The SDG Knowledge Hub of the International Institute for Sustainable Development (IISD) provides a recent update on global developments in climate finance for mitigation.
Climate Mitigation Finance Update: MDBs Launch Funding Initiatives as EBRD Invests in Green Bond
Multilateral development banks (MDBs) have pledged over US$2 billion in funding for initiatives supporting climate mitigation in developing countries. The initiatives include a 32-megawatt solar plant in Chad, the launch of a US$5 million fund to support climate-resilient, low-carbon development and scaled-up access to climate finance in African countries, a US$2 billion partnership between the African Development Bank (AfDB) and the Islamic Development Bank (IsDB), and a project to deliver 50,000 clean cookstoves to low-income households in Honduras. In addition, the European Bank for Reconstruction and Development (EBRD) made its first green bond investment.
AfDB and IsDB Launch US $2 Billion Partnership
The AfDB and the IsDB jointly signed an agreement committing US$1 billion each towards activities focused on: agriculture and food security; renewable energy; small and medium enterprises; and human development.
As part of the three-year, US$2 billion partnership, the two banks will also work together to implement AfDB’s ‘High-Five’ priority areas for Africa’s economic transition, which aim to: light up and power Africa; feed Africa; industrialize Africa; integrate Africa; and improve the quality of life for the people of Africa. Additionally, the arrangement foresees cooperation and sharing of national-level expertise in the countries that are members of both banks.
AfDB Supports 32-Megawatt Solar Plant in Chad
AfDB announced plans to support several projects in Chad. These included the funding of a 32-megawatt solar plant in the country’s capital city, N’Djamena. Alongside the solar plant, AfDB will support the restoration of Chad’s National Electricity Company (SNE) power plant and an electrical interconnection project between Chad and Cameroon. Several other projects are under discussion.
In a meeting with Chad’s President Idriss Déby Itno on 5 July 2017, Amadou Hott, AfDB’s Vice President for Power, Energy, Climate Change and Green Growth, also confirmed AfDB’s participation in a donors’ roundtable on financing for Chad’s 2017-2021 National Development Plan. The meeting will be held in Paris, France in September 2017.
Africa Climate Change Fund Calls for Proposals
AfDB’s Africa Climate Change Fund (ACCF) launched a call for funding proposals to support African countries’ transition to climate-resilient, low-carbon development and to scale up access to climate finance. Within US$5 million available in grants, ACCF will fund individual projects or programmes between US$250,000 – $1 million each, giving priority to proposals that cover one of two thematic, priority areas: supporting direct access to climate finance; and supporting small-scale or pilot adaptation initiatives to build resilience of vulnerable communities.
Besides focusing on one of the priority thematic areas, the call for proposals states that requests should align with: AfDB priorities, including its 10-year strategy and the ‘High-Five’ priority areas; Nationally Determined Contributions (NDCs); and National Adaptation Plans (NAPs) or related adaptation strategies of the beneficiary countries.
EBRD’s First Green Bond Investment
The European Bank for Reconstruction and Development (EBRD) invested €30 million in a €300 million bond issued by Lithuanian energy utility, Lietuvos Energija. While EBRD has been issuing green bonds since 2010, this is its first investment. The Lietuvos Energija bond forms part of a €1 billion programme for investments to foster a transition towards a sustainable and modern electricity network in Lithuania, and is one of the first green bonds to be issued in an EBRD region.
The bond complies with the International Capital Markets Association’s (ICMA) Green Bond Principles (GBP), of which EBRD is a member of the Executive Committee. The ERRD is rated “dark green” by the Centre for International Climate and Environmental Research (CICERO). This is the highest rating available, given to bonds that represent a “long-term vision of a low-carbon and climate-resilient future.”
Climate Investment Funds Support Clean Cookstoves in Honduras
Using funding from its Scaling Up Renewable Energy Program (SREP) and supported by the Inter-American Development Bank (IDB), the Climate Investment Fund (CIF) will support a project to provide subsidized, clean cookstoves for low-income households in Honduras. Set up in 2014, the PROFOGONES project has so far supported 5,000 clean cookstoves with a subsidy of US$37 for each. Eligible cookstoves and their components must be certified as clean under technical standards from the National University of Honduras (UNAH) and the Universidad Zamorano.
The project aims to provide an additional 45,000 subsidized clean cookstoves by 2019, as well as an additional 8,000 through microcredit schemes that will provide low interest rate loans to local communities lacking access to traditional banks.