Climate finance totaling $81 billion was mobilized for projects funded by the world’s six largest multilateral development banks (MDBs) in 2015. This included $25 billion of MDBs’ direct climate finance, combined with a further $56 billion from other investors.
The latest MDB climate finance figures are detailed in the 2015 Joint Report on Multilateral Development Banks’ Climate Finance, prepared by the Asian Development Bank together with MDB partners: the African Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank Group, and the World Bank Group.
This important contribution to the global climate change challenge was reinforced last year by pledges from all of the MDBs to significantly increase their climate finance in the coming years. They made these pledges in the run up to the COP21 Paris Agreement, the world’s first universal climate accord adopted in December last year by 195 countries.
The report covers the year 2015 and shows that MDBs delivered over $20 billion for mitigation activities and $5 billion for adaptation. Mitigation activities involve the reduction of greenhouse gas emissions through energy efficiency measures and the use of clean, renewable energy sources, while adaptation measures reduce climate vulnerability and increase resilience to climate change through, for example, investing in climate-resilient land-use and water resource management. Since 2011, MDBs have jointly committed more than $131 billion in climate finance.
Among the regions, non-European Union (EU) Europe and Central Asia received the largest share of total funding at 20 percent; with South Asia receiving 19 percent; Latin America and the Caribbean 15 percent; East Asia and the Pacific 14 percent; the EU 13 percent; Sub-Saharan Africa 9 percent; and the Middle East and North Africa 9 percent. Multi-regional commitments made up the other 2 percent of the total.
On a sectoral basis, the largest recipient of adaptation funding was for water and wastewater systems (27 percent), followed by energy, transport and related infrastructure (24 percent), and crop and food production (18 percent). Renewable energy received the bulk of mitigation finance (30 percent), lower-carbon transport received 26 percent, and energy efficiency activities 14 percent.
The release of this fifth joint MDB report comes just after the Governors of the IDB Group (including the Inter-American Investment Corporation) made the strong commitment to doubling climate finance by 2020. Juan Pablo Bonilla, Manager of the IDB´s Climate Change and Sustainable Development Sector, stated, “As of the end of 2015, 16 percent of our portfolio targeted climate-induced challenges. This includes innovative financial instruments to ensure lasting adaptation processes for water resources management and agricultural practices, and to develop clean energy, more sustainable infrastructure and better land use.”
Given the role of MDBs in catalyzing finance, the inclusion in this year's report of a common tracking approach for climate cofinancing is a significant step forward in making the reporting of climate finance flows more robust and transparent. MDBs have also been working closely together to harmonize reporting on greenhouse gas emissions and the use of proceeds from MDB green bonds.
Moving forward, the report notes that the MDBs will scale up climate finance activities across multiple sectors, in particular in renewable energy and energy efficiency; low-carbon and climate-resilient cities, regions and industries; low-carbon transport; natural resource efficiency; and climate-smart agriculture and food security. These efforts will help countries meet their commitments under the Paris Agreement, moving to a low-carbon, more resilient future.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source oflong-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
About the Inter-American Investment Corporation
The Inter-American Investment Corporation (IIC), a member of the Inter-American Development Bank Group, is a multilateral development bank committed to supporting the private sector in Latin America and the Caribbean. The IIC finances sustainable enterprises and projects to achieve financial results that maximize social and environmental development for the region. With a current portfolio of US$7 billion under management and 330 clients in 20 countries, the IIC works across sectors to provide innovative financial solutions and advisory services that meet the evolving demands of its clients.
- John Ferriter