Brazil starts funding solar rather than fossil fuels
Last Monday, Brazil’s National Development Bank (BNDES) announced that they were cutting credit for fossil fuels and hydro in order to encourage solar funds.
New coal and oil-fired power station investments have been ruled out thanks to a new funding policy and big hydropower plants are entitled to only 50 per cent of the project value, down from 70 per cent.
Subsidised rates have been made available for 80 per cent of solar project investment needs –and the rates for wind, biomass and small hydropower remain at 80 per cent and 70 per cent respectively.
The BNDES lends money to projects at least partly made in Brazil, with a lower interest than the electricity market’s rate, to encourage national enterprise.
Marilene Ramos, Head of Infrastructure and Sustainability of BNDES and former President of Ibama ( Brazil’s federal environmental agency), declared on Monday that the new policy comes according to the government’s commitment to lower emissions under the Paris Agreement.
The loans for coal and oil projects, which were agreed between 2013 and 2015, will still be honoured.
Oil-fuelled stations are expensive to run, and are expected to decrease from 3,586 megawatts to 3,201 megawatts by 2024, according to the Decennial Energy Plan, which details the country’s energy mix until 2024.
However, coal is expected to increase from 3,064 megawatts today to 3,404 megawatts by 2024, and it has been argued there will be more demand for Chinese loans as a result of the new policy.
Barbara Rubim, Campaign Coordinator of Climate and Energy from Greenpeace Brazil, said: “In general, this is great news; a strong signal to improving financing for solar power and discouraging investment in fossil fuels... We truly hope that this is well received by other sections of the government, especially in planning. It is also a signal to the private sector.”