Bank Plan Could Unlock Billions in Green Loans for Climate Action

A new plan from the Inter-American Development Bank (IADB) could be a game-changer for climate finance in the Global South. According to The Guardian, the IADB aims to unlock trillions in climate funds by using public money to buy renewable energy loans in developing countries, freeing up capital from cautious private investors.

The concept, led by climate advisor Avinash Persaud, is simple but powerful. Many renewable energy projects in poorer nations already have solid repayment records, but mainstream private lenders often avoid them due to low country credit ratings. By having development banks—backed by public funds—buy these existing loans and offer guarantees, the loans become attractive and accessible to institutional investors like pension funds.

This approach could rapidly scale up climate investments, especially in regions already reeling from climate impacts, such as Central America. Persaud points to $50 billion in performing green loans in Latin America alone that could be recycled into new projects. When loans are bought, developers must reinvest the freed-up funds into new clean energy projects, creating a “virtuous circle” of continual green growth.

The plan comes ahead of the COP30 climate summit in Brazil and follows growing frustration at wealthy nations’ continued expansion of oil and gas. Despite their climate promises at COP28, countries like the U.S., Canada, and Australia are still among the top drivers of fossil fuel expansion, according to Oil Change International.

The IADB is expected to launch the first $500 million to $1 billion portfolio soon. Experts say this model could be one of the few realistic ways to deliver on the $1.3 trillion per year climate finance promise by 2035.

Let’s Support financial systems that fuel solar panels, not pipelines. Choosing renewables, backing climate justice, and demanding fossil-free investment is one of the most powerful choices we can make.

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