lifetime of the implemented technologies while supporting investments in energy efficiency of at least 675 Brazilian industries.
