Connect with us

Reports

MDBs Climate Finance Hit $66 Billion in 2020

Published

on

Climate finance committed by major multilateral development banks (MDBs) rose to a total of $66 billion last year from $61.6 billion in 2019, according to the 2020 Joint Report on Multilateral Development Banks’ Climate Finance, published today. Of this, 58%—or $38 billion—was committed to low- and middle-income economies.

The total climate cofinance committed during 2020 alongside MDB resources was $85 billion. Together, MDB climate finance and climate cofinance totalled more than $151 billion. The amount of private direct mobilization stood at $5.9 billion.

Accelerating the transition to low-carbon and climate-resilient economies through climate finance is a key element of the MDBs’ effort to align their activities with the objectives of the 2015 Paris Agreement to keep global warming well below 2°C, with efforts to limit it to 1.5°C, along climate-resilient development pathways. In the past 6 years, the MDBs have jointly committed a total of $257 billion in climate finance, of which $186 billion was directed at low- and middle-income economies.

The annual report is a key indicator on the progress MDBs are making on accelerating the delivery of climate finance, for which demand is clearly going to grow over time. This year’s report marks the end of the reporting period tracking individual climate finance pledges since 2015; for most, 2021 will mark the start of a new increase in ambition. In 2019, at the UN Secretary-General’s Climate Action Summit, MDBs announced their expected joint annual climate action finance to 2025. These include at least $65 billion, with $50 billion of MDB climate finance for low-income and middle-income countries; an increase in adaptation finance to $18 billion; and private direct mobilization of $40 billion.

“The MDBs will continue to improve their tracking and reporting of climate finance in the context of their commitments to ensure consistent financial flows to the countries’ long-term, low-carbon and climate-resilient development pathways, as established in…the Paris Agreement,” says the 2020 report, which is the 10th in the series.

Of the 2020 total of $66 billion, $63 billion came from the MDBs’ own accounts and almost $3 billion from external resources channelled through and managed by MDBs. These included the Climate Investment Funds, Green Climate Fund and climate-related funds under the Global Environment Facility, EU blending facilities and others.

The 2020 financing helped play a key role in supporting countries to embed green and climate-focused solutions as part of their recoveries from the impact of the coronavirus disease (COVID-19). While these programmes affected MDBs’ normal lending operations and thus the delivery of their climate finance targets, seeing the total commitments for low- and middle-income countries dip from 2019’s $41.5 billion, the 2020 report says interventions and support from the MDBs laid a solid foundation for “building back better” for a greener, more resilient, post-COVID-19 future.

“Climate action has never been more urgent than now. Speed, scale, and financing are critical to enable transition into low-carbon and climate-resilient development pathways and achieving the universally agreed goals of the Paris Agreement,” said ADB’s Vice-President for Knowledge Management and Sustainable Development Bambang Susantono. “ADB remains steadfast in providing financing and technical assistance for our developing member countries to make a green, resilient, and inclusive recovery from COVID-19, while aligning our own operations with the goals of the Paris Agreement.”

Nearly $50 billion (76%) of total MDB climate finance in 2020 was associated with climate change mitigation investments that aim to reduce harmful greenhouse gas emissions and slow down global warming. Of this, 50% went to low- and middle-income economies. More than $16 billion (24%) for climate change adaptation finance was invested in adaptation efforts to help countries build resilience to the mounting impacts of climate change, including worsening droughts and more extreme weather events, from flooding to rising sea levels. Of this, 83% was directed for low- and middle-income economies.

The 2020 MDB report, coordinated by the European Bank for Reconstruction and Development (EBRD), combines data from the African Development Bank, ADB, the Asian Infrastructure Investment Bank (AIIB), the EBRD, the European Investment Bank, the Inter-American Development Bank Group, the Islamic Development Bank and the World Bank Group. AIIB data is fully incorporated for the first time. As part of the MDBs’ ambition to extend and enhance climate finance reporting, the 2020 report also summarises information on climate finance tracking from the New Development Bank, presented separately from the joint figures and not yet included in the MDB climate finance total.

Continue Reading
Comments

Reports

Action on Trade is Necessary for Businesses to Unlock Net Zero Targets

Published

on

business

For businesses to reach their emission targets, the global trading system needs to adapt, and businesses are calling for the change.

These are the main findings of the Delivering a Climate Trade Agenda: Industry Insights Report released today by the World Economic Forum, in collaboration with Clifford Chance.

The six-month study is based on research and interviews with global companies, across sectors including transport, energy, manufacturing, and consumer goods. The objective of the research process was to identify necessary changes to the current global trade system and how to better incentivize and accelerate decarbonization. The resulting study outlines eight key actions that, if taken by governments and businesses, could make global trade a better enabler of climate action.

Sean Doherty, Head of International Trade and Investment said: “Traditionally, trade and climate policy-making has happened in separate silos. The urgency of the climate crisis calls for us to break down these silos through public-private cooperation in order to accelerate emissions reductions while achieving prosperity for all. The good news for policy makers is businesses are ready and willing to support this change.”

Jessica Gladstone, Partner at Clifford Chance said: “International trade will play a key role in achieving a just transition to a low-carbon sustainable global economy. Businesses stand ready to lead in this transition, but governments can support by ensuring the right legislative and regulatory structures are in place. Our report explores global and domestic policy actions that can create climate-friendly trade that is fair, transparent, and has technology and innovation at its core.”

Interviews revealed the following ways for trade to support businesses to decarbonize and grow sustainably:

  • Tariff reductions on key goods
  • Addressing non-tariff distortions in parallel
  • Phasing out fossil fuel subsidies
  • Building coherence around carbon-based trade policies
  • Supporting trade in digital and climate-related services
  • Encouraging climate-smart agriculture
  • Aligning trade agreements with climate commitments
  • Facilitating green investment

The chart below provides examples of how the global trading system can through continued dialogue between governments and the private sector put trade to the service of climate action.

The report includes a jointly-authored foreword by the World Trade Organization (WTO) Director General Ngozi Okonjo-Iweala and the United Nations Framework Convention on Climate Change (UNFCCC) Executive Secretary welcoming the insights from business. Major intergovernmental meetings will be held under both organisations in the last quarter of this year.

Business can take steps to encourage alignment of trade rules with climate action. The Forum is today launching a two-year work programme – titled Climate Trade Zero – to support public and private exchange on these issues as part of building a more sustainable trading system.

Many companies also recognized that the transition is taking place at different speeds and levels of intensity across countries and sectors. Interviewees highlighted the importance of providing support and incentives to developing countries, and to supply chain partners in developing countries, to undertake the investments necessary to reduce their emissions.

Continue Reading

Reports

Appliance standards and labelling is highly effective at reducing energy use

Published

on

Policies that introduce minimum efficiency performance standards and energy-consumption labelling on appliances and equipment have led to reduced power consumption, lower carbon emissions, and cost savings for consumers, according to analysis published today by the IEA and the 4E Technology Collaboration Programme (4E TCP).

The report’s findings are drawn from nearly 400 evaluation studies covering 100 countries, including those with the longest running and strongest appliance policies, such as China, European Union, Japan and the United States.

“The findings from the study are important as they provide evidence that standards and labelling are highly effective policy instruments that bring benefits to consumers as well as lower emissions and lower energy demand,” said Brian Motherway, the Head of Energy Efficiency at the IEA.

The study shows the policies have had significant positive impacts:

  • In countries with long-running policies, appliances are now typically consuming 30% less energy than they would have done otherwise.
  • In the nine countries/regions for which data were available, such programmes reduced annual electricity consumption by a total of around 1 580 terawatt-hours in 2018 – similar to the total electricity generation of wind and solar energy in those countries.
  • The programmes that have been operating the longest, such as those in the United States and the European Union, are estimated to deliver annual reductions of around 15% of their current total national electricity consumption. This percentage increases each year as more of the older, less-efficient stock is replaced with equipment that meets new higher efficiency standards.
  • These energy savings represent a significant financial boon for businesses and householders. In the United States alone, utility customers are now economising USD 60 billion each year, or USD 320 per customer.
  • Also, the United States, European Union and China together are avoiding annual CO2 emissions of more than 700 million tonnes, equivalent to the total energy-related emissions of Germany.
  • Well-designed policies encourage product innovation and lead to economies of scale, which reduces the cost of appliances even without accounting for the efficiency gains. For example, in Australia the sticker price of appliances has typically fallen 40% over the last 20 years, while average energy consumption has fallen by a third.

“The message is simple: expanding standards and energy efficiency labelling programmes makes the energy transition challenge easier, more affordable and become a reality,” said Jamie Hulan, the Chair of the 4E TCP.

The IEA will continue to collaborate with 4E TCP to enhance and promote the use of such policies. 4E TCP is an international platform for fourteen countries and the European Union to exchange technical and policy information focused on increasing the production and trade in efficient end-use equipment.

Ahead of this November’s COP26 Climate Change Conference, the IEA is working with the UK Government via the Super-Efficient Equipment and Appliance Deployment (SEAD) initiative to coordinate and improve international action on product energy efficiency. The United Kingdom is leading the COP26 Product Efficiency Call to Action, which aims to double the efficiency of key global products by 2030, initially focusing on four key energy-consuming products: air conditioners, refrigerators, lighting and industrial motors systems. The IEA is supporting the implementation of this work and helping expand the number of countries ready to make this commitment.

Continue Reading

Reports

Global economy projected to show fastest growth in 50 years

Published

on

The global economy is expected to bounce back this year with growth of 5.3 per cent, the fastest in nearly five decades, according to the UN Conference on Trade and Development (UNCTAD).

In its new report released on Wednesday, the agency said that the rebound was highly uneven along regional, sectoral and income lines, however.  

During 2022, UNCTAD expects global growth to slow to 3.6 per cent, leaving world income levels trailing some 3.7 per cent below the pre-pandemic trend line. 

The report also warns that growth deceleration could be bigger than expected, if policymakers lose their nerve or answer what it regards as misguided calls for a return to deregulation and austerity. 

Differences in growth 

The report says that, while the response saw an end to public spending constraints in many developed countries, international rules and practices have locked developing countries into pre-pandemic responses, and a semi-permanent state of economic stress. 

Many countries in the South have been hit much harder than during the global financial crisis. With a heavy debt burden, they also have less room for maneuvering their way out through public spending. 

Lack of monetary autonomy and access to vaccines are also holding many developing economies back, widening the gulf with advanced economies and threatening to usher in another “lost decade”. 

“These widening gaps, both domestic and international, are a reminder that underlying conditions, if left in place, will make resilience and growth luxuries enjoyed by fewer and fewer privileged people,” said Rebeca Grynspan, the secretary-general of UNCTAD. 

“Without bolder policies that reflect reinvigorated multilateralism, the post-pandemic recovery will lack equity, and fail to meet the challenges of our time.” 

Lessons of the pandemic 

UNCTAD includes several proposals in the report that are drawn from the lessons of the pandemic. 

They include concerted debt relief and even cancellation in some cases, a reassessment of fiscal policy, greater policy coordination and strong support for developing countries in vaccine deployment. 

Even without significant setbacks, global output will only resume its 2016-19 trend by 2030. But even before COVID-19, the income growth trend was unsatisfactory, says UNCTAD. Average annual global growth in the decade after the global financial crisis was the slowest since 1945. 

Despite a decade of massive monetary injections from leading central banks, since the 2008-9 crash, inflation targets have been missed. Even with the current strong recovery in advanced economies, there is no sign of a sustained rise in prices. 

After decades of a declining wage share, real wages in advanced countries need to rise well above productivity for a long time before a better balance between wages and profits is achieved again, according to the trade and development body’s analysis. 

Food prices and global trade 

Despite current trends on inflation, UNCTAD believes the rise in food prices could pose a serious threat to vulnerable populations in the South, already financially weakened by the health crisis. 

Globally, international trade in goods and services has recovered, after a drop of 5.6 per cent in 2020. The downturn proved less severe than had been anticipated, as trade flows in the latter part of 2020 rebounded almost as strongly as they had fallen earlier. 

The report’s modelling projections point to real growth of global trade in goods and services of 9.5 per cent in 2021. Still, the consequences of the crisis will continue to weigh on the trade performance in the years ahead. 

For director of UNCTAD’s globalization and development strategies division, Richard Kozul-Wright, “the pandemic has created an opportunity to rethink the core principles of international economic governance, a chance that was missed after the global financial crisis.” 

“In less than a year, wide-ranging US policy initiatives in the United States have begun to effect concrete change in the case of infrastructure spending and expanded social protection, financed through more progressive taxation. The next logical step is to take this approach to the multilateral level.” 

The report highlights a “possibility of a renewal of multilateralism”, pointing to the United States support of a new special drawing rights (SDR) allocation, global minimum corporate taxation, and a waiver of vaccine-related intellectual property rights.  

UNCTAD warns, though, that these proposals “will need much stronger backing from other advanced economies and the inclusion of developing country voices if the world is to tackle the excesses of hyperglobalization and the deepening environmental crisis in a timely manner.” 

For the UN agency, the biggest risk for the global economy is that “a rebound in the North will divert attention from long-needed reforms without which developing countries will remain in a weak and vulnerable position.”

Continue Reading

Publications

Latest

Southeast Asia2 hours ago

Visit of Vietnamese President to Cuba

Following the outbreak of the Corona pandemic in Vietnam, the government has decided to procure 10 million doses of Abdala...

Economy4 hours ago

Finding Fulcrum to Move the World Economics

Where hidden is the fulcrum to bring about new global-age thinking and escape current mysterious economic models that primarily support...

South Asia6 hours ago

The failure of the great games in Afghanistan from the 19th century to the present day

Whenever great powers have tried to make Afghanistan a colony, they have always been defeated. British imperialism and its “civilising...

Southeast Asia8 hours ago

From the 2004 tsunami relief efforts to the 2021 leaders’ summit, the Quad has come a long way

The Quad plurilateral mechanism in the Indo-Pacific reached the landmark summit level in March, this year. With its second summit...

Economy10 hours ago

Evergrande Crisis and the Global Economy

China’s crackdown on the tech giants was not much of a surprise. Sure, the communist regime allowed the colossus entities...

Middle East12 hours ago

From ‘Decisive Storm’ to Secret Talks: The Journey of Saudi Conquest of Yemen

In the last days of the spring of 2015, Saudi generals were sitting around a V-shaped table in front of...

Energy14 hours ago

Trans-Caspian Gas Pipeline – An ‘apple of discord’ between Azerbaijan and Russia?

A broad range of strategic, economic and cultural ties between Azerbaijan and Russia create an illusion of quite stable bilateral...

Trending