Lab Instrument Analysis: Energy Savings Insurance

This report analyzes Energy Savings Insurance (ESI), a financial instrument developed by the Inter-American Development Bank (IDB) and BASE to mitigate the risk of underperformance in energy efficiency projects for small and medium-sized businesses (SMEs) in developing countries.

• Energy Savings Insurance (ESI) is designed to overcome investment barriers for SMEs and local banks who lack the technical capacity to assess capital-intensive energy efficiency investments. The instrument functions by paying out if the projected value of energy savings is not achieved, and analysis indicates it can absorb up to 80% of this underperformance risk.
• If implemented across all relevant developing countries, ESI has the potential to mobilize between USD 10 billion and USD 100 billion in investment and achieve annual emissions reductions ranging from 27 to 234 MtCO2 by the year 2030.
• The ESI instrument consists of insurance purchased by technology solutions providers to back contractual guarantees for SME clients, combined with complementary measures. These measures include third-party verification, standardized contracts to lower transaction costs, grant support, and credit lines from development banks to provide long-term capital.
• The instrument is being piloted or structured in several countries with specific targets: Mexico aims for USD 25 million in investment across 190 agro-industry projects by 2020; Colombia targets 104 firms in healthcare to reduce 13,977 tCO2e/year; and El Salvador targets 500 firms to reduce 37,500 tCO2e/year. Other active or developing implementations include Nicaragua, Brazil, and Peru.

APA

Climate Policy Initiative (2015). Lab Instrument Analysis: Energy Savings Insurance. https://www.climatepolicyinitiative.org/publication/lab-instrument-analysis-energy-savings-insurance/

Chicago

Climate Policy Initiative. Lab Instrument Analysis: Energy Savings Insurance. 2015. https://www.climatepolicyinitiative.org/publication/lab-instrument-analysis-energy-savings-insurance/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Lab Instrument Analysis: Energy Savings Insurance |date=22 April 2015 |url=https://www.climatepolicyinitiative.org/publication/lab-instrument-analysis-energy-savings-insurance/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2015lab, author = {{Climate Policy Initiative}}, title = {{Lab Instrument Analysis: Energy Savings Insurance}}, institution = {Climate Policy Initiative}, year = {2015}, month = apr, url = {https://www.climatepolicyinitiative.org/publication/lab-instrument-analysis-energy-savings-insurance/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }