Latest update on climate finance

The International Institute for Sustainable Development (IISD) provides the October update on global developments in climate finance.


October 2015 Climate Finance Update

During the month of October, the Asian Development Bank (ADB), the African Development Bank (AfDB), the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the Inter-American Development Bank (IDB), the Caribbean Development Bank (CDB), the World Bank, the Green Climate Fund (GCF), the Adaptation Fund and others reported on funding, project news and other climate-related finance developments. Multilateral development banks, environmental funds and UN entities also released studies, newsletters and reports on, inter alia, food security, access to finance, green bonds, black carbon and private sector climate finance.

On October financing news, a number of targets were announced around the 2015 Annual Meetings of the World Bank Group and the International Monetary Fund (IMF), taking place from 9-11 October in Lima, Peru. The World Bank Group announced it would seek to increase its climate financing by one-third, to US$29 billion per year by 2020.

AfDB announced it would increase its annual climate financing to US$5 billion by 2020, with mitigation and adaptation receiving equal shares. In addition, AfDB will pursue public and private co-financing opportunities.

EIB committed to increasing the share of its lending in support of climate related investment in developing countries from 25% to 35%.

IDB committed to doubling the volume of its climate-related financing by 2020. From 2018 onward, the Bank will also screen all relevant projects for climate risks and resilience. IDB will further increase the use of instruments to leverage private sector finance, including for adaptation and climate resilience.

CDB approved: a US$134,000 technical assistance grant help to Belize decrease the vulnerability of its water sector to climate change impacts; and financing of US$70,000 to training workshops in Haiti to support the roll-out of the Caribbean Climate Online Risk and Adaption Tool (CCORAL).

Announcements were also made during a climate finance ministerial meeting, organized in parallel with the World Bank/IMF Annual Meetings by the Governments of Peru and France. In addition to those by the Multilateral Development Banks (MDBs), finance-related announcements were made by: China (US$3.1 billion); the European Commission (US$2 billion/year in grants by 2020); France (€5 billion/year by 2020); Germany (doubling by 2020 from 2014); Luxemburg (€120 million over 2014-2020); the Netherlands (€540 million in 2016); Sweden (doubling in 2016 compared to 2015); and the UK (£5.8 billion over 2016-2021).

On project news, ADB announced a US$24.25 million project grant from its Strategic Climate Fund to support Papua New Guinea (PNG) in building climate resilience and responsiveness.

AfDB’s Africa Climate Change Fund (ACCF) announced US$1.35 million in readiness financing to Cape Verde, Kenya and Swaziland. AfDB approved a US$27 million project in Benin that aims to support food security and climate resilience. Of the total funding, US$24 million will come from the Global Agriculture and Food Security Program (GAFSP). AfDB also wrote on how a US$3.5 million contribution from the Rural Water Supply and Sanitation Initiative (RWSSI) Trust Fund is helping build climate resilience in Malawi.

EIB approved a US$100 million loan to a Swedish company to build two large near-zero-energy-buildings.

On green bonds, EIB announced it had increased its Climate Awareness Bond (CAB) 11/2023, by €400 million, to €1 billion. EIB also launched a CAD500 million CAB, which marked the first green bond issuance from an international supranational sovereign agency (SSA) issuer in the Canadian Dollar market.

EBRD’s Managing Director explained that a “Green Economy Transition approach” will underpin the Bank’s aim to increase its financing to “sustainable resources” to €18 billion over the next five years.

The World Bank, with Maldives, the EU and Australia, launched the Climate Change Adaptation Programme (CCAP), which “will work across sectors and institutions to plan and manage the natural environment” on two of Maldives’ atolls. The World Bank also reported on how Niger River Basin riparian countries are taking steps to collaboratively address climate change-induced threats. The countries recently adopted the Niger Basin Climate Resilience Investment Plan (CRIP) and “pledged to advocate for technical support and financing to implement its resilience-focused priority actions.”

The World Bank also reported on a number of funding and project developments, including: a US$15 million credit and loan to Grenada to enhance resilience against natural disasters, among other development policy goals; South Africa’s plans to introduce a carbon tax at R120 ($11.20) per tonne of carbon dioxide (CO2) in 2016; and a US$410,000 waste management methane recovery project in the Philippines.

The World Bank also published an overview of its carbon finance projects in Africa, including those in the waste sector in Morocco, Nigeria and South Africa.

The GCF launched a new website. Dedicated web pages were also made available for the 11th GCF Board meeting, and for access to readiness grants.

On other developments, the GCF published its first set of funding proposals for review by the 11th Board Meeting, taking place from 2-5 November, in Livingstone, Zambia. The GCF also finalized US$300,000 readiness grant agreements with both Rwanda, and Antigua and Barbuda.

The Adaptation Fund approved three full project proposals and six preliminary projects, totalling US$12.4 million. The fund also launched a public call for comments on its gender policy proposal, open through 31 December 2015.

The International Fund for Agricultural Development (IFAD) reported on a US$7.8 million grant from the Global Environment Facility (GEF) to the ‘Integrated Management and Innovation in Rural Settlement’ project in Egypt, which will focus on climate change measures in areas targeted by IFAD’s Sustainable Agriculture Investments and Livelihoods (SAIL) project. IFAD is also inviting signatures in a petition calling for countries’ climate negotiators to ensure that an agreement reached at the UN Paris Climate Change Conference does not leave out smallholder farmers.

In October, ADB, AfBD, EIB, the World Bank, the Partnership for Market Readiness (PMR), the GEF, the UN Environment Programme (UNEP)-DTU Partnership, the UN Framework Convention on Climate Change (UNFCCC) and the UN published studies, newsletters and reports.

Studies by ADB focus on climate change and food security in Pacific islands, and attribution of responsibility for CO2 emissions in emerging economies. The first study concludes that investments in agriculture and in agricultural research and extension services “hold the potential to effectively eliminate the negative impacts of climate change on food security.” The second study finds that a substantial share of emissions growth “is explained by higher participation in global production networks that serve expanding foreign consumption.”

AfDB released a brochure on the Africa Climate Change Fund (ACCF).

EIB released its Climate Strategy, which was adopted in September 2015. The strategy is structured around three action areas: reinforcing the impact of EIB climate financing; increasing climate resilience; and further integrating climate change considerations across all EIB’s standards, methods and processes. EIB also published the first issue of its semi-annual CAB Newsletter, which inaugurates the practice of reporting project allocations on an individual bond basis.

The World Bank’s Climate and Carbon Finance Unit released its October 2015 Newsletter with stories on, inter alia, the Pilot Auction Facility for Methane and Climate Change Mitigation (PAF), technical workshops and publications.

A World Bank Report on the ‘Future of Food’ “examines ways to improve the productivity and resilience of the food system and to make agriculture part of the solution to climate change.” It recommends practices that boost productivity, enhance resilience and lower greenhouse gas (GHG) emissions.

Other World Bank publications in October included reports on: building local resilience to disaster risk in Bangladesh; the Bank’s Greenhouse Gas Emissions Inventory Management Plan (IMP); and carbon leakage.

PMR released the second issue of its China Carbon Market Monitor.

The GEF’s Scientific and Technical Advisory Panel (STAP) released an advisory document titled ‘Black Carbon Mitigation and the Role of the Global Environment Facility,’ which recommends significant investments in accelerating the reduction of black carbon to directly support implementation of the Sustainable Development Goals (SDGs).

UNEP-DTU launched working papers that evaluate the CDM Executive Board’s Sustainable Development Tool, including host countries’ views, and make recommendations for its improvement.

The UNFCCC Secretariat released finance-related documents ahead of the UN Paris Climate Change Conference: financial report and audited statements for the year 2014 (FCCC/SBI/2015/INF.10 and FCCC/SBI/2015/INF.10/Add.1); and parties’ views and recommendations on the elements to be taken into account in developing guidance to the GCF (FCCC/CP/2015/MISC.1).

The UNFCCC also prepared a summary overview of announced climate finance pledges ahead of Paris.

The Climate Change Support Team of the UN Secretary-General published a report on ‘Trends in Private Sector Climate Finance’ that examines progress made since the 2014 Climate Summit. The report calls on policy makers to increase the demand for low-carbon, climate resilient investment and to enhance the opportunities for low-cost capital to flow towards these opportunities.

On event-related news, the GCF organized a readiness workshop for Caribbean stakeholders in Belize City, Belize, from 8-10 October.

PMR held its 13th Partnership Assembly Meeting in Sweimeh, Jordan, from 28-29 October. Preceding the Assembly, PMR organized two technical workshops at the same location, on ‘PMR Insights on Post-2020 Carbon Markets’ and on ‘Carbon Leakage: Theory, Evidence and Policy.’

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