Towards the energy transition: KfW supports Colombia’s comprehensive policy reforms

• Another EUR 200 million to accelerate the transition to clean energy
• Share of non-conventional renewable energy sources to increase from 0.2% to 12%
• Clearing the way for decentralised power generation by small providers and increased use of photovoltaics
• Improved conditions for more widespread adoption of electric vehicles (EVs): 600,000 EVs by 2030

On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), KfW today signed a loan agreement for EUR 200 million to fund the second phase of the reform programme to promote sustainable and resilient growth. The reform programme will support and accelerate the country’s transition to renewable energy sources, with a particular focus on power generation, access to electricity, and the transport sector.

In the second phase, a roadmap for the energy transition will be drawn up, taking into account the potential for the use of alternative fuels. In addition, the share of non-conventional renewable sources (especially solar and wind) in the Colombian energy mix is to be increased from 0.2% to 12%. This increase will add to the already very high proportion of renewable energy obtained from hydropower in the national electricity mix (66%). Another aim is to allow remote regions to be connected to the national power grid so that the local population can benefit from having eco-friendly electricity at their disposal. Decentralised power generation will also be facilitated by companies that generate less than 0.1 MW of green electricity. There are also plans to create incentives for public power utilities to invest in photovoltaic systems in remote regions of the country.

“We are supporting Colombia, as one of the countries that is leading the way in Latin America, in making its policy more environmentally friendly and socially responsible as well as creating the appropriate conditions for directing private and public investment into green projects. To this end, the country is taking advantage of the new push towards green transformation that has emerged following the most severe recession this century caused by COVID-19. Comprehensive reforms will spur sustainable and resilient growth, while at the same time mitigating climate change,” said Christiane Laibach, Member of the Executive Board of KfW Group.

With regard to the transport sector, a legislative framework for the use, import, promotion and subsidisation of electric transport will be drawn up, which will set out the necessary environment for tax and financial incentives, minimum requirements for market standards and conditions for EVs parking and charging infrastructure. The aim is to increase the number of electric cars in Colombia from 4,259 to 600,000 by 2030 and to forge ahead with developing a network of charging stations. In addition, the country is planning to promote low-emission vehicles for both private and public transport, freight transport and motorcycles.

The various components of phases one and two of these reforms will play a significant role in Colombia’s ability to achieve the Sustainable Development Goals outlined in the United Nations’ 2030 Agenda by 2030. In particular, the German Federal Government’s development cooperation support provided via KfW is targeted at delivering progress on Colombia’s ambitious climate targets (nationally determined contributions, NDCs), which envisage an exceptionally high 51% reduction in greenhouse gas emissions by 2030.

The first phase of the project saw a commitment of EUR 150 million in December 2021. The project is being implemented in close cooperation with the Agence Française de Développement (AFD), the Inter-American Development Bank (IDB), the Corporación Andina de Fomento (CAF) and the Central American Bank for Economic Integration (Banco Centroamericano de Integración Económica, BCIE).

Information about KfW Development Bank can be found at:
www.kfw-entwicklungsbank.de