Climate finance totalling US$ 81 billion was mobilised for projects funded by the world’s six largest multilateral development banks (MDBs) in 2015. This included US$ 25 billion of MDBs’ direct climate finance, combined with a further US$ 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.
The report covers 2015 and shows that MDBs delivered over US$ 20 billion for mitigation activities and US$ 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 US$ 131 billion in climate finance.
Among the regions, non-EU Europe and Central Asia received the largest share of total funding at 20 per cent; with South Asia receiving 19 per cent; Latin America and the Caribbean 15 per cent; East Asia and the Pacific 14 per cent; the EU (new member states) 13 per cent; Sub-Saharan Africa 9 per cent; and the Middle East and North Africa 9 per cent. Multi-regional commitments made up the remaining 2 per cent of the total.
On a sectoral basis, the largest recipient of adaptation funding was for water and wastewater systems (27 per cent), followed by energy, transport and related infrastructure (24 per cent), and crop and food production (18 per cent). Renewable energy received the bulk of mitigation finance (30 per cent), lower-carbon transport received 26 per cent, and energy efficiency activities 14 per cent.
In 2015 the EBRD contributed over US$ 2.9 billion for mitigation finance and US$ 244 million for adaptation finance. Seventy per cent of total EBRD climate finance was committed to the private sector.
Josué Tanaka, EBRD Managing Director, Energy Efficiency and Climate Change said: “The EBRD delivered climate finance totalling US$ 3.2 billion in 2015, accounting for 30 per cent of total EBRD annual investments. This reflects the fact that climate finance has become a core operational area for the EBRD across its sectors and regions of activity, providing a strong base for the EBRD to contribute in a meaningful manner to the objectives of the Paris Agreement.”
Given the role of MDBs in catalysing finance, the inclusion in this year’s report of a common tracking approach for climate co-financing 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 harmonise reporting on greenhouse gas emissions and the use of proceeds from MDB green bonds.
Looking ahead, 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, helping them move to a low-carbon, more resilient future.