PATEN and Green Funds: Driving the Future of the Environment and Opportunities for Sustainable Projects

Green Funds are financial initiatives that aim to support projects focused on environmental sustainability and combating climate change. These funds offer credits for initiatives that seek to reduce carbon emissions, promote the transition to renewable energies and boost environmental preservation. Basically, they are “financial mechanisms” created to enable sustainable development on a local and global scale.

These funds, of public, private or mixed origin, play an essential role in creating incentives for companies and governments to implement major sustainable infrastructure projects. Through amounts set aside for this purpose, they unite common sustainability objectives with contributions from the public and private sectors, opening doors for those looking to implement initiatives with a positive impact on the environment.

The opportunities offered by international sustainable development funds represent a competitive advantage for people and companies wishing to invest in the proposed objectives, expanding their positive environmental impact and innovating with financial backing.

Get to know the main Green Funds:

1. Green Climate Fund (GCF)

Created by the UN in 2010, during COP16 in Cancun, the Green Climate Fund (GCF) is aimed at projects that help developing countries mitigate climate impacts and adapt to environmental changes. With the ambitious goal of mobilizing 100 billion dollars a year in line with the Paris Agreement, the GCF allocates funds to initiatives that reduce emissions and strengthen climate adaptation.

Developed through grants, loans and financial guarantees, the GCF supports both large-scale infrastructure projects and smaller local initiatives. Among the projects already funded are:

• Bangladesh: protection of coastal areas vulnerable to flooding, with the development of natural barriers and drainage systems.

• Peru: sustainable agriculture in mountainous regions, adapting agricultural practices to new climatic conditions.

• Morocco: large-scale solar energy, contributing to a cleaner and more accessible energy matrix.

Brazil also receives funding from the GCF, especially for projects to reduce deforestation, reforestation and the development of renewable sources. The main focus has been on the Amazon, with actions to protect the forest and boost the “sustainable development” of local communities.

How does access to the GCF work for companies?

Access to the GCF occurs through financing proposals drawn up with the support of Accredited Entities (AE), which act as intermediaries for private companies and interested organizations.

These entities, which can be public, private, national or international, facilitate the submission of proposals to the Fund, especially for projects by private companies, monitor the implementation and progress of approved projects and the application of resources, and attract additional capital to expand projects, offering instruments such as donations, loans, equity and guarantees.

The entities also ensure that the resources are well managed, guarantee that the projects do not cause unforeseen damage to the environment or society, and ensure that the projects are in line with the standards required by the GCF.

Only proposals submitted through Accredited Entities are evaluated by the Designated National Authority (DNA) in Brazil, which is the Secretariat of International Affairs (SAIN) of the Ministry of Finance.

Why is accessing the GCF advantageous for private companies?

Companies that choose to access the GCF benefit not only from financing, but also from a solid environmental and social compliance structure, which strengthens their image of responsibility and sustainable innovation. The main advantages include

• Cost and risk reduction: Access to financial resources that cover part of the investments needed to implement sustainable technologies, reducing the equity invested.

• Market positioning: Companies aligned with the GCF's goals improve their image among the public and investors, meeting current demands for social responsibility and sustainability.

• Expansion of opportunities: Projects supported by the GCF enable international partnerships and increase competitive capacity in markets that prioritize sustainable practices.

Other Funds Include

2. Global Environment Facility (GEF)

Founded in 1991, the GEF (Global Environment Facility) supports the conservation of biodiversity, the protection of the ozone layer and the reduction of pollution in international waters. In addition to climate projects, the GEF collaborates with various implementing agencies, such as the United Nations Development Program (UNDP) and the World Bank.

Examples of projects: (i) Sustainable forest management in Brazil. (ii) Energy transition to solar energy in the Maldives. (iii) Transboundary water conservation.

The GEF has already earmarked more than US$ 21 billion for environmental causes, involving more than 170 countries. The main challenges faced include the high demand for funding and the need for effective coordination between different countries and sectors.

3. Adaptation Fund

Created under the Kyoto Protocol, the Fund is focused on projects that help vulnerable countries deal with the impacts of climate change. Unlike other funds that focus on mitigation, the Adaptation Fund offers support to strengthen local infrastructures, empower communities and improve agricultural practices.

Its main sources of funding come from a levy on Clean Development Mechanism (CDM) carbon credits and voluntary contributions.

Examples of projects: (i) Coastal barriers in Bangladesh. (ii) Irrigation systems in Senegal. (iii) Reforestation in the Amazon and sustainable agricultural practices in vulnerable regions, such as the semi-arid northeast, promoting food security and sustainable resource management in Brazil.

4. Climate Investment Fund (CIF)

Established in 2008, the CIF (Climate Investment Funds) is a transition mechanism that helps countries implement low carbon and climate resilience policies.

With programs such as the Renewable Energy in Low Income Countries Program (SREP) and the Clean Technology Fund (CTF), the CIF works with multilateral banks such as the World Bank and the African Development Bank.

The CIF is organized into two major programs:

• Clean Technology Fund (CTF): focuses on reducing carbon emissions, with investments in renewable energy, energy efficiency and sustainable transport.

• Strategic Climate Fund (SCF): supports climate resilience and the sustainable management of forests and natural resources, including initiatives to reduce deforestation in the Brazilian Amazon.

Examples of projects: (i) Geothermal energy in Turkey. (ii) Wind energy in Kenya. (iii) Climate resilience in Bangladesh.

5. Forest Carbon Partnership Fund (FCPF)

Established by the World Bank, the Forest Carbon Partnership Facility (FCPF) is a global initiative aimed at reducing emissions from deforestation and forest degradation, especially in tropical countries.

The FCPF supports developing countries in developing REDD+ (Reducing Emissions from Deforestation and Forest Degradation) programs, promoting sustainable management practices.

• Objective:To help countries create infrastructure and develop policies to reduce deforestation, benefiting local communities and conserving forests.

Examples of projects: Support for Brazil to combat illegal deforestation and promote sustainable practices.

The FCPF is an important model of public-private partnership, bringing together governments, international organizations, companies and local communities for forest preservation.

6. International Fund for Agricultural Development (IFAD)

   
   

The International Fund for Agricultural Development (IFAD) is a UN agency that finances agricultural projects in developing countries to improve food security and strengthen the resilience of rural communities.

Many of the projects funded by IFAD are aligned with sustainability and climate adaptation objectives.

• Objective: To reduce rural poverty, promote sustainable agricultural practices and increase the resilience of communities vulnerable to climate change.

Examples of projects: Irrigation technologies and sustainable agricultural practices in Africa.

7. European Fund for Sustainable Development (EFSD)

Created by the European Union, the European Fund for Sustainable Development (EFSD) aims to support investments in countries in Africa and the European neighborhood to promote sustainable development and combat the causes of forced migration.

It works mainly in areas of green infrastructure, such as renewable energy, water management and sanitation.

• Objective: To promote economic, social and environmental stability in countries neighboring Europe and in Africa.

Examples of projects: Solar electricity grids and water treatment systems in Africa.

8. Latin American and Caribbean Climate Fund (LCF)

The Latin American and Caribbean Climate Fund (LCF) was created in 2012 to help Latin American countries achieve sustainable development and climate adaptation goals. This fund works in partnership with multilateral banks and financial institutions to promote climate mitigation and adaptation projects.

• Objective: To support the transition to a low-carbon economy, with projects in areas such as sustainable transportation, energy efficiency and conservation of natural resources.

Examples of projects: Sustainable public transportation initiatives in Brazil.

9. Sustainable Agriculture and Climate Resilience Investment Program (ASRIC)

ASRIC is an initiative focused on creating climate resilience in agricultural practices, especially in areas vulnerable to climate change, such as sub-Saharan Africa and Asia. It is funded by a coalition of international donors, including the World Bank and the African Development Bank.

• Objective: To strengthen agricultural practices so that they are less vulnerable to extreme climatic phenomena, promoting food security.

Examples of projects: Water retention technologies and crops adapted to droughts in the Sahel.

New Green Fund Proposal: PATEN - Energy Transition Acceleration Program

PATEN - the Program to Accelerate the Energy Transition - has recently been going through the National Congress. It also includes a proposal to create a Green Fund, administered by the BNDES , allowing companies to negotiate their tax credits in exchange for investments in sustainable projects. This is a proposal that, if approved, will tend to greatly intensify the use of Funds for project implementation by private companies.

PATEN's main objective is to encourage renewable energy and sustainable technology projects, using funds from companies' tax credits with the Federal Government.

Despite the visionary proposal, there has been much debate about the inclusion of natural gas in its scope, due to its fossil origin, reflecting the complexities surrounding the energy transition.

We are attentive and following the implementation of PATEN, ready to help our clients benefit from the new regulations. Our expertise can be crucial in structuring projects that meet the required guidelines and objectives, as well as maximizing the strategic use of financing and, in the future, the tax credits available for implementing these projects.

In addition, the proposal to allocate 1% of energy distributors' operating revenue to promoting energy efficiency in non-profit communities opens up a range of opportunities for pro bono actions and collaborations with social organizations.

This highlights the fundamental role of companies in promoting social and environmental responsibility.

The energy transition is a topic of growing relevance, and PATEN represents a significant step in this direction. Piva Advogados is committed to offering comprehensive legal advice, guiding our clients on how to navigate this new regulatory landscape and maximize the benefits arising from the implementation of sustainable projects.