The IDB Invest blog discusses the topic of zero-carbon affordable housing in Latin America and the Caribbean (LAC). The authors hypothesize that increased access to multifamily housing with high levels of energy efficiency could have a highly positive impact on environmental pollution patterns. Such housing projects contemplate the implementation of energy efficiency measures, the purchase of offsetting instruments, e.g. through the purchase of carbon credits, to compensate for remaining emissions and maintain consistency with the “zero carbon” goal. In addition to minimizing the impact of construction, through the use of materials that reduce carbon emissions associated with their manufacture and transportation, and maximizing the availability and use of natural resources within the design, especially natural lighting and ventilation.

In December 2020, IDB Invest announced an investment of up to 10 million dollars in the region’s first zero-carbon affordable housing fund, managed by Paladin Realty. IDB Invest support consists of a 5 million dollars equity investment complemented by a 5 million dollars blended finance investment with resources mobilized from the Clean Technology Fund (CTF), one of the two multi-donor climate trust funds of Climate Investment Funds (CIF). The operation seeks to increase the availability of capital for the development of sustainable housing, built by medium-sized developers and destined for homes in Mexico, Colombia, Brazil and Peru.

This type of projects are becoming more relevant in the LAC region. For example, in Mexico, there is a residential project called “Villas del Fresno”, that achieved the prestigious Zero Carbon EDGE (Excellence in Design for Greater Efficiencies), which consists of 1,639 affordable homes located in the outside of Mexico City and that had the support of Paladin Realty as its main investor.

Paladin’s fund aims to a total size between 50 to 100 million dollars to be invested in housing construction for households with incomes below the gross income per capita of each country. All homes financed by this fund will meet the IFC’s EDGE certification standard, a green building certification system focused on sustainable development, and at least 75% of the fund’s projects will reach the highest level of “EDGE Zero Carbon.”