Project will close open dumps, reduce carbon emissions and improve living conditions for waste pickers
BRASÍLIA, December 5, 2011 – The Vice-President of Caixa Econômica Federal, José Urbano Duarte, and the World Bank Director for Brazil, Makhtar Diop, signed today a US$ 50 million loan for the Integrated Solid Waste Management and Carbon Finance Project. The project, to be implemented by Brazil’s Caixa Econômica Federal national savings and infrastructure bank, will support the reduction of pollution, greenhouse gas emissions and environmental and health impacts related to unsustainable solid waste disposal.
In connection with the loan, Caixa also signed a three million Emission Reduction Purchase Agreement (ERPA) with the World Bank. This is the first ERPA to be signed by the World Bank’s Carbon Partnership Facility. The emission reduction will happen with the capture of methane from the landfills financed by Caixa.
The coordination between the loan and carbon financing is an innovative mechanism for solid waste management, enabling the public and private sectors to access carbon markets and produce environmental benefits. Caixa will be the first Brazilian Bank to both finance landfills and manage their carbon programs.
“This project comes at a very important time, after the sanctioning of the National Solid Waste Management Policy, and will spur investments in the sector,” said José Urbano Duarte, Vice-President of Caixa Econômica Federal. “The project will contribute to developing innovative and sustainable frameworks for solid waste management, reduce environmental impacts and improve the livelihoods of waste pickers currently living and working in hazardous conditions.”
The national program supported by the loan will close up to six existing dumpsites by 2015, construct sanitary landfills, increase by 4,000 tons per day the volume of waste disposed in environmentally sustainable sanitary landfills, develop alternative waste treatment facilities, and integrate carbon finance in these activities. It will also address social issues linked to solid waste management by developing strategies to improve living conditions, create jobs and reduce health risks to waste pickers and people living on existing dumps. More than half of Brazilian cities have waste picker populations.
“About US$ 2.2 billion are spent on solid waste management per year in Brazil, with Caixa Econômica Federal as the main player,” said Makhtar Diop, World Bank Director for Brazil. “The project will help Caixa maximize the environmental, social and economic sustainability of these investments, boost private sector participation and blend all of this with carbon finance resources, leveraging a huge impact.”
The project will help strengthen Caixa’s capacity to design appropriate lending products for investments in the solid waste sector, preparing and managing carbon finance projects, and structure mixed (lending/carbon finance) operations. This will help boost public sector capacity, particularly in municipalities and financial institutions, to attract private sector investments for final treatment and disposal of solid waste.
Brazil has been among the most proactive countries in pursuing Clean Development Mechanism (CDM) carbon finance opportunities, and is currently third in the world (after China and India) in number of ongoing CDM projects. The Caixa initiative is likely to boost Brazil’s carbon projects in the solid waste management sector.
This US dollar-denominated disbursement-linked IBRD Flexible Loan with a fixed-spread, has level payments of principal and a four-year grace period, with 19 years of total loan term with all conversion options selected. Since 1971, the World Bank has invested approximately US$ 4.4 billion in urban and sanitation projects in Brazil, including today’s loan.
The Carbon Partnership Facility (CPF) is one of the main World Bank carbon finance instruments for the post-2012 period. The CPF is designed to innovate on the Clean Development Mechanism, financing emission reductions and supporting their purchase, on a larger scale, through long-term investment funding.
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