26 November 2012: The Inter-American Development Bank (IDB) has approved the final segment of a four-part programmatic policy-based loan (PBL) to develop Peru’s new sustainable energy matrix (NSEM).

The US$30 million loan completes the US$230 million program begun in 2009 with IDB help to boost the use of renewable energy sources, promote energy efficiency, create new inter-institutional mechanisms and promote citizen participation in energy matters.

Among other things, the latest loan will aid completion of the Indicative Plan for Renewable Energy and Energy Efficiency and an Indicative Plan for Biofuels and Hydrocarbons, ensuring that both are consistent with the NSEM and the 30-year National Energy Plan drawn up in earlier phases. Linked to these are loan-supported activities, such as: the implementation of the an energy efficiency management plan, which includes guidelines for labeling, packing, packaging and advertising related to energy efficiency; full implementation of the new biodiesel blending policy; and tweaking of the new regulatory framework for hydropower development.

The loan will also support general environmental protection measures related to the energy sector, including: the introduction of a report on environmental performance indicators for Peru’s energy sector; an update of environmental protection regulations for the energy sector; and a tightening of existing emission limits for gaseous and particulate emissions from the electricity sector.

Furthermore, the NSEM process supported by this loan will seek to quantify the emissions of carbon dioxide equivalent (CO2e) for the various energy options contemplated in the National Energy Plan, in order to consider fully the possible climate change impacts of energy paths chosen. It will also train local and regional authorities in energy management and regulation matters and further develop citizen and community participation mechanisms in energy-related activities.

IDB officials have indicated that the NSEM PBL has yielded valuable lessons that they hope to use in similar PBLs elsewhere in the region. [IDB Press Release]