The Inter-American Development Bank (IDB) said Monday it had been selected by Canada as a key partner in its "fast-start" commitment to support climate-change mitigation and adaptation in Latin America and the Caribbean.
The Washington-based financial institution said Canada has committed CDN$250 million (US$253.1 million) to create the Canadian Climate Fund for the private sector in the Americas.
It will be managed by the IDB and finance private-sector climate-mitigation and adaptation projects requiring concessional financing to become viable.
"The private sector is a key player in helping countries address climate change. The Canadian Climate Fund will go a long way in moving the needle on innovation and helping reduce the gap in financing for climate-friendly projects," said IDB President Luis Alberto Moreno.
"We thank the Canadian government for providing the resources to create this fund and are grateful for its decision to partner with the IDB," he added.
Canada's Minister of International Cooperation, Beverley J. Oda, said fostering active private-sector participation, especially innovative initiatives that generate jobs, is "an important component of our efforts to make our international assistance more effective.
"Through this fund, the IDB will be helping to finance climate-related initiatives, helping to stimulate sustainable economic growth and deliver better results which will benefit Latin America and the Caribbean as a whole," she said.
The IDB said the fund aims to mobilise private-sector investment in cleaner technologies, "which often have higher initial costs and longer paybacks than fossil fuel technology".
"A key aspect of the Canada Climate Fund is its ability to level the playing field," said Hans Schulz, IDB's general manager at the Structured and Corporate Finance Department.
"Canada's partnership offers us a tremendous opportunity to expand our support for climate-friendly projects in our member countries," he added.
The IDB said projects supported may include renewable energy, energy efficiency, agriculture and forestry greenhouse-gas emission-reduction projects, as well as adaptation projects to reduce climate-change vulnerabilities.