The world’s six large multilateral development banks (MDBs) delivered over $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 $100 billion.
In 2014, the six banks together provided over $23 billion dedicated to mitigation efforts and $5 billion for adaptation 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).
“Last week, the G7 leaders made clear their commitment to decarbonizing the global economy.” said Rachel Kyte, World Bank Group Vice President and Special Envoy for Climate Change. “In so doing they recognized the important role that multilateral development banks play in helping our country and private sector clients to manage an orderly transition to low carbon growth and resilient economies. Our role in channeling and leveraging finance for climate action was also recognized as they asked us to stretch our balance sheets and crowd in more capital.”
“In 2014 the IDB reached a record amount of climate finance. But beyond the figure itself we are diversifying the menu of instruments, especially thanks to the possibilities offered by concessional international climate finance resources.” said David Wilk, Climate Change and Sustainability Division Chief a.i. at the Inter-American Development Bank.
Of the total commitments in 2014, 91 percent came from MDBs’ own resources, while the remaining 9 percent, or $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.
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 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 $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.
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.
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- Cecilia Reifschneider
- Anamaria Nuñez