Climate financing hits record $43.1 B in 2018

MANILA, Philippines — Climate financing provided by multilateral development banks (MDBs) to developing and emerging economies reached a record high of $43.1 billion in 2018 as more funds were given for projects that cut emissions and address climate risks.

The 2018 Joint Report on Multilateral Development Banks’ Climate Finance showed this was a 22 percent increase from the total climate financing of $35.2 billion the  previous year.

For the Philippines, MDBs provided total financing of $1.967 billion in climate financing from 2015 up to 2018. In 2018 alone, this amounted to $505 million, up significantly from $167 million in 2017.

Climate financing by development banks rose sharply after the adoption of the 2015 Paris climate agreement.

Most of the funds were chanelled through investment loans (71 percent of the total), while the rest were divided into policy and results-based loans, grants, guarantees, equities and other forms of financing.

The report combines data from the biggest MDBs worldwide: African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank Group (IDBG), and the World Bank Group (WBG).

These banks account for the vast majority of multilateral development finance globally.

The 2018 report also summarizes information on climate finance from the Islamic Development Bank (IsDB), which joined the MDB climate finance tracking groups in October 2017.

The report shows that $30.2 billion, or 70 percent, of the total climate financing for 2018 was devoted to investments in projects that aim to reduce harmful greenhouse gas emissions and slow down global warming.

The remaining $12.9 billion, or 30 percent of total, was invested in adaptation efforts to help address other impacts of climate change such as worsening droughts and extreme flooding.

Financing commitments to developing and emerging economies have risen steadily since 2011, when the six MDBs initiated joint reporting. Since then, these institutions have committed nearly $237 billion in climate finance for these countries.

Climate funds such as the Climate Investment Funds (CIF), the Global Environment Facility (GEF), the Global Energy Efficiency and Renewable Energy Fund (GEEREF), the European Union’s funds for Climate Action, and the Green Climate Fund (GCF) also play an important role in boosting MDB climate investment through concessional financing.

“The continued collaboration among MDBs to report on climate financing has clearly shown the joint resolve for transparency and accountability in supporting the delivery of our commitments,” said Woochong Um, director general of ADB’s Sustainable Development and Climate Change Department

“At ADB, we have committed to ensure 75 percent of our operations support climate change mitigation and adaptation efforts by 2030, while committing $80 billion in investments for the period 2019–2030 in low-carbon and climate-resilient development in the Asia and Pacific region,” he added.

The regions of Sub-Saharan Africa, Latin America and the Caribbean and South and East Asia were the top recipients of MDB climate finance in 2018.

The report said the MDBs’ provision of climate finance helps ensure that global financial flows consistently support a low-carbon growth path in line with the Paris climate agreement’s aim to limit the increase in global temperatures to well below two degrees Celsius.