Zambian Business Times

MDB Climate Finance peaked USD35.2bn in 2017


An increase of nearly 30 per cent on the previous year, boosting projects that help developing countries cut emissions and address climate risks. WASHINGTON -

Climate financing by the world’s six largest multilater­al developmen­t banks (MDBs) rose to a seven-year high of $35.2billion in 2017, up 28% on the previous year.

The MDBs’ latest joint report on climate financing said $27.9billion, or 79% of the 2017 total, was devoted to climate mitigation projects that aim to reduce harmful emissions and slow down global warming.

The remaining 21%, or $7.4 billion, of financing for emerging and developing nations was invested in climate adaptation projects that help economies deal with the effects of climate change such as unusual levels of rain, worsening droughts and extreme weather events.

In 2016 climate financing from the MDBs had totalled $27.4billion.

The latest MDB climate finance figures are detailed in the 2017 Joint Report on Multilater­al Developmen­t Banks’ Climate Finance, combining data from the African Developmen­t Bank, the Asian Developmen­t Bank, the European Bank for Reconstruc­tion and Developmen­t, the European Investment Bank, the Inter-American Developmen­t Bank Group and the World Bank Group ( World Bank, IFC and MIGA). These banks account for the vast majority of multilater­al developmen­t finance. In October 2017 the Islamic Developmen­t Bank joined the MDB climate finance tracking groups, and its climate finance figures will be included in joint reports from 2018 onwards.

Climate funds such as the Climate Investment Funds (CIF), the Global Environmen­t Facility (GEF) Trust Fund, the Global Energy Efficiency and Renewable Energy Fund (GEEREF), the European Union’s funds for Climate Action, the Green Climate Fund (GCF) and others have also played an important role in boosting MDB climate finance. As well as the $35.2billion of multilater­al developmen­t finance, the same adaptation and mitigation projects attracted an additional $51.7billion from other sources of financing last year.

Of the 2017 total, 81% was provided as loans. Other types of financial instrument­s included policy-based lending, grants, guarantees, equity and lines of credit.

Latin America, Sub-Saharan Africa and East Asia and the Pacific were the three major developing regions receiving the funds. The report contains a breakdown of climate finance by country.

The sharp increase came in response to the ever more pressing challenge of climate change. Calls to galvanise climate finance were at the heart of events such as the One Planet Summit in Paris in December 2017, two years after the historic Paris Agreement was adopted. Multilater­al banks began publishing their climate investment in developing countries and emerging economies jointly in 2011, and in 2015 MDBs and the Internatio­nal Developmen­t Finance Club agreed joint principles for tracking climate adaptation and mitigation finance.

Climate finance addresses the specific financial flows for climate change mitigation and adaptation activities. These activities contribute to make MDB finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient developmen­t, in line with the Paris Agreement.

The MDBs are currently working on the developmen­t of more specific approaches to reporting their activities and how they are aligned with the objectives of the Paris Agreement. “For the World Bank Group, 2017 was a record-setting year on climate finance as a result of a deliberate effort over the past few years to mainstream climate considerat­ions into our operations. This upward trend is continuing,” said World Bank Senior Director for Climate Change John Roome.

“The Multilater­al Developmen­t Banks are also playing a key role in leveraging private sector finance which will be critical to meeting the objectives of the Paris Agreement.

Last year alone, the WBG crowded in $8.6 billion in private financing for climate change, which is up 27% from 2016.”

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