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AfrElec INVESTMENT AfrElec

MDBs provide $61.6bn of

climate financing in 2019

MDBs play a crucial role in supporting the worldwide economic recovery after the
COVID-19 crisis, aiming for environmental and economic resilience

GLOBAL CLIMATE financing by seven of the world’s adaptation finance was predicted to double to
largest multilateral development banks (MDBs) $18bn by 2025.
accounted for $61.6bn in 2019, of which The study reported on climate financing in
$41.5bn (67%) was in low and middle-income all countries by a group of seven banks, with the
economies. Islamic Development Bank (IsDB) and the Chi-
The Joint Report on Multilateral Devel- na-based Asian Infrastructure Investment Bank
opment Banks’ Climate Finance found that (AIIB) included for the first time.
$46.6bn, or 76%, was devoted to reducing green- The report has come out during the COVID-
house gas (GHG) emissions and slowing down 19 economic crisis, which has caused significant
global warming. Of this, 59% went to low and social and economic disruption, temporarily
middle-income economies. reducing global carbon emissions to 2006 levels.
The remaining $15bn, or 24%, was invested The report notes that countries are now con-
in adaptation efforts to help countries build fronting the parallel threats of COVID-19 and
resilience to the mounting impacts of climate climate change, as well as a unique opportunity
change. This includes worsening droughts and to plan investments for more sustainable sys-
more extreme weather events from extreme tems in place of the current carbon-intensive
flooding to rising sea levels. A total of 93% of this approach.
finance was directed to low and middle-income
economies. Asian angle
The report also stressed that MDMs would One of the banks involved, the Asian Develop-
now play a crucial role in supporting the world- ment Bank (ADB), said that it had committed
wide economic recovery after the coronavirus almost $7.1bn in climate finance in 2019, clas-
(COVID-19) crisis, and are now well-placed to sified as $5.5bn for mitigation and $1.5bn for
support a green recovery which supports both adaptation.
environmental and economic resilience. This included $705mn from external
The work of the MDMs involves providing resources, including multilateral climate funds.
soft loans to risky projects in a bid to encourage In addition, the ADB mobilised $8.8bn of cli-
the rest of the public sector and private investors mate co-financing from public and private
to provide funding where they would otherwise investors.
have not done. “The growing flow of MDB climate finance
Additional climate funds channelled through shows our joint resolve to take on climate change
MDBs, such as the Climate Investment Funds and, in the face of the coronavirus disease
(CIF), the Global Environment Facility (GEF) (COVID-19) pandemic, it is more important
Trust Fund, the Global Energy Efficiency and than ever to ‘build back better’ in a low-car-
Renewable Energy Fund (GEEREF), the Euro- bon and climate-resilient way,” said the Direc-
pean Union’s funds for Climate Action, and the tor-General of ADB’s Sustainable Development
Green Climate Fund (GCF), play an important and Climate Change Department, Woochong
role in boosting MDB climate financing. Um.
In 2019, the MDBs reported a further “The report shows that climate finance pro-
$102.7bn in net climate co-finance – investments vided by and through the MDBs is providing
from the public and private sector – taking the increasing support for these needed transitions.”
total of climate activity financed in the year to MDMs are keen to support green projects
$164.3bn. and have in recent years moved on from their
The report shows that the MDBs are on track last support for coal projects. The African Devel-
to deliver on their increased climate finance lev- opment Bank (AfDB), for example, has commit-
els. In New York in 2019, a statement by MDBs ted itself to avoiding coal, and last made a policy
highlighted that their global annual climate decision to support a coal project, a generation
finance was expected to collectively amount plant in Senegal, over five years ago.
to at least $65bn, with $50bn for low and mid- The ADB in Manila has made similar policy
dle-income countries by 2025, and that MDB commitments.™

P6 www. NEWSBASE .com Week 32 13•August•2020