LATIN AMERICA ADVISOR

Energy ADVISOR

A daily publication Of the dialogue

March 11, 2022

Will Sustainability Linked Bonds Work in Latin America?

Chile hopes to reduce CO2 emissions by producing 60 percent of its energy using renewable sources by 2032. This timeline is one of two KPIs in its sustainability-linked bond (SLB) issue. A coal-fired power plant is pictured. // File Photo: Chilean Government.

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Luisa Palacios, senior research scholar at the Center on Global Energy Policy of Columbia University’s School of International and Public Affairs: “Chile’s $2 billion issuance of sustainability-linked bonds (SLBs) represents the many creative ways in which emerging markets can finance the energy transition. The SLBs (with a 2042 maturity) were 4.1 times oversubscribed. This shows the huge demand for these types of instruments, which are undeterred by the current heightened geopolitical uncertainty. An SLB could be more impactful than a green bond from an overall climate perspective, given that its performance indicators are linked to Chile’s climate commitments under the Paris climate accords and are not linked to one specific project. The key performance indicators (KPIs) entail an emissions target of a maximum of 95 metric tons of CO2 equivalent (known as MTCO2EQ) by 2030 and a total carbon budget of no more than…”

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A sister publication of the Inter-American Dialogue’s daily Latin America Advisor, the weekly Energy Advisor captures fresh analysis from business leaders and government officials on the most important developments in oil and gas, biofuels, the power sector, renewables, new technologies, and the policy debates shaping the future of energy in the Western Hemisphere and beyond. To subscribe or for more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.

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