Latest update on climate finance

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


February 2016 Climate Finance Update

During the month of February, the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Climate Investment Funds (CIF) and the World Bank, among others, reported on new funding and other climate finance news in the areas of, inter alia, climate and disaster risk reduction (DRR), smart cities, green bonds, and technology transfer and development. The Partnership for Market Readiness (PMR), EIB, the Green Climate Fund (GCF) and the Adaptation Fund released publications.

On funding news, ADB announced the provision of US$2 million in emergency assistance to Fiji, which was hit by tropical cyclone Winston, the strongest on record in the Southern Hemisphere. The funds, coming from the ADB’s Asia Pacific Disaster Response Fund, will be used towards relief, rehabilitation and reconstruction.

ADB, with support for the Government of Japan, also launched a US$2 million grant-based project aimed at strengthening community-based flood risk and disaster response management in Thailand.

In Tajikistan, the World Bank signed a financing agreement on the regional Climate Adaptation and Mitigation Program for Aral Sea Basin (CAMP4ASB), under which Tajikistan will receive US$9 million from the International Development Association (IDA). The Program, aimed at rural communities and targeting a total of 91,000 people, will support measures to counter climate change-related risks to agricultural production and rural livelihoods.

The World Bank and the Government of Tajikistan further signed an agreement on the allocation of a US$2.83 million additional grant for a project launched in 2013 that supports sustainable management of natural resources and climate risk resilience in rural communities in two Tajik regions.

Also in Tajikistan, the International Fund for Agricultural Development (IFAD) signed and agreement to finance a US$24.2 million project to reduce the vulnerability of pastoral communities to climate change-related threats. The financing includes US$8.7 million in loans and US$13.7 million in grants from IFAD.

Jamaica launched the second phase of a PPCR programme, on improving climate data and information management, which is supported by a US$6.8 million grant from CIF. The project will cover: the acquisition of a weather radar; health sector resilience measures; and technical assistance to coastal communities.

Also in Jamaica, the World Bank approved a US$30 million loan to support the Jamaica Disaster Vulnerability Reduction Project, which will aim to, inter alia: establish a national risk information platform; build storm drains and fire stations; and train 450 government officials and constructors on construction regulations and practices.

On green bonds, the Luxembourg Stock Exchange listed its one-hundredth green bond with a €250 million new issue from the EIB. An article by EIB discusses the role of green bonds post-Paris and highlights the Bank’s role in coordinating the development of guidelines for the harmonized reporting of associated projects’ impacts.

In other climate finance news, EBRD and the CIF Pilot Program for Climate Resilience (PPCR) formally launched Tajikistan’s Climate Resilience Financing Facility ‘CLIMADAPT.’ The US$10 million facility will support climate change adaptation efforts of micro, small and medium enterprises (MSMEs) and households. Financing will be provided through local partner financial institutions. In addition, the UK Department for International Development (DFID) will provide technical advice on technologies and practices that reduce soil erosion and pressure on water and energy resources.

Ukraine joined the EBRD’s Finance and Technology Transfer Centre for Climate Change (FINTECC) programme, which is supported by the Global Environment Facility (GEF) and the EU’s Neighbourhood Investment Facility (NIF). The programme provides grant funding to cover up to 25% of the cost of the introduction of a new climate change mitigation/adaptation technology, capped at US$1 million.

EIB reported on progress under the Smart Cities and Sustainable Development programme supported by EIB and Belgian bank and insurance company Belfius, which aims to minimize borrowing costs for local authorities in Belgium for the implementation of ‘smart, inclusive and sustainable’ projects, in particular in the areas of energy efficiency, and urban mobility and development.

In Honduras, an action plan for making the country’s capital city Tegucigalpa sustainable and climate-resilient was launched. The action plan is the outcome of the Emerging and Sustainable Cities Initiative (ESCI), funded by the Nordic Development Fund (NDF).

The World Bank reported on the Lake Chad Development and Climate Resilience Action Plan (LCDAP), developed by the Lake Chad Basin Commission (LCBC), aimed at improving rural development in Chad, Cameroon, Niger and Nigeria. The development of the action plan was supported by the World Bank’s Cooperation in International Waters in Africa (CIWA) programme.

The World Bank approved a US$17.2 million grant package for establishing a Climate Innovation Center in Ghana to advance the country’s green growth strategy. The center, supported by the Governments of Denmark and the Netherlands, will benefit local clean technology companies and generate important mitigation benefits through clean energy production.

The Carbon Pricing Leadership Coalition (CPLC), coordinated by the World Bank, released its work plan, which had been formally adopted at the UN Paris Climate Change Conference in November 2015. The CPCL is a multi-stakeholder initiative that seeks to ‘broaden the scope and pace of effective carbon pricing globally, from countries to sub-national jurisdictions.’

The GEF reported on a US$207 million project to recover and protect climate and biodiversity services in the Brazilian Atlantic Forest (Mata Atlântica). The GEF is providing a US$31 million grant, with the Inter-American Development Bank (IDB) functioning as a second international funding partner. Implementation of the project, which will benefit three Brazilian states, began in January with the signing of a cooperation agreement with the state of São Paulo.

The GEF also reported on efforts by African partner cities of the facility’s Sustainable Cities Program, which is currently engaging 23 cities in 11 developing countries in Africa, Asia and Latin America.

The GCF announced the Fund’s Executive Director Héla Cheikhrouhou would step down at the end of her current term in September 2016. Also in February, the GCF Board met Cape Town, South Africa, for an informal dialogue on operational issues and expectations for 2016.

The UN Environment Programme Finance Initiative (UNEP FI) presented a series of recommendations to the International Task Force on Climate-Related Financial Disclosures, established in January 2016 by the Financial Stability Board (FSB).

In February, the PMR, EIB, the GCF and the Adaptation Fund launched publications summarizing recent developments and institutional activities.

The PMR launched the third edition of its China Carbon Market Monitor, which covers: updates from the seven Chinese pilot carbon markets, which as of 31 December 2015 had a total trading volume of 49.8 million tonnes; an update of China’s Certified Emission Reduction (CER) projects; and an analysis of the National Development and Reform Commission’s (NDRC) preparations for the launch of a national emissions trading system (ETS) by 2017.

EIB released an infograph highlighting the Bank’s financing for renewable energy in 2015 (€3.4 billion) and other climate financing activities. The GCF published infographs on different aspects of climate finance and the fund’s work. The Adaptation Fund launched videos on projects it is funding in Argentina, Rwanda and Pakistan.

On events, AfDB and the World Bank met to discuss the operationalization of the Africa Hydromet Program, launched in June 2015, which aims to strengthen capacities in African countries’ weather, climate and hydrological services, thereby contributing to climate resilience. The organizations agreed to develop a ‘comprehensive strategy and master plan tailored to individual country contexts.’

At a technical workshop hosted by the World Bank in Kazakhstan, participants discussed initial findings of a study to measure the impact of Kazakhstan’s ETS on the country’s economy, and to assess policy options for achieving the country’s intended nationally determined contribution (INDC).

Nepal’s Mainstreaming Climate Change Risk Management in Development (MCCRMD) project organized two technical training courses for hydro-met experts on modeling climate change impacts on the country’s water resources. MCCRMD is financed by CIF with administrative and technical support from ADB. A further training session will be organized in March. In addition, MCCRMD undertook the mainstreaming of climate change into several academic programmes in Nepalese universities.

The World Bank’s Pilot Auction Facility for Methane and Climate Change Mitigation (PAF) announced a series of private sector consultations and webinars, taking place in March 2016, that will provide an update on the facility’s upcoming second auction.

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