Supporting the innovative climate projects of Minas Gerais municipalities

The State of Minas Gerais is often described as a “condensed version of Brazil”, due to the considerable territorial and social disparities between the urban and economically dynamic Center and South regions, and a Northeast where the situation is comparable to Northeast Brazil. For several years, Minas Gerais has been making major efforts to reduce the social and territorial divide, especially in the field of access to basic public services. The Minas Gerais Development Bank (BDMG), whose sole shareholder is the State, plays a key role in financing these strategic priorities over the long term.

The partnership with BDMG is part of an approach to diversify this bank’s resources, with the aim of supporting the growth in its activity for municipalities. Its objective is to promote innovative projects which have a co-benefit for the fight against climate change, in line with AFD’s mandate for operations in Brazil. It is the first time that AFD is supporting a regional development bank in Brazil and the first financing with the fight against climate change as the main objective.

BDMG, which finances the sustainable development projects of municipalities, is the main project beneficiary. The investments or studies supported by this operation primarily target projects which reduce greenhouse gas emissions in the energy, waste management and urban transport sectors, or reduce the vulnerability of territories to current and future climate risks, such as droughts and flooding. The partnership with BDMG involves a technical cooperation program based on three themes:

• Capacity building for BDMG for the evaluation of projects and their impacts;
• Awareness-raising and support actions for municipalities, with the aim of creating and implementing projects for the adaptation of territories to climate change or the reduction of greenhouse gas emissions;
• The identification of innovative projects which meet the objectives of theTerritorial Climate-Energy Plan of the State of Minas Gerais, which was defined in 2014 in the context of a partnership with the Nord-Pas-de-Calais-Picardie Region, French Environment and Energy Management Agency (ADEME) and AFD.

The project improves access for municipalities – which are key actors in territorial development – to financing tailored to their needs (long-term, reasonable cost). It contributes to catching up in terms of the equipment of the Minas Gerais municipalities, by implementing a large number of projects which have positive impacts for both the local environment and for the fight against climate change.

For example, in November 2015, BDMG launched a call for projects specifically devoted to the “climate” investments of municipalities and their public service concessionaires. AFD, by assisting BDMG in the development of its technical assistance to municipalities, is contributing to the definition of sustainable development strategies, while providing expertise for project structuring, implementation and evaluation.