TUE, NOVEMBER 27 2018-theG&BJournal-AfDB-Climate financing by the African Development Bank (AfDB) and the world’s other largest multilateral development banks rose by a record 28% to US$35.2 billion in 2017 from the previous year. This is the highest level since the annual reports of the MDBs were launched in 2011. Sub-Saharan Africa received 16 % overall of the total funds.
Climate finance addresses the specific financial flows for climate change mitigation and adaptation activities. These activities contribute to make MDB finance flows consistent with progress towards low greenhouse gas emissions and climate-resilient development, and aligned with the 2015 Paris Climate Agreement of December 2015 at COP 21, which plotted new coordinates for the global climate change effort.
MDBs are vital players in the climate finance ecosystem. They provide direct financing for climate mitigation and adaptation activities and play a key role in leveraging private sector finance, critical to meeting the objectives of the Paris Agreement.
Of the 2017 total, US$27.9 billion – 79 % – was devoted to climate mitigation projects that aim to reduce harmful emissions and slow down global warming. The remaining 21 %, US$7.4 billion, was invested in climate adaptation projects that particularly help developing and emerging economies deal with the effects of climate change such as unusually heavy rain, worsening droughts and other extreme weather events.
As well as the US$35.2 billion of multilateral development finance, the same adaptation and mitigation projects attracted an additional US$51.7 billion from other public and private sources of financing last year, bringing the year’s total climate financing to a record US$86.9 billion.
The African continent, which has contributed almost nothing to the climate change problem, suffers acutely and disproportionately from its impact. Currently Africa, which accounts for less than 4% of global greenhouse gas emissions, receives only 3% of the world’s climate finance despite being the continent most at risk from climate change.
In summary, as Bank President Adesina has remarked on several occasions, “Having been short-changed by climate change, Africa must not be short-changed by climate finance”.
The sharp increase from the MDBs came in response to urgent calls to increase climate finance at the One Planet Summit in Paris in December 2017, and its follow-ups in California and New York City in September 2018, among others.
The African Development Bank is in the front line of the fight against climate change in Africa, investing heavily in climate resilient agriculture and renewable energy – in 2017 100% of the Banks energy projects were renewable. It has also committed to ensuring that 40% of its investments will include a ‘climate change’ aspect by 2020. The 2018 figure is already 32%. Developments after 2020 will encourage further progress in these commitments.
The Bank has also been active in its encouragement of climate finance. In this regard it developed and launched the Financial Alliance on Climate Change (AFAC) in May 2018. AFAC seeks to boost the flow of climate finance towards the continent, and to lead the African financial sector to combat climate change by building an ecosystem of financial institutions in Africa.
At the COP 24 UN climate negotiations in December, countries must agree on the implementing rules for the Paris Agreement and step up the ambition of their national climate plans.
The MDBs are currently working on the development of more specific approaches to reporting their activities and how they must align with the objectives of the Paris Agreement.
Whatever happens, the African Development Bank will continue to fight hard for a fairer climate finance deal for Africa. -AfDB
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