Environment
ACHIEVEMENT of one of the main objectives of the Paris Agreement, limiting global warming to 1.5°C, requires the global economy to undergo a transition. The African Development Bank Group is committed to fully aligning with the goals of the Paris Agreement by 2025, including through the creation of a common framework, and it is working to attract greater climate finance flows to Africa, which is responsible for only 2.8% of global greenhouse gas emissions.
The Bank is convinced that “the overall costs of green growth pathways are often no higher than those of conventional growth pathways”. Stakeholders from every sector and investors alike are invited to adapt their business models for a low-carbon, climate-resilient transition.
Immediately after COP21, the Bank put in place its Climate Change Plan Action 2016 – 2020, which sets out the key axes for financing climate-change adaptation and low-carbon development.
In October 2021, the Bank approved an ambitious new strategic climate-change and green-growth framework. It comprises a high-level policy and a long-term strategy (2021-2030) that will guide the Bank’s climate action ambitions over ten years.
These instruments were complemented by the Bank’s third Climate-Change and Green-Growth Action Plan (2021-2025). The main objectives of this strategic framework include aligning all the Bank’s investments with the Paris Agreement and doubling its climate finance to $25 billion by 2025, while prioritizing adaptation and increasing Africa’s access to global climate finance. It is the view of the African Development Bank that growth must be supported by climate-compatible development and that the continent’s financial industry must be at the forefront of climate resilience.
Vision for green growth
The Bank’s vision on climate change and green growth is to play a decisive role in achieving an Africa that is climate-resilient, low-carbon, green, inclusive, integrated and prosperous. Green growth guarantees efficiency gains and greater competitiveness. Countries’ development objectives must be linked to optimal uses of natural resources.
Africa, which has 65% of the world’s arable land and immense forest and mineral resources, is responsible for only 2.8% of global greenhouse gas emissions. The transition must provide African countries with options for their oil and mineral resources. Low-carbon development in Africa must be matched by access to clean and affordable energy.
private sector involvement is especially expected in the development of decentralized, renewable energy.
Significant milestones
The decision to permanently stop investing in the coal sector for a decarbonized future is one of the significant measures taken by the Bank.
The Bank has also stipulated that climate change and green growth must be integrated into its investment processes, including environmental and social procedures. It is working hand in hand with African countries to help them advance their nationally determined contributions and long-term strategies, and to support them to achieve Paris Agreement targets.
The Bank is similarly focused on the integration of green growth into its country strategy papers and regional integration strategies. In 2019, more than 90% of Bank projects and 100% of its country strategies integrated climate change; in 2020, 63% of its climate finance was allocated to adaptation and 37% to mitigation.
Under the second action plan, the Bank has made significant progress towards its target of allocating 40% of its project approvals to climate finance annually by 2020. This rate increased from 9% in 2016 to 35% in 2019. The 2020 target of 40% was disrupted by the Covid-19 pandemic. The Bank allocates 63% of its climate finance to adaptation and promotes low-carbon development. It is strengthening entrepreneurship in young people through job creation in climate-resilient sectors.
The proportion of the Bank’s financing devoted to climate quadrupled, from 9% in 2016 to 35% in 2019 and then increased further, to 41% and 45% of the Bank’s total investments in 2021 and 2022 respectively. Since 2011, the Bank has deployed $23 billion in climate finance, 80% of which comes from its own financing instruments (AfDB and ADF windows). The remaining 20% comes from co-financers and external climate funders, such as the Global Environment Facility, the Green Climate Fund and the Climate Investment Funds.
The Bank has also increased its engagement with private-sector beneficiaries, who accounted for some 33% of climate finance in 2019, against 21% in 2016.
Since 2018, the Bank has committed more funds to adaptation than to mitigation, becoming the first multilateral development bank to achieve and exceed parity, or 50% adaptation financing. This move towards adaptation was supported and strengthened between 2019 (55%), 2021 (67%) and 2022 (63%).
The Climate Action Window, set up by the Bank during the 16th replenishment of the African Development Fund, aims to mobilize between $3 and 13 billion in long term capital exclusively for the continent. – Culled from the African Development Bank website
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Tags: African Development Bank Group COP21
