Latest update on climate finance

The International Institute for Sustainable Development (IISD) provides the December 2015 update on global developments in climate finance.


December 2015 Climate Finance Update

December 2015 Climate Finance Update21 December 2015: During the month of December, the Asian Development Bank (ADB), the African Development Bank (AfDB), the European Bank for Reconstruction and Development (EBRD), the World Bank, the Green Climate Fund (GCF), the Adaptation Fund and the Secretariat of the UN Framework Convention on Climate Change (UNFCCC), among others, reported on new financing pledges and other climate finance news. Multilateral Development Banks (MDBs), climate funds and UN initiatives launched studies, reports and briefs on, inter alia, climate risks and resilience, and adaptation finance. A large number of climate finance-related side events were held during the UN Paris Climate Change Conference in December 2015.

On new financing pledges made in December, a number of countries, regions and cities made pledges to the GCF: Belgian regions pledged €11 million; the city of Paris pledged €1 million; Norway doubled its pledge, from US$258 million, by 2020; and Viet Nam pledged US$1 million.

The GCF signed two readiness grant agreements, each of US$300,000, with Guyana and the Democratic Republic of the Congo.

The Adaptation Fund also received new pledges, totaling close to US$75 million, which came from: the Belgian region of Wallonia (€1 million); Germany (€50 million); Italy (€2 million); and Sweden (U$17 million). The Adaptation Fund’s funding goal for 2015 is US$80 million.

Canada, Denmark, Finland, France, Germany, Ireland, Italy, Sweden, Switzerland, the UK and the US announced a US$248 million contribution to the Least Developed Countries Fund (LDCF), hosted by the Global Environment Facility (GEF). In addition, the Canadian province of Quebec pledged CAD6 millions to the LDCF. According to the LDC Group at the UNFCCC negotiations, the funds will cover for the 35 projects currently in the LDCF pipeline, valued at US$255 million.

In other funding announcements, Italy announced a €4.7 million contribution to the Africa Climate Change Fund (ACCF). Germany announced an additional €5 million funding to the Integrating Agriculture in National Adaptation Plans programme of the Food and Agricultural Organization of the UN (FAO) and the UN Development Programme (UNDP), raising its total support to the programme to €15 million. In addition, Germany, Norway and the UK announced a US$100 million contribution to Colombia’s REDD+ efforts to reduce deforestation in the county’s Amazon forests.

The World Bank announced US$3.8 million to combating climate change and preventing natural disasters in Bhutan and South Asia, and a US$300 million loan to support the implementation of Morocco’s green growth strategy. ADB granted a US$100 million loan to improving urban environments and climate resilience in two cities in Viet Nam. EBRD launched a climate resilience credit line, with the first loan under this credit line, at US$3 million, going to Bank Eskhata of Tajikistan. The funds will be on-lent to small and medium-sized enterprises and households to support the adoption of technologies and practices that reduce soil erosion and pressure on water and energy resources.

The UNFCCC Secretariat published a list of climate funding announcements made by developed countries, MDBs and multilateral climate funds in the run-up to, and during the UN Paris Climate Change Conference. The Secretariat also launched an interactive graphic showing the details of each announcement.

On other December climate finance news, MDBs undertook a number of joint actions, including: pledging to “work together to substantially increase climate investments and ensure that development programs going forward consider climate risks and opportunities”; signing on to the voluntary Principles to Mainstream Climate Action within Financial Institutions; and committing to accelerating efforts to mitigate transport-related emissions.

The World Bank launched: the Vietnam Climate Innovation Center aimed at assisting clean-tech businesses, together with the Governments of Viet Nam, Australia and the UK; and the Africa Climate Business Plan initiative, valued at US$16 billion, as well as a related Africa Facility for Climate-Resilient Investment as a joint initiative with the African Union Commission (AFC) and the UN Economic Commission for Africa (UNECA).

The World Bank also issued a call, jointly with the Heads of State/Government of France, Germany, Mexico, Chile, Ethiopia and Canada, to put a price on carbon. Five Nordic countries launched a statement calling for stronger public-private partnerships in climate financing, and committing to mobilizing financial resources targeted at commercially viable climate investments in sustainable and resilient infrastructure and technology in developing countries. AfDB announced the Affirmative Finance Action for Women initiative aimed at enhancing the climate resilience of women in agriculture and agri-business.

On green bonds, AfDB launched a US$500 million three-year green bond transaction. Also, an informal working group of eleven international financial institutions proposed a harmonized framework for impact reporting on projects to which green bond proceeds have been allocated.

In December, ADB, the European Investment Bank (EIB), the World Bank, the UN Environment Programme (UNEP) DTU Partnership, the UNEP Finance Initiative (UNEP-FI), the International Fund for Agricultural Development (IFAD), the Partnership for Market Readiness (PMR) and the GCF published studies, reports and briefs.

ADB’s climate change-related studies included those on: the impacts of climate shocks on Pacific Governments’ spending; climate change losses in Southeast Asia; city disaster risk financing in Viet Nam; climate risks, disasters and adaptation in China; and carbon capture and storage (CCS) demonstration and deployment in China.

Brochures were published by: the ADB, on the Japan Fund for the Joint Crediting Mechanism; and the EIB, on the bank’s role in financing climate-related investments.

The World Bank: provided input to a report on The State of City Climate Finance; launched a brief on its support to enhancing road resilience in Pacific island countries; and released an infograph on the role of forests in slowing climate change and increasing resilience.

UNEP-DTU launched the Adaptation Finance Gap Update, which builds on the UNEP 2014 Adaptation Gap Report and includes preliminary findings from the 2016 Adaptation Finance Gap Report. The report finds that, inter alia, adaptation finance flows have increased but current levels fall short of needs.

A report published in UNEP-FI’s Principles for Sustainable Insurance initiative series finds that multi-stakeholder partnerships can help in building global disaster resilience.

A report by IFAD calls for including the world’s smallholder farmers in climate change policy-making processes, highlighting the fund’s support to policy dialogue between governments and farmers, “including special provisions to ensure that the adaptation priorities of women, young people and indigenous peoples are also heard.”

The PMR, a global partnership of more than 30 countries working on carbon pricing readiness and pilot instruments, published its annual report.

The GCF published a report on the fund’s 2015 project briefs and a compilation of submissions for the strategic plan for the GCF.

Among events held in December, a large number of official and unofficial side events focusing on different aspects of climate finance were organized during the UN Paris Climate Change Conference. A list of the official side events, including event synopses, contact information and presentations, is available via the UNFCCC website. IISD RS covered a number of these events, and produced videos.

Also, the Adaptation Fund launched a webinar series to share best practices among its National Implementing Entities on managing climate finance and developing adaptation projects.

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