INSTRUMENT ANALYSIS

The Guarantee Fund for Biogas (GFB) is designed as the first environmental guarantee fund in Brazil to unlock public and private credit for independent biogas developers who lack the collateral required by lenders. Structured as a CVM-compliant fixed-income fund investing in Brazilian treasury bills, the GFB will provide short-term collateral to enable loans during the construction phase of projects. A pilot phase targeting five Brazilian states aims to leverage USD 53 million in capital to enable USD 67 million in loans in the first year, with a 10-year goal of enabling USD 271 million in credit. The fund utilizes a blended finance structure with a 50% first-loss tranche for concessional investors to mitigate credit risk and lower fees for developers. If scaled and replicated to address 10% of Brazil's biogas potential, the instrument could enable USD 6.1 billion in loans and mitigate 7.8 million tons of CO2e annually.

• Independent biogas developers in Brazil are currently unable to access existing credit lines because lenders often require real-estate or cash guarantees of up to 120% of the loan value, which these developers lack during the construction phase.
• The GFB is structured as a closed fixed-income fund under CVM Instruction nº 555 that invests up to 100% of its resources in Brazilian treasury bills, using these shares as collateral for biogas project loans registered as liens in B3.
• The fund employs a blended finance model where 50% of the capital is a first-loss tranche for concessional investors to absorb initial defaults, while the remaining 50% is a senior tranche for commercial investors.
• The pilot phase requires USD 53 million in initial fundraising (split equally between concessional and commercial capital) to enable USD 67 million in loans in the first year and USD 271 million over a 10-year lifespan.
• The GFB pilot focuses on projects using agricultural waste in the states of Mato Grosso, Minas Gerais, Paraná, Santa Catarina, and São Paulo, specifically excluding urban landfill projects due to lower investment needs and lower appeal to climate investors.
• The instrument is projected to mitigate 348,000 tons of CO2e per year during the pilot phase, increasing to 1 million tons at scale and 7.8 million tons per year if replicated to cover 10% of Brazil's biogas potential.
• Full replication of the instrument to address 10% of Brazil's electric energy biogas potential (1.7 GW) would require USD 401 million in investments to enable USD 6.1 billion in loans over 10 years.

APA

Climate Policy Initiative (2021). INSTRUMENT ANALYSIS. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/09/Guarantee-Fund-for-Biogas_Instrument-Analysis.pdf

Chicago

Climate Policy Initiative. INSTRUMENT ANALYSIS. 2021. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/09/Guarantee-Fund-for-Biogas_Instrument-Analysis.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=INSTRUMENT ANALYSIS |date=September 2021 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2021/09/Guarantee-Fund-for-Biogas_Instrument-Analysis.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2021instrument, author = {{Climate Policy Initiative}}, title = {{INSTRUMENT ANALYSIS}}, institution = {Climate Policy Initiative}, year = {2021}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2021/09/Guarantee-Fund-for-Biogas_Instrument-Analysis.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }