WASHINGTON, D.C., APRIL 28, 2023. The World Bank's Board of Executive Directors approved a $150 million Development Policy Loan (DPL) for Panama, which will contribute to fostering low emission and sustainable growth while supporting enhanced climate resilience and better climate governance, both cr Contact online >>
WASHINGTON, D.C., APRIL 28, 2023. The World Bank''s Board of Executive Directors approved a $150 million Development Policy Loan (DPL) for Panama, which will contribute to fostering low emission and sustainable growth while supporting enhanced climate resilience and better climate governance, both critical aspects to achieve greater inclusion and promote sustainable growth for the benefit of Panamanians, particularly those living in vulnerable conditions. This is the first in a programmatic series of two DPL operations to support green growth, resilience and an inclusive development model in Panama.
The operation will support actions on climate-change tagging in public expenditures to improve the efficiency of public spending and enhance institutional capacity to mainstream climate mitigation and adaptation criteria into governance, budgeting, and spending. Additionally, the project supports the decarbonization of land transport, progress in implementing energy efficiency policies, forest conservation, and ocean protection.
The project aims to increase the country''s resilience to climate change and protect natural capital by supporting improved forest management and watershed protection policies. It will also encourage the adoption of higher standards of energy efficiency. Finally, the operation supports gender-sensitive policies in rural electrification, renewable energy and digital connectivity, which will establish Panama as a model for other countries in Central America and the region.
"Panama has great natural capital that, combined with its social and cultural diversity, and its geographical location, offer great opportunities to promote integrated, inclusive and environmentally sustainable economic development" said Michel Kerf, World Bank Director for Central America and the Dominican Republic., "This new operation will help Panama advance its goal of building a more inclusive and resilient economy for the benefit of all Panamanians"
Héctor Alexander, Minister of Economy and Finance (MEF), said "thisfinancial operation will enhance Panama''s efforts in establishing the policy foundations to foster the country''s sustainable economic growth, low emissions, and resilience to climate change. It also positions Panama as one of the countries which promotes a transition to clean energy, socially inclusive, low-carbon growth, and technological innovation to better respond to climate emergencies. Similarly, Panama supports the efforts to sustain natural capital for resilient growth by strengthening climate governance and improving institutional capacity to advance the country''s climate change mitigation and adaptation agendas," concluded Alexander.
The Development Policy Loan is designed around two pillars:
The policy reforms under the program are expected to achieve results in 2025, including maintaining Panama''s status as carbon neutral, improving access to energy and internet services in remote regions, and strengthening deforestation control in mangroves, among others.
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Panama City, Panama — Upgrades to Panama''s regulatory environment and power system management are critical to achieving the renewable energy goals set out in the country''s National Energy Plan, per a Renewables Readiness Assessment Panama report released by the International Renewable Energy Agency (IRENA). The report was launched at high-level event in Panama City today and presented to the country''s Secretary of Energy, Dr. Victor Urrutia.
A central recommendation of the report calls for amendments to the country''s regulation of Power Purchase Agreements (PPAs) for variable renewable energy sources, such as solar and wind. Currently, these renewable energy technologies are attributed a value of zero ''firm capacity'' – the actual amount of energy that a power plant can guarantee to make available under maximum operating conditions – while thermal power plants and hydropower facilities are rewarded with far higher firm capacity values. This makes solar and wind less competitive in Panama''s wholesale electricity market, and can disincentivise investment.
"Enabling policies and attractive regulatory frameworks can drive renewable energy deployment, which in turn can boost low-carbon economic growth and enhance energy security," said IRENA Director-General Adnan Z. Amin. "Panama''s abundant renewable energy resource potential offers the country an opportunity to cost-effectively meet its long-term energy needs and underpin its transition to sustainable energy future."
Panama''s National Energy Plan is a roadmap that seeks to increase the share of renewables in the power system to 70 per cent by 2050. By the end of 2016, wind and solar power capacity had reached 270 megawatts (MW) and 90 MW respectively.
"Panama can set a strong example for the Central American region by utilising our potential to generate 70 per cent of our electricity from hydropower, wind and solar resources," said Dr. Victor Urrutia, Secretary for Energy for Panama. "IRENA''s support through this RRA process will facilitate the realisation of our long-term ambition.
"In addition to the moral and ideological imperative, we also have an enormous interest and commitment to renewable energy," continued Secretary Urrutia, "renewables are no longer an alternative option but instead offer a clear path to the future."
Increased shares of solar and wind will also require significant flexibility mechanisms in Panama''s evolving electricity network. Combined with updated power system planning and operational practices, these measures can help ensure the reliable integration of variable renewable energy in a cost-effective manner, the report suggests.
The development of a domestic renewable energy workforce is also key to the success of Panama''s renewable energy programme and can bolster the growing solar PV and wind energy markets in the country. The report recommends an examination of the current national workforce in the field of renewables, compared with projected future needs in order to help inform modifications to domestic education and training programmes.
About the International Renewable Energy Agency (IRENA)
The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports countries in their transition to a sustainable energy future, and serves as the principal platform for international co-operation, a centre of excellence, and a repository of policy, technology, resource and financial knowledge on renewable energy. With 156 Members (155 States and the European Union) and 26 additional countries in the accession process and actively engaged, IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity.
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