Shearman And Sterling

News December 23, 2020

Engie’s Decarbonization Loan Facility

Shearman & Sterling advised Engie Energía Chile S.A. (Engie) as New York counsel on the entry into a $125 million unsecured loan facility from the Inter-American Investment Corporation (IDB Invest) in its own capacity and in separate capacities as agent of the Inter-American Development Bank and as sub-implementing entity of the Trust Fund for the Clean Technology Fund.  

Proceeds of the loans will be applied exclusively by Engie to pay for costs associated with the design, construction, operation and maintenance of the 162 MW Calama Wind Farm to be located near the city of Calama in northern Chile. The clean energy produced will enable the decommissioning of two coal-fired power-plants in Mejillones, Chile. Total project costs are estimated to be approximately $153 million.

The Clean Technology Fund loan deploys a unique pilot financing structure that monetizes the actual displacement of CO2 emissions of existing fossil fuel fired power assets. In the absence of a carbon credits market, the loan agreement establishes a minimum price for the emissions reductions to be credited to Engie in connection with the repayment of the loan. IDB Invest plans to replicate this innovative structure to support decarbonization efforts in other projects in Chile and elsewhere in Latin America and the Caribbean, with the broader objective to foster the development of carbon credits markets in the region.

The Shearman & Sterling team below also included visiting attorney Camila de Lasa.

The Team