Climate finance mobilized by the AfDB went up by 60% compared to 2013
Multilateral Development Banks provided US $28 billion in Climate Finance in 2014
The world’s six large multilateral development banks (MDBs) delivered over US $28 billion in financing last year to help developing countries and emerging economies mitigate and adapt to the challenges of climate change. The latest figures bring total collective commitments of the past four years to more than US $100 billion.
In 2014, the six banks together provided over US $23 billion dedicated to mitigation efforts and US $5 billion for adapation work, according to the fourth joint report on MDB Climate Finance.
The report reveals the important part the MDBs play in delivering development finance in a world shaped by climate change. It was prepared by the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank (IDB) and the World Bank Group (WBG).
Of the total commitments in 2014, 91 percent came from MDBs’ own resources, while the remaining 9 percent, or US $2.6 billion, came from external resources including bilateral or multilateral donors, the Global Environment Facility, and the Climate Investment Funds.
Among the regions, South Asia received the largest share of total funding, at 21 percent. Latin America and the Caribbean, non-EU Europe and Central Asia, Sub-Saharan Africa, and East Asia and the Pacific received 17 percent, 16 percent, 15 percent and 10 percent, respectively.
In Africa, climate finance mobilized by the AfDB went up by 60% compared to 2013 boosted by increased investments in renewable energy and sustainable transport. A total of US $1.92 billion was mobilized: US $1.16 billion for mitigation and US $760 million for adaptation, 50% more than in 2013 because the Bank continues to push for increased funding for adaptation projects. Over the last four years, the Bank has delivered US $7 billion in climate-smart development.
“Our aim is to do more and we are committed to scaling up much-needed climate finance for the continent,” said Alex Rugamba, AfDB Director, Energy, Environment and Climate Change Department. “2015 represents one of the last opportunities for the global community to deviate from its current unsustainable growth pathway. This year is critical for solid decisions on sustainable development and on climate change in particular. For African economies which are considered among the most vulnerable to the adverse effects of climate change, the importance cannot be overstated. The AfDB has been at the forefront in supporting sustainable development working closely with African countries to transition towards climate resilient and low carbon growth.”
About one-third (36 percent) of the total in adaptation funding went into agriculture and ecological resource projects, and 40 percent went into projects involving infrastructure (including flood protection), energy, and the built environment. Renewable energy was the most common mitigation project, drawing 35 percent of the funding. Energy efficiency accounted for 22 percent. The banks also invested heavily in sustainable transport, at 27 percent of the total.
“The increasing level of climate financing delivered by MDBs is a positive trend and should encourage all stakeholders to stay the course with particular attention to delivering more adaptation finance to countries with the least resources,” said Rugamba. “The African Development Bank also commends the joint work undertaken by MDBs and IDFC (International Development Finance Club) to harmonize climate finance tracking methodologies, leveraging climate finance and greening development; all these geared towards a robust climate finance pronouncement at COP 21.”
The 2014 report is based on a joint MDB approach for climate finance tracking and reporting that counts only the project components directly providing mitigation or adaptation co-benefits.
Knowing where the money is flowing is critical for reaching areas of opportunity and need, because what gets measured gets managed. The MDBs have harmonized their principles for tracking climate mitigation finance with members of the International Development Finance Club, and have started a similar process for adaptation finance.
The MDBs, together with other public development finance institutions, play a strategic role in smartly deploying scarce government resources and leveraging much larger, and longer-term, private investments.
It is increasingly clear that the finance required for a successful, orderly transformation to a low-carbon and resilient global economy is counted in the trillions and not billions. The immediate challenge of climate finance, while we build the policy framework that will drive investment of the trillions, is to meet the promise made by developed countries to mobilize US $100 billion a year by 2020.
With their ability to catalyze public and private funds, the report shows how the MDBs have successfully attracted and deployed climate financing to support low-carbon resilient growth in developing countries and emerging economies.
The report provides key data on climate finance flows and is expected to inform discussions at the Third International Conference on Financing for Development in Addis Ababa next month, and the UN climate change negotiations (COP21) in Paris at the end of the year.