Brasil Innovation Lab for Climate Finance Green Receivables Fund Instrument Analysis

This briefing by the Climate Policy Initiative analyzes the 'Green FIDC,' a proposed asset-backed security designed to scale private finance for renewable energy and energy efficiency projects in Brazil. The instrument adapts the existing Fundo de Investimento em Direitos Creditórios (FIDC) framework to transition risky greenfield projects into bankable businesses by securitizing project receivables, thereby reducing reliance on the Brazilian National Development Bank (BNDES).

• The Green FIDC is an asset-backed security that utilizes the existing Brazilian Fundo de Investimento em Direitos Creditórios (FIDC) regulatory framework to finance renewable energy and energy efficiency projects. It operates in two stages: providing construction and development finance for greenfield projects, and then refinancing those projects through the sale of senior shares in Brazilian Capital Markets once they are operational.
• The instrument aims to address a financing gap created by the scaling back of the Brazilian National Development Bank (BNDES), which historically dominated the sector. In 2014, BNDES provided 88% of total debt financing for renewable energy projects in Brazil, but its disbursements dropped by more than 35% in 2016.
• The Green FIDC overcomes several barriers to private investment, including the scarcity of early-stage equity, the rarity of true project finance in Brazil, and high costs associated with BNDES local content requirements. Because it is not tied to BNDES, FIDC-financed projects do not need to meet these local content rules, which is particularly beneficial for solar PV projects that face up to 40% higher CAPEX when using local equipment.
• The capital structure of the Green FIDC involves different share classes to allocate risk. Junior shares are held by sponsors, developers, and equipment providers to align incentives. Senior shares, typically indexed to the domestic interbank rate or inflation, are targeted at Brazilian Institutional Investors such as pension funds.
• Two pilot opportunities are being explored for late 2017 or early 2018: a 90 MW Solar PV project in the State of Ceará and a street lighting retrofitting project in Rio de Janeiro. The street lighting project targets the replacement of inefficient lamps with LEDs, which the World Bank estimates can lead to energy savings between 40% and 80%.
• Financial modeling for a pilot solar PV project indicates the instrument is commercially viable, with a real Internal Rate of Return (IRR) above 15% under all tested scenarios. The proponents estimate that an investment program raising USD 300 million over ten years could leverage up to USD 1 billion in investment, potentially deploying 1 GW of renewable energy and avoiding 10 million tons of CO2.
• Initial public or philanthropic support is required for preparation funding (estimated at USD 300,000) and anchor funding (estimated at USD 15-20 million, or 15-20% of the pilot value). This support is necessary to provide confidence to senior investors and to cover development costs that private actors may avoid because the resulting public Offering Memorandum allows others to replicate the model without first-mover advantage.

APA

Escalante, D., Todaro, P., & Jungman, L. (2017). Brasil Innovation Lab for Climate Finance Green Receivables Fund Instrument Analysis. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/Green-FIDC-Instrument-Analysis.pdf

Chicago

Escalante, Donovan, Paulo Todaro, and Laura Jungman. Brasil Innovation Lab for Climate Finance Green Receivables Fund Instrument Analysis. Climate Policy Initiative, 2017. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/Green-FIDC-Instrument-Analysis.pdf.

Wikipedia

{{cite report |last1=Escalante |first1=Donovan |last2=Todaro |first2=Paulo |last3=Jungman |first3=Laura |title=Brasil Innovation Lab for Climate Finance Green Receivables Fund Instrument Analysis |publisher=Climate Policy Initiative |date=September 2017 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/Green-FIDC-Instrument-Analysis.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{escalante2017brasil, author = {Escalante, Donovan and Todaro, Paulo and Jungman, Laura}, title = {{Brasil Innovation Lab for Climate Finance Green Receivables Fund Instrument Analysis}}, institution = {Climate Policy Initiative}, year = {2017}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/Green-FIDC-Instrument-Analysis.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }