The FINANCIAL — 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 (ADB) together with MDB partners: the African Development Bank (AfDB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank Group (IDBG), and the World Bank Group (WBG).
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, according to the World Bank.
The report covers the 2015 year 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%; with South Asia receiving 19%; Latin America and the Caribbean 15%; East Asia and the Pacific 14%; the EU 13%; Sub-Saharan Africa 9%; and the Middle East and North Africa 9%. Multi-regional commitments made up the other 2% of the total.
On a sectoral basis, the largest recipient of adaptation funding was for water and wastewater systems (27%), followed by energy, transport and related infrastructure (24%), and crop and food production (18%). Renewable energy received the bulk of mitigation finance (30%), lower-carbon transport received 26%, and energy efficiency activities 14%.
“The 2015 year will go down in history as the end of the first chapter to transition the world to a low carbon, more resilient future,“ said the World Bank Group’s Senior Director for Climate Change, John Roome. “We are determined to do all we can to maintain the momentum and promise of the historic Paris climate change agreement. It’s why the Bank Group has ramped up its support for climate work post Paris, with an action plan laying out a clear roadmap to spur more investments in renewable energy, water, helping our crowded cities and saving our forests and promoting agriculture. We are also determined to deliver on our pledge to increase annual funding for climate work to potentially $29 billion annually in 2020. We already have plans to provide more than $1 billion to support India’s ambitious initiatives to expand solar and have already approved projects to help farmers in countries like Niger grow more to adapt to a changing climate.“
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.