5 MDBs pledge $170 billion in climate financing

The 21st COP is set to take place in Paris between 30 November and December 11. For the first time, the organizing committee has said that the objective, this year, is to secure a "binding and universal agreement on climate, from all the nations of the world."

Ahead of the conference, and after a pledge by developed countries to raise $100 billion a year from 2020 onwards to combat climate change in developing countries, five MDBs have announced they will increase climate financing over the next five years, in a bid to help developing countries fight climate change.

World Bank Group

At a meeting of global finance ministers, hosted by France and Peru, on the sidelines of the Annual Meetings of the World Bank Group-IMF in Lima, Peru, the World Bank Group said it is looking to "potentially" increase its climate financing to $29 billion a year by 2020. Overall, it aims to increase the share of climate-related funding from 21 to 28%, comprising average direct financing for climate of around $10.3 billion, and leveraging co-financing for climate related projects.

"The investments will boost support for renewable energy and energy efficiency, climate-smart transport solutions, resilient cities, the restoration of degraded forests and landscapes, enhanced water security, and agricultural practices," said the bank in a statement released.

European Investment Bank

Representing the biggest commitment, the European Investment Bank (EIB) – the world’s largest MDB – has pledged to increase climate related investment to "well over" $110 billion over the next five years, thus increasing its spending in this area from 25 to 35%. In 2014, the EIB doled out climate change loans totaling $25.4 billion.

"We must do all we can to unlock new investment in countries especially vulnerable to climate change, including those with low-lying coastal areas and regions exposed to desertification, drought, and flooding. The EIB now expects its lending for climate projects to represent over a third of its support in those countries," stated Werner Hoyer, EIB Group president.

African Development Bank

The African Development Bank (AfDB) said it will triple climate financing to $5 billion a year by 2020, thus increasing such investments to 40% of its total new investments. Half of this will be used to reduce Africa’s greenhouse gas emissions via the implementation of renewable energy, particularly solar; while the rest will be used to help African economies adapt to climate change through climate-resilient crops, for example, and improving access to water.

In a statement on the increase, it said, "The African Development Bank has committed almost $7 billion to support climate-resilient and low-carbon development in Africa in the past four years. Its energy investments last year will deliver power that is 90% generated from renewable sources."

Asian Development Bank

Representing around 30% of its overall financing, the Asian Development Bank (ADB) has said it will double its climate financing to $6 billion by 2020. "This commitment reflects the importance of addressing climate change in Asia and the Pacific, where rising sea levels, melting glaciers, and weather extremes like floods, droughts, and tropical storms are damaging livelihoods and taking too many lives," it wrote.

It added, however, that financing alone was not enough. Technology, partnerships and a deeper understanding of the issues at hand were also crucial to fighting climate change. It says that currently, Asia-pacific contributes to 37% of global greenhouse gas emissions.

European Bank for Reconstruction and Development

Over the next five years, the European Bank for Reconstruction and Development (EBRD) has said it will increase green financing to €18 billion (around $20.5 billion), thus matching the amount of financing it has provided in the last ten years. This will represent roughly 40% of its financing commitments. In 2014, it invested €8.9 billion.

"Through investing in a wide variety of projects ranging from solar plants in Jordan and Kazakhstan and wind farms in Turkey and Mongolia to energy efficiency projects in factories and commercial and residential buildings, EBRD finance for sustainable resource use has led to a reduction of carbon emissions of over 72 million tonnes a year," it commented in a statement released.

Inter-American Development Bank

The Inter-American Development Bank (IADB) has also pledged to double the volume of its climate-related financing between 2016 and 2018, to represent between 25 and 30% of its investments. A spokesperson told pv magazine the IADB provided around $5.5 billion in climate financing between 2012 and 2014, or an average of $1.8 billion per year.

"Doubling these amounts for the period 2016-2018 would imply a three-year total of US$11 billion and an annual average of US$3.7 billion (rounding up). This assumes that the volume of Bank lending will continue to average roughly US$13 billion per year," said the spokesperson.

They added, "Important to underscore, as in last week’s press release, that the goal is aspirational. I.e., it is subject to demand from the IDB´s borrowing member countries in Latin America and the Caribbean, and subject to approval as a target by the Bank´s Governors."

According to Bloomberg New Energy Finance (BNEF), both national and multilateral banks have invested over half a trillion dollars in clean energy. "This figure is expected to reach $1 trillion in cumulative investment by 2020," it predicts.

pv magazine will speak to BNEF this Thursday about climate financing. Watch out for more news on the topic in the coming days.