The taxonomy aims to attract green finance to the country in its effort to mitigate climate change, writes Jacqueline Echevarria
Colombia has launched a green taxonomy that aims to boost green finance in the country. It will help participants in the public and private sectors identify and evaluate investments that can help meet environmental objectives and which are aligned with the country's commitments and policies.
The taxonomy, launched by President Ivan Duque on 11 April during a visit to the New York Stock Exchange, focuses on mitigation and adaptation to climate change, conservation of ecosystems and biodiversity, water management, soil management, circular economy and pollution prevention and control.
The document outlines seven sectors, assets and economic activities that contribute to the environmental goal of mitigating climate change — energy, construction, waste management and emissions capture, water supply and treatment, transportation, information and communication technologies, and manufacturing.
The taxonomy also highlights three sectors of land use — livestock, agriculture and forestry. These sectors together are responsible for 59pc of Colombia's greenhouse gas (GHG) emissions, it says.
The taxonomy is aimed at helping Colombia meet its goal of reducing greenhouse gas emissions by 51pc by 2030 and hitting carbon neutrality by 2050.
The green taxonomy was formulated by the finance ministry with the support of external entities including the World Bank's finance arm IFC.
"The aim was to bring the EU taxonomy to a local context by either dividing a number of activities that were very similar to the EU but also developing some additional details that were fit for the country," says the head of the IFC's climate finance programme for Latin America and the Caribbean, Marcela Ponce, who worked on the project.
Other countries in the region are working with the IFC on developing green taxonomies. "We are also working with the environment ministry in Peru… Chile has started working on defining the governance of a potential taxonomy," Ponce adds. "This is very important for governments because they committed to net zero targets," she says.
Energy implications
The taxonomy identifies 18 economic assets and activities in the energy sector that have a substantial contribution to climate change mitigation, from renewable electricity generation to green hydrogen production and district heating. The energy sector generates 10pc of GHG emissions in the country, the document says.
The taxonomy sets some criteria to determine whether an energy investment is green or sustainable. Solar, wind and ocean energy generation are eligible. But for other generation, heating and cooling activities, it is necessary to carry out a GHG life-cycle study. Facilities operating with life-cycle emissions of less than 100g CO2 equivalent/kWh are eligible, the document says. Renewable energy purchase activity is also eligible if it is subject to a long-term power purchase agreement and has a renewable energy certificate.
On hydropower, facilities with a power density of less than 5W/m² must demonstrate that they operate with life-cycle emissions of less than 100g CO2e/kWh. Geothermal or cogeneration facilities have the same threshold.
