Latest update on climate finance

The SDG Knowledge Hub of the International Institute for Sustainable Development (IISD) provides the March and April update on global developments in climate finance


Climate Finance Update: Major Emerging Market Green Bond Fund Launched

During the months of March and April, the boards of two major climate funds met, approving a total of US$815 million for mitigation and adaptation projects in developing countries. Green bonds issuance registered a 42%-rise compared to the previous years’ first quarter. April saw the launch of the US$2-billion Green Cornerstone Bond Fund, touted as the “world’s largest green bond fund dedicated to emerging markets.”

In the Paris Agreement on climate change, countries agreed to make “finance flows consistent with a pathway towards low greenhouse gas (GHG) emissions and climate-resilient development.” Developing countries will receive financial resources for both mitigation and adaptation actions, while developed countries are expected to continue leading in mobilizing climate finance from a variety of sources, with public funds playing a significant role in reaching the previously agreed US$100 billion annual target by 2020. Monthly SDG Knowledge Hub Climate Finance Updates aim to help track multilateral financing to support the finance goal agreed under the UNFCCC, which will in turn contribute to the implementation of Sustainable Development Goal (SDG) 13 (Take urgent action to combat climate change and its impacts).

G20, V20 Ministers, World Bank-IMF Spring Meetings Discuss Finance

In March and April, both the G20 (Group of Twenty) and V20 (Vulnerable Twenty) met to discuss issues of relevance for climate finance. In addition, the World Bank and the International Monetary Fund (IMF) held their Spring Meetings.

In March, V20 finance ministers from 15 Asia-Pacific developing countries held a regional consultation that focused on enhanced economic and financial responses to climate change, including instruments for disaster risk reduction (DRR), public financial management and carbon pricing.

In April, the V20 organized its fourth Ministerial Dialogue, the outcomes of which included the establishment of a task force for assessing the financial requirements for climate action consistent with the Paris Agreement, and of a technical committee to develop multi-country financing initiatives.

The V20 and G20 high-level representatives met for the first time, in a dialogue hosted on the sidelines of the World Bank-IMF Spring Meetings, discussing eliminating fossil fuel subsidies and carbon pricing, among other issues.

During a March meeting, G20 finance ministers and central bank governors reaffirmed their commitment to rationalize and phase out inefficient fossil fuels subsidies “in the medium term.” However, they did not agree on the inclusion of references to climate finance in their final communiqué.

As part of the German G20 Presidency’s climate change-related efforts, the Organisation for Economic Co-operation and Development (OECD) is working on a project on ‘Growth, Investment and the Low-Carbon Transition.’ A final report of the project, which seeks to “bring together the growth, climate and development agendas,” will be delivered during the Petersberg Climate Dialogue in May 2017 and the results will also feed into the G20 process.

Climate finance also featured at the World Bank-IMF Spring meetings in April, including in the form of a high-level panel discussion on mobilizing financing to meet the Paris Agreement goals, which highlighted the need to focus on both mitigation and adaptation investments.

GCF, Adaptation Fund Boards Approve Projects

In March, the Adaptation Fund Board (AFB) held its 29th meeting, approving eight projects and endorsing five project concepts, at a total amount of US$60.3 million. The approvals include a US$6.8 million project under the fund’s Pilot Program for Regional Projects and Programs, aimed at supporting vulnerable farmers and pastoralists in three countries of the Horn of Africa in climate change adaptation. In addition, the AFB, inter alia, elected a Chair and Vice-Chair, decided to develop a medium-term strategy for the Fund, and agreed to explore steps to enhance complementarity and coherence with the Green Climate Fund (GCF).

In April, the GCF Board’s 16th meeting approved eight new projects and programmes, at a total value of US$755 million, with projects located across the developing world and submitted by the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the World Bank and the German KfW Bankengruppe, among others. The board also approved the GCF Secretariat’s work programme for 2017.

Other activities of the GCF included: a call by the Secretariat for public inputs on the review and update of the GCF Gender Policy and Action Plan, open until 21 May 2017; the signing of an Accreditation Master Agreement (AMA) with the EBRD; the publishing on the GCF website of the inputs received from the GCF Board and REDD+ stakeholders to support the Secretariat’s work on REDD+ results-based payments (RBP); and the organization of a ‘Structured Dialogue’ for the GCF’s Asian stakeholders in Denpasar, Bali, aimed at developing regional programming roadmaps for identifying regional trends and emerging priorities.

On readiness, the GCF approved a US$339,000 readiness grant for Nauru. UN Environment, the UN Development Programme (UNDP) and the World Resources Institute (WRI) have in place a dedicated web portal aimed at supporting developing countries’ climate finance readiness, specifically for the GCF. The GCF also recently launched a web-based guide for accessing GCF resources.

Another event focused on building capacity for readiness, specifically mobilizing financing for mitigation measures in Anglophone African countries, was hosted by the Ghanaian Ministry of Environment, Science, Technology and Innovation, and the African Regional Group of the International Partnership on Transparency in the Paris Agreement (formerly the International Patnership on Mitigation and MRV), focusing on developing policy and financial framework-based mitigation measures.

MDBs Report on 2016 Climate, Green Investments

According to the Inter-American Development Bank’s (IDB) 2016 Sustainability Report, released in April, the Bank approved US$2.7 billion in loans related to climate change during 2016.

Ahead of its May Annual Meeting, the EBRD released data from its 2016 Sustainability Report, according to which, in 2016, the bank invested €2.9 billion, or a third of total investments, in green economy projects and avoided five million tonnes of carbon dioxide (CO2) emissions.

On tracking of climate finance flows, the Asian Development Bank (ADB) launched a climate financing database that contains detailed information about the Bank’s support to climate action projects in 2016.

New Funds for Africa, Carbon Pricing

In other multilateral funding news, the Africa Climate Change Fund (ACCF), established in 2014 with €4.7 million from Germany, was converted into a multi-donor trust fund, bringing in Italy and the Flanders region of Belgium as new partners, with contributions of €4.7 million and €2 million, respectively.

The World Bank’s Partnership for Market Readiness will support India in piloting carbon pricing instruments through a US$8 million grant. The funds will go, inter alia, towards supporting existing market-based approaches to increasing energy efficiency and scaling up renewable energy, and to developing a new market-based instrument for medium and small industries.

Also on carbon pricing, the PMR published a ‘Carbon Tax Guide’ to a serve as “a practical tool to help policymakers determine whether a carbon tax is the right instrument to achieve their policy goals and to support them in designing and implementing a tax that is best suited to their specific needs, circumstances and objectives.” The PMR notes that interest in carbon taxes has re-emerged in recent years as countries seek for cost-effective ways to achieve the mitigation goals subscribed in their nationally determined contributions (NDCs).

Green Bonds See Growth

In April, the World Bank’s International Finance Corporation (IFC) announced it will be launching the “world’s largest green bond fund dedicated to emerging markets,” together with French asset management company Amundi. The IFC will invest up to US$325 million in the US$2-billion ‘Green Cornerstone Bond Fund.’

According to the not-for-profit Climate Bonds Initiative, the issuance of green bonds grew by 42% in the first quarter of 2017 compared to the same period in 2016, totalling US$21.76 billion. Green bonds have seen rapid growth in recent years, with total issuance rising from US$3 billion in 2012 to US$81 billion in 2016. Europe is the leading issuer, with more than a third of outstanding green bonds denominated in Euros. The initiative’s total issuance forecast for 2017 stood at US$150 billion.

Project Financing: Support to Climate-smart, Resilient Agriculture Continues

In project-based financing news, Asia-Pacific countries will receive support in mainstreaming gender in climate finance governance. Other multilaterally-funded projects focused on climate resilience in the areas of road infrastructure, agriculture, forests and tourism.

Gender Mainstreaming in Climate Finance Governance

On gender mainstreaming, the UNDP and Sweden signed a US$10 million partnership to strengthen the governance of climate change finance and budgeting in Asia and the Pacific. The agreement forms the second part of part an ongoing initiative on ‘Strengthening the Governance of Climate Change Finance to Enhance Gender Equality’ in the region. Programme partner UNDP released a short issue brief on gender and climate finance, which explains that “only 0.01 percent of all worldwide funding supports projects that address both climate change and women’s rights,” and calls for a paradigm shift in this regard.

Road Infrastructure

In Uruguay, the World Bank will provide a US$70 million loan for a project to rehabilitate and improve more than 1,000 km of roads, which incorporates activities to enhance climate resilience. The World Bank also published methodology to identify optimal interventions to increase the climate resilience of Peru’s road network, and a report that examines the integration of climate change into road asset management.

The EBRD has been working on improving the climate resilience of Bosnia-Herzegovina’s road network since 2016. In 2017, related activities will include the establishment of an institutional framework for managing climate risks. The EBRD is planning to extend similar activities to other Western Balkan countries that are facing similar problems.

Forests, Agriculture

In the Ethiopian state of Oromia, home to 30 million people, a US$18 million grant from the World Bank’s BioCarbon Fund will “support community-centered activities that reduce deforestation and land-use based emissions, as well as enhance forest carbon stocks in deforestation hotspots” and is expected to result in ten million tons of avoided CO2 emissions.

Loans provided by the International Fund for Agricultural Development (IFAD), of US$43 million and US$18.2 million, will support the climate resilience and adaptation capacity of the rural poor in Viet Nam and Moldova, respectively.

The World Bank reported on the results of its climate-smart agriculture projects, which include adoption of environmentally sustainable technologies by agribusinesses in Mexico, improved agrometeorological information services in Morocco, the development of drought-resistant crop varieties in Senegal and increased crop yields resulting from the use of ‘evergreen agriculture’ in Zambia.


In the Caribbean, an €460,000 grant from the Caribbean Development Bank (CBD) will seek to boost the climate resilience of the region’s tourism sector through supporting policy formulation, raising knowledge and awareness, and strengthening the Caribbean Tourism Organisation (CTO) Secretariat’s capacity in delivering climate services, or climate information to support decision making.

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