Brazilhas a new weapon in its battle with climate change. Last week the government launched a climate fund worth 80 million euros ($106 million) that will target projects that reduce greenhouse gases, fight climate change, and implement adaptation strategies for climate change.

"The government has fulfilled its role of making the money available. There's a willingness from industry and from private initiatives to participate and to invest in the appropriate technologies," Karen Suassuna, the director of climate change issues at Brazil's Environment Ministry, told DW.

The fund is administered by the Banco Nacional de Desenvolvimento (BNDES) and the special loans will be awarded to private, municipal, or state projects. The interest rates are more attractive than a typical loan, starting at 2.5 percent per year. But what makes this fund truly unusual is that the source of the money is the oil industry.

From fossil fuels to climate-friendly projects

All the money the government plans to hand out for climate-friendly projects comes from fees imposed on oil companies active in Brazil. The fund was enshrined into law in 2009. The money is divided among several ministries. About 10 percent is handed over to the environment ministry. The rest goes to the ministry of science and technology and the energy ministry.

"The climate fund is one of the most important instruments of Brazil's climate policy. By 2014 the amount could be increased to up to a billion reals" (440 million euros, $582 million), Brazilian Environment Minister Izabela Teixeira said. This year the ministry expects the amount to exceed 140 million euros.

The program identifies six areas the fund will target. In transportation, initiatives that reduce greenhouse gases and improve urban mobility are to be supported. The borrowed money - such as for the purchase of new rail vehicles - must be paid back to the BNDES in 25 years at the latest.

Among the areas to be supported are machinery and equipment with better energy efficiency; renewable energies such as wind, biomass, hydroelectric, and solar. Projects that turn waste into energy, improve the efficiency of charcoal use, and fight desertification are also to receive financial support. The dry northeast of Brazil has been especially hard hit by the effects of climate change.

Money for further development

As an emerging economy, Brazil faces tough decisions if it hopes to balance growth and its environmental commitments. Its infrastructure needs to be greatly expanded to allow more economic growth. At the same time, the country is home to the largest rainforest in the world, which must be protected against further destruction. The voluntary emissions reduction targets agreed upon at the 2010 United Nations Climate Change Conference must also be met.

Brazilian companies are already beginning to implement sustainable practices, according to Tatiana Donato Trevisan from the Instituto Ethos. "Some major multinationals already have departments that deal with climate issues, pursue policies of low carbon emissions and have set voluntary targets for reducing greenhouse gases."

Private initiatives still find it difficult to get money from the government's climate fund. They blame too little information and too much bureaucracy. "The whole country is being rebuilt for the 2014 World Cup and the 2016 Olympic Games. But the construction sector is completely excluded from the loans for sustainable projects," Trevisan said.

Karen Suassuna agrees that there is not yet enough money available to finance sustainable development for the whole country. "But we are changing the scale, without a doubt. Before, the financing was in the thousands, now it's already in the millions. We have started down the right path."

Author: Nadia Pontes / hf
Editor: Andreas Illmer