South Asia receives largest chunk of climate finance
South Asia received the largest share of climate finance from the multilateral development banks last year, according to a report.
Among the regions, South Asia received the largest share of total funding, at 21 per cent. Latin America and the Caribbean, non-EU Europe and Central Asia, Sub-Saharan Africa, and East Asia and the Pacific received 17 per cent, 16 per cent, 15 per cent, and 10 per cent, respectively, the fourth joint report on Multilateral Development Banks (MDB) Climate Finance.
About one-third (36 per cent) of the total in adaptation funding went into agriculture and ecological resource projects, and 40 per cent went into projects involving infrastructure (including flood protection), energy, and the built environment,” the MDB Climate Finance report said, adding that renewable energy was the most common mitigation project, drawing 35 per cent of the funding, whereas Energy efficiency accounted for 22 per cent, the banks also invested heavily in sustainable transport, at 27 per cent of the total.
The world’s six large multilateral development banks 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, the fourth joint report on MDB Climate Finance.
Prepared by African Development Bank, Asian Development Bank (ADB), European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank and World Bank Group, the report also revealed the important part the MDBs play in delivering development finance in a world shaped by climate change.
“Mobilising the $100 billion plus per year by 2020 that developing countries urgently need to address climate change is critical to a meaningful agreement at the upcoming climate negotiations in Paris,” ADB’s vice-president for Knowledge Management and Sustainable Development Bindu Nath Lohani said, adding, “As well as direct assistance from MDBs, this also means leveraging private sector finance and tapping non-traditional sources such as pension funds and sovereign wealth funds.”
The recent merger of ADB’s concessional and ordinary lending windows, which will increase ADB’s annual operations by 50 per cent to around $20 billion, will free up additional funds for climate-related and other development assistance, notably in poorer countries in the region.
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.
Of the total commitments in 2014, some 91 per cent came from MDBs’ own resources, while the remaining nine per cent, or $2.6 billion, came from external resources including bilateral or multilateral donors, the Global Environment Facility, and the Climate Investment Funds.
Knowing where the money is flowing is critical for reaching areas of opportunity and need, because what gets measured gets managed, it said, adding that the MDBs have harmonised 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 building the policy framework that will drive investment of trillions, is to meet the promise made by developed countries to mobilise $100 billion a year by 2020.
With their ability to catalyse 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 provided 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.