Latest update on climate finance

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

 

January 2016 Climate Finance Update

During the month of January, the Asian Development Bank (ADB), the African Development Bank (AfDB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank (IDB), the World Bank and the Adaptation Fund, among others, reported on new funding approvals and other climate finance news. Multilateral Development Banks (MDBs), climate funds and the UN Environment Programme (UNEP) launched publications on, inter alia, blended climate finance, climate co-finance tracking and climate risk management.

On funding news, ADB and Papua New Guinea (PNG) signed a US$24.3 million grant agreement aimed at supporting climate resilience in PNG though the integration of climate risk and resilience planning into development policies in vulnerable communities.

The Climate Investment Funds (CIF) Pilot Program for Climate Resilience (PPCR) approved a US$1.5 million preparation grant that will help Uganda develop a national Strategic Program for Climate Resilience. Once developed, AfDB will serve as the lead implementation agency for the Program.

Also in Uganda, a €5.25 million grant from the Nordic Development Fund (NDF), for the second phase of the Farm Income Enhancement and Forest Conservation Project, will support farmers’ transitions from rain-fed subsistence agriculture to more sustainable and climate-resilient agricultural models.

EBRD and PPCR provided US$2 million and US$3 million loans to two microfinance institutions in Tajikistan under a new financing facility launched in December 2015. The loans will support micro, small and medium-sized enterprises in adopting technologies and practices to reduce soil erosion and pressure on water and energy resources.

EIB approved a €120 million loan to Turkey for forest rehabilitation, afforestation and erosion control. The activities are expected to contribute to climate change mitigation and adaptation, support improved natural resource management, and generate employment and sustainable raw material supplies to wood processing industries in Turkey’s rural areas.

IDB provided a US$500,000 grant to a foundation in Trinidad and Tobago to finance two underwater sculptures to facilitate the adaptive capacity and recovery of a reef area by creating an alternative tourist destination and revenue source.

The World Bank approved a US$500 million loan (Second Disaster Risk Management Development Policy Loan with a Catastrophe-Deferred Drawdown Option) to the Philippines, aimed at strengthening investment planning and regulation to reduce disaster risks, and help manage disaster-related financial impacts.

In other climate finance news, the Adaptation Fund announced it had received 23 new project proposals for review at its 27th Board meeting in March 2016. The project proposals focus on, inter alia, watershed restoration, coastal community resilience, renewable energy desalination, integrated water management, climate-smart agriculture and financial risk management for climate resilience.

The Adaptation Fund also reported on the installation of four agro-meteorological stations in Argentina aimed at supporting small farmers in subsistence agricultural systems cope with variable weather caused by climate change.

The World Bank published feature stories on, inter alia: financial incentives for towns and cities in the Philippines to invest in methane capture from municipal wastes; the Caribbean Ocean and Aquaculture Sustainability Facility (COAST), which proposes to leverage innovative insurance funding to promote the resilience of small-scale fisheries in the region; and the work of the Global Facility for Disaster Reduction and Recovery (GFDRR).

The International Fund for Agricultural Development (IFAD) reported on the Pro-Poor Value Chain Development Project in the Maputo and Limpopo Corridors. Implemented in Mozambique, the project is helping smallholder farmers develop climate-smart livelihoods.

ADB reported that, in 2015, the Bank’s financing and investments for the private sector increased by more than a third from 2014, totaling US$2.6 billion. Of these, more than 30% focused on climate change and/or renewable energy. Highlights included the first green bond in Asia, for a geothermal operator in the Philippines, and the financing of a new wind power project in Thailand.

EBRD reported on its activities in 2015 and going forward, including those related to climate change, including: a strategy for EBRD regions, with an enhanced focus on global and regional challenges, such as food security and climate change; and the Bank’s Green Economy Transition approach and plans to double green financing over the next five years, to €18 billion.

The Financial Stability Board (FSB), a body established in 2009 by the Group of Twenty (G-20), launched an industry-led Task Force on Climate-related Financial Disclosures (TCFD), chaired by Michael R. Bloomberg, which will “develop voluntary, consistent climate-related financial disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders.”

In December, EIB, CIF, the Green Climate Fund (GCF), the Global Environment Facility (GEF), the Adaptation Fund, the World Bank, UNEP and the UNEP Finance Initiative (UNEP-FI) published newsletters, studies, reports, briefs and multimedia content.

EIB published a document titled ‘External Lending Mandate Climate Strategy’, which sets the Bank’s strategic vision for supporting climate action in countries outside the EU covered by the Bank’s external lending mandate.

CIF published results reports from its Forest Investment Program (FIP), Scaling Up Renewable Energy Program (SREP), Clean Technology Fund (CTF) and the PPCR. The reports present baseline and expected results data, as reported by CIF’s pilot countries, and programmatic status updates.

The GCF’s December 2015 ‘GCF Dispatch’ includes short articles on: the role of the GCF under the Paris Agreement; the Fund’s participation at the 21st session of the Conference of the Parties (COP 21) to the UNFCCC; and new pledges and pledge conversions made at COP 21.

The GEF published a leaflet summarizing the Facility’s experience with blended finance for climate change, defined as “structured transactions in which development finance and private capital achieves climate impact while at the same time delivers adequate risk-adjusted financial returns for the private investor.”

The Adaptation Fund published an article highlighting Adaptation Fund-related and relevant results at COP 21, including references in the Paris Agreement, in a Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP) decision and in the report of the Adaptation Fund Board (AFB).

The Adaptation Fund also released the report of the 26th AFB Meeting, held in Bonn, Germany, from 8-9 October 2015.

World Bank publications include: an assessment of national weather, climate and hydrological services in Central Asia (Kyrgyz Republic, Tajikistan and Turkmenistan), including a proposed programme to improve these services; and a development and climate resilience action plan for Lake Chad.

The World Bank also launched a video drawing attention to the need to build climate resilience in cities and highlighting the benefits of risk management. The video explains that, in the last three decades, natural disasters have killed approximately 2.3 million people and resulted in US$3.5 trillion in economic damage.

Further, the World Bank, together with six other MDBs, published a proposed approach to tracking climate co-finance, alongside a briefing document that summarizes preliminary results for climate finance investments made by the participating MDBs (US$27.8 billion) and the estimated climate co-finance made alongside these investments (US$64.3 billion) in 2014.

The UNEP Inquiry into the Design of a Sustainable Financial System published a report that charts actions taken in the UK over the past 15 years to mainstream environmental and social factors into banking, capital markets, investments and insurance. The report concludes that, while “UK leadership in many areas is clear,” “sustainability could be classified as a ‘sleeping giant’ of the financial system.”

UNEP FI reported that a survey it undertook jointly with the United Arab Emirates (UAE) Ministry of Environment and Water indicates clear evidence that many of the country’s financial institutions are already investing in green products and that green investment is increasing.

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