Multilateral development banks (MDBs) around the world poured $27 billion into financing initiatives that address the climate change challenge in 2012.
This is according to the second joint MDB report on climate finance released last week. The MDB financing joins the emergence of a global movement towards environmentally friendlier industry even though the movement is still miniscule and is facing some repulsion from the establishment.
The climate change financing listed in the MDB’s report cites two primary categories mitigation and adaptation finance. Projects include renewable energy projects, agriculture and infrastructure development.
A statement released by the African Development Bank (AfDB) which forms part of the MDB report said the report analyzes the financial commitments by the institutions to support climate change mitigation and adaptation, and the information provided has been expanded since the first edition to include better sectorial and regional breakdowns of MDB financing.
Of the total US $27 billion in climate finance, 78 per cent – or over US $21 billion – was dedicated to mitigation, while 22 per cent – or nearly US $6 billion – was applied to adaptation. Of the total commitments, eight per cent – or US $2 billion – came from external resources, such as bilateral or multilateral donors, including the Global Environment Facility and the Climate Investment Funds.
In terms of regional coverage, Sub-Saharan Africa received almost equal amounts of adaptation and mitigation finance, 31% of total adaptation finance and eight per cent of total mitigation finance, respectively, or US $1.8 billion under each area. Responding to the specific needs of African countries, the AfDB mobilized US $1.7 billion of climate mitigation finance – more than any other development institution on the continent – in 2012. This financing will mostly go toward addressing the infrastructural deficit on the continent, largely in the energy sector. The Bank is responding to the need of African nations to diversify their energy sources and increase the level of energy security across the continent by prioritizing investments in clean and renewable energy sources.
Regarding adaptation finance, the AfDB has established itself as the leading provider of climate adaptation finance on the African continent, where for every one dollar of external financing mobilized the AfDB has also contributed over six dollars of its own resources.
From 2011 to 2012 the AfDB increased its climate finance levels by 50 per cent and while climate finance represented 20 per cent of the Banks’ total lending in 2011 it represented roughly 34 per cent of the Banks’ total lending in 2012.
Speaking of the AfDB’s commitments in climate change as reflected in the climate finance levels, Mafalda Duarte, Chief Climate Change Specialist of the Energy, Environment and Climate Change Department, said “We are very proud of our increasing contribution to the momentum being built up in Africa towards development embedded with climate action. In 2012, we have committed US $2.2 billion worth of investments to climate smart development in Africa through financing to be provided for programs in renewable energy, resilient rural, coastal and forest landscapes, and globally scalable knowledge on low-carbon and climate resilient solutions. This is a record we hope to improve upon to better serve African countries and to further cement our position as the premiere African development institution.”