Climate Finance in Developing and Emerging Countries Rise by 22%

Business Finance Latest News

Finance which helps countries boost projects that reduce emissions and address climate challenges have increased by 22% in developing and emerging economies during the last one year, the 2018 Joint Report on Multilateral Development Banks’ Climate Finance has revealed.

According to the report, these Climate financing by the world’s largest multilateral development banks (MDBs) rose to an all-time high of $43.1 billion in 2018 from $35.2 billion the previous year.

“This is also a 60% increase since the adoption of the Paris agreement in 2015 response to the ever more pressing challenge of climate change, which disproportionately affects the poorest and most vulnerable,” the report noted.

Also Read: Onofiok Luke Makes Legislative Appointment

The report shows that $30.2 billion, or 70% of the total financing for 2018 was devoted to climate change mitigation investments that aim to reduce harmful greenhouse gas emissions and slow down global warming, while the remaining $ 12.9 billion or 30% was invested in adaptation efforts to help address mounting impacts of climate change, including worsening droughts and more extreme weather events from extreme flooding to rising sea levels.

The report which combines data from 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 Group (IDBG) and the World Bank Group (WBG), indicates that these banks account for the vast majority of multilateral development finance globally.

The 2018 report also summarises information on climate finance from the Islamic Development Bank (IsDB), which joined the MDB climate finance tracking groups in October 2017.

Since 2011, when the six MDBs initiated joint reporting, they have committed nearly $237 billion in climate finance for developing and emerging economies. Climate funds channeled to these countries through MDBs, such as the Climate Investment Funds (CIF), the Global Environment Facility (GEF) Trust Fund, the Global Energy Efficiency and Renewable Energy Fund (GEEREF), the European Union’s funds for Climate Action, and the Green Climate Fund (GCF), play an important role in boosting MDB climate financing.

Coupled with the $43.1 billion of MDB finance in 2018, MDBs report another $68.1 billion in net climate co-finance – investments from the public and private sector – adding up to total climate finance for the year of $ 111.2 billion.

“The MDBs are key partners in drawing more private sector investors and large institutional investors into the green finance sector,” said Josué Tanaka, the EBRD’s Managing Director for Energy Efficiency and Climate Change.

“Green finance is central to what we do at the EBRD. We are well on the way to achieving our goal of 40% of EBRD investments being in the green sector by 2020, as well as mobilising significant amounts of private sector finance to complement our own investments in line with our philosophy of working with the private sector,” said Tanaka

The regions of Sub-Saharan Africa, Latin America and the Caribbean, and South and East Asia were the top three to invest MDB climate finance. The report also breaks down climate finance by MDB, economy size, sector, type of recipient and type of financial instrument.

MDBs’ provision of climate finance helps to ensure global financial flows are consistent with development with low greenhouse gas emissions and are resilient to climate change, in line with the Paris Agreement’s aim to limit the increase in global temperatures to well below 2°C, pursuing efforts for 1.5°C.