Montevideo, Uruguay – The streets of Uruguay's capital are getting quieter and cleaner as a new fleet of electric buses transforms public transportation in the South American nation, with the support of innovative financing solutions from the Renewable Energy Innovation Fund (REIF).
Uruguay has already achieved international recognition for its First Energy Transition, which successfully transformed the country's electricity matrix to nearly 98% renewable sources. Now, as part of its Second Energy Transition, the nation is tackling one of its most challenging sectors, transportation.
UN Deputy Secretary-General Amina J. Mohammed (left) and UN Resident Coordinator Pablo Ruiz Hiebra (right) ride an electric bus financed through REIF—advancing Uruguay’s shift to sustainable public transport.
REIF's Blended Finance Model: Catalyzing Green Investment
The Joint SDG Fund’s joint programme, Renewable Energy Innovation Fund (REIF) operates under the leadership of the UN Resident Coordinator in Uruguay and is implemented by three UN agencies: the United Nations Industrial Development Organization (UNIDO), the United Nations Development Programme (UNDP), and the United Nations Entity for Gender Equality and the Empowerment of Women (UN-Women). The initiative is strongly supported by the Government of Uruguay and financially backed by partnering financial institutions.
By partnering with seven major banks – BBVA, BROU, Heritage, HSBC, Itaú, Santander, and Scotiabank – which collectively represent more than 80% of Uruguay's banking sector, REIF has achieved remarkable financial leverage. The initial investment has grown into US$22 million for renewable energy projects across various sectors, including transportation – representing a leverage ratio of 1:6. This powerful multiplier effect means that transportation companies can now afford to switch to electric buses and other businesses can install electric boilers, heat pumps and storage capacity to improve energy efficiency.
The programme combines three key elements:
- Financial Innovation: REIF provides up to 30% of project costs at concessional rates and tailored repayment schedules, while facilitating commercial bank financing for the remaining 70% through risk mitigation instruments.
- Technical Assistance: Firms receive support to perform technical analysis, and to measure and improve environmental and gender impact in their investment projects, while banks receive training on environmental impact assessment and risk evaluation for sustainable projects.
- Knowledge Generation: The programme has produced comprehensive studies on electromobility opportunities and challenges, as well and other energy transition subjects such as green hydrogen in Uruguay's specific conditions, creating an open knowledge base that reduces information barriers for future projects.
The initial phase of the programme has financed the acquisition of 50 electric buses for Montevideo's public transportation system, representing a direct investment of US$1 million from REIF, which catalyzed a total investment of US$13 million when including commercial bank participation.
The 50 buses alone will prevent approximately 42.506 tonnes of CO2 emissions annually. That translates to approximately 43 tonnes of CO2 avoided for every US$1,000 invested by REIF – a remarkable return on investment for climate finance.
REIF has incorporated gender considerations throughout the project lifecycle. A specialized study identified barriers to women's participation in the transportation sector, leading to the creation of targeted training programmes for women drivers and mechanics.
As Uruguay continues its journey toward comprehensive decarbonization, the electric bus programme stands as testament to how innovative financing mechanisms can accelerate the transition to more sustainable and inclusive urban transportation systems – a model that other countries throughout Latin America and beyond are now studying closely.
Note:
All joint programmes of the Joint SDG Fund are led by UN Resident Coordinators and implemented by the agencies, funds and programmes of the United Nations development system. With sincere appreciation for the contributions from the European Union and Governments of Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, Monaco, The Netherlands, Norway, Poland, Portugal, Republic of Korea, Saudi Arabia, Spain, Sweden, Switzerland and our private sector funding partners, for a transformative movement towards achieving the SDGs by 2030.
