World Bank pledges $200 billion in extra ‘climate action’ funding – Invests in ‘low-carbon projects’
By Madeleine Cuff
Pledge represents a doubling of its current five-year investment plans for low-carbon projects
The World Bank has today promised to double its investment plans for low-carbon projects to $200bn over the next five years, in a bid to accelerate action against climate change.
The announcement came as the first day of talks at the COP24 international climate negotiations got underway in Katowice, Poland, where officials from around the world are gathered to thrash out the details of how the Paris Agreement will work in practice.
The extra funding will cover the period 2021 to 2025, and is targeted at improving the ability of the world’s poorest countries to reduce emissions and deal with the impact of climate change, the bank said.
World Bank Group President Jim Yong Kim said he hoped the increased ambition would encourage other institutions and businesses to follow suit and step up levels of low carbon investment. “We are pushing ourselves to do more and to go faster on climate and we call on the global community to do the same,” he said. “This is about putting countries and communities in charge of building a safer, more climate-resilient future.”
The $200bn represents a combination of $100bn in direct finance from the organisation’s two lending divisions, the IBRD and IDA, alongside combined direct finance from the International Finance Corporation, the Multilateral Investment Guarantee Agency, as well as $67bn of private capital mobilised by the World Bank Group.
Private capital is becoming an increasingly important source of finance for the World Bank. Earlier this year the World Bank’s IDA body raised cash on the private capital markets for the first time via a $1.5bn bond issuance, which will in part be used to fund climate action projects. Speaking to BusinessGreen about the move, the World Bank’s head of investor relations and new product development Heike Reichelt said IDA was looking to raise around $10bn on the private market over the next decade.
Of the $200bn, some $50bn will be used to help poor nations adapt to the impacts of climate change, for the first time putting investments in this area on an equal footing with efforts to reduce greenhouse gas emissions. Investments will include support for high quality forecasts and early warning systems to help communities prepare for extreme weather events, and climate smart agriculture to reduce crop failure in the face of changing climates.
Climate finance is expected to once again be a fraught issue at this year’s summit. The deadline for rich countries to meet their promise to mobilise $100bn of climate finance a year for poorer nations by 2020 is fast approaching, and new figures from both the OECD and UN in recent days have revealed developed countries are still tens of billions of dollars short of the target.
Alongside climate finance, another key focus of COP24 is the theme of a ‘just transition’, which is being heavily promoted by the conference’s Polish organisers. Later today heads of state are expected to adopt the Silesia Declaration on Solidarity and Just Transition, which will call for countries to deliver a “fair and solidarity-based transformation” to a low-emission economy, that protects workers’ livelihoods and maintains economic development.