Investing in the climate in turbulent times

0

The World Bank Group is committed to helping developing countries mitigate greenhouse gas emissions and increase their resilience to climate impacts, while addressing key development priorities. This is the central approach of the Bank Group’s Climate Change Action Plan, 2021-25, which is already delivering results.

Some of them include:

  • A significant boost for climate finance as a whole: In FY22, Bank Group lending for climate-related investments reached 36% or $31.7 billion, exceeding the Bank Group’s new climate finance target of 35%, as outlined in the World Bank Group’s Climate Change Action Plan 2021-2025. The $31.7 billion includes the total share of financing directly linked to climate action across all Bank Group projects and is calculated based on the agreed joint methodology of the Multilateral Development Bank (MDB). This is a 19% increase from the record $26.6 billion reached in the previous fiscal year.
  • A major step forward for adaptation financing in particular: In addition, adaptation financing for the World Bank (IDA/IBRD) has also increased to a record high of $12.9 billion, representing 49% of its overall share of climate finance. This figure is close to the Bank Group’s commitment to achieve parity between funding for mitigation and adaptation.
  • Analytical innovations that bridge development and climate priorities: The Bank Group has announced a new baseline diagnostic report for all World Bank Group client countries: Country Climate and Development Reports (CCDRs) analyze how a country’s development goals can be achieved while seeking to mitigate and adapt to the impacts of climate change. So far, the Bank Group has issued CCDRs for Turkey and Vietnam, and another 20 CCDRs are to be finalized by the end of this year.

Here is a snapshot of the Bank Group’s climate co-benefits in action, looking at how this type of climate finance is delivering results:

Helping 3.4 million people adapt to climate change in Nigeria

Climate change is causing severe water stress in Nigeria, resulting in increased frequency and intensity of droughts. This affects Nigeria’s economic growth – it could cost the country up to 30% of its GDP by 2050, affecting the livelihoods of millions of households, worsening food security and livelihoods and increasing the risk of violent conflict.

Sustainable landscape management can help build the resilience of local communities and adapt to changing dryland conditions. $700 million Agro-climate resilience project in semi-arid landscapes aims to develop 20 watershed management plans covering the whole of northern Nigeria. It will prioritize investments that can slow desertification while supporting natural resource-based livelihoods. For example, investing in sustainable oases and wetlands can be vital for adaptation and providing alternative incomes to communities. The project is designed to ensure participation at the community level, build local capacity and coordination between different groups, and ensure transparency between different agencies so that climate solutions also strengthen the institutional systems in place.

88% of project funding supports activities focused on building resilience and adaptation to climate change.

Catalyzing Private Finance to Help India’s Green Economy

India is one of the most vulnerable countries to climate change, experiencing more frequent extreme weather events such as floods, droughts and cyclones. Although India has made considerable progress in reducing poverty in recent years, these gains are threatened by a number of factors including climate change which threatens the stability of India’s financial system, resulting in potential massive economic losses for micro, small and medium-sized enterprises (MSMEs), as well as significant damage to infrastructure.

The development policy operation Catalyzing Private Finance for Sustainable Recovery and Growth (DPO) will support India’s efforts to launch its first sovereign green bond whose proceeds are expected to fund investments in sustainable infrastructure; improve the communication of information on the social and environmental governance (ESG) of listed companies; and to develop a national carbon trading market. These reforms are essential for the implementation of the ambitious announcements made by India during COP26, notably the net zero objective and its Nationally Determined Contribution (NDC).

With 26% of its funding supporting economy-wide climate action, this project aims to improve the enabling environment for the private sector to play a critical role in unlocking long-term finance for national climate action. .

Improving health and climate outcomes for over 11 million Moroccans

The twin crises of the COVID-19 pandemic and climate-related agricultural shocks have forced Morocco into a deep recession in 2020, contracting its real GDP by 6.3%. Even though the government’s response to COVID has been swift and key reforms have been undertaken, climate change continues to threaten to reverse development gains and aggravate existing economic and social vulnerabilities. There are also significant health impacts associated with rising temperatures and heat waves, including the risk of vector-borne diseases such as dengue fever and malaria or exposure to sun or heat for those who work. outside in sectors such as tourism or agriculture. Climate change is also likely to increase the frequency of droughts and floods which threaten the livelihoods of subsistence farmers and vulnerable smallholder farmers.

A $500 million project – the Morocco Health and Social Protection Reform Project – is the first in a series supporting government efforts to improve protection against health risks; losses of human capital, especially during childhood, as well as those related to poverty among the elderly; and strengthen climate risk management and resilience to catastrophic events. The project supports the extension of health insurance to 11 million people, the provision of climate-resilient health services, an adaptive social protection system, strengthened local capacity to manage climate and disaster risks and the development of insurance mechanisms to protect vulnerable farmers against floods and droughts. .

37% of this project directly supports climate-related actions.

Financing healthy oceans and clean water: IFC’s first blue investments in Romania and Thailand

This year, IFC, the private sector arm of the World Bank Group, provided a landmark €100 million loan – the first of its kind for Central and Eastern Europe – to Banca Transilvania SA (BT), enabling the bank to help expand access to water and improve wastewater treatment in Romania. In addition, TMBThanachart Bank Public Company Limited (ttb) has become the first commercial bank to issue a blue bond in Thailand, thanks to a $50 million loan from IFC aimed at increasing access to finance for smart solutions. climate change and blue economy projects. IFC works to promote a global blue economy financial market aimed at ensuring access to clean water, protecting oceans and waterways, and further reducing carbon emissions.

The percentage of climate co-benefits for these projects is 100%.

The first large-scale solar and battery project in Malawi

Malawi has one of the lowest electricity access rates in the world, just 11.2% in 2019. Most of the existing generation capacity – 75% – depends on hydroelectricity (of which a significant portion comes from Lake Malawi), which makes the country vulnerable to the effects of climate change and leads to frequent and prolonged power cuts. Additionally, peak demand is currently managed using expensive and polluting diesel generators. Malawi’s government proposes to increase electrification levels to 30% by 2030, seeking to increase electricity supply from new independent power producers and connecting new customers to the grid.

Earlier this year, MIGA issued $24 million in guarantees for investments in a new 20-megawatt solar photovoltaic power plant. The plant includes a battery energy storage system, the first in Malawi. The photovoltaic plant, the second independent power producer in Malawi supported by MIGA, adds a new source of clean energy supply that will reduce CO2 emissions by 45,000 metric tons over its life cycle. The 5 MW/10 MWh battery storage system was installed and made operational at the same time as the plant and has an expected useful life of up to 15 years.

The percentage of climate co-benefits for this project is 100%. The project is also consistent with the low-carbon and climate-resilient dimensions of the Paris Alignment.

Share.

Comments are closed.