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Monday May 27, 2024

ADB announces programme to accelerate billions in climate change financing

"Climate events world has experienced over past 12 months will only increase in intensity so we must take bold action now," ADB chief says

By Ashraf Malkham
May 02, 2023
Asian Development Bank President Masatsugu Asakawa speaks at the Sydney Energy Forum on July 12, 2022, in Sydney. — AFP
Asian Development Bank President Masatsugu Asakawa speaks at the Sydney Energy Forum on July 12, 2022, in Sydney. — AFP

INCHEON, REPUBLIC OF KOREA: The Asian Development Bank (ADB) on Tuesday announced the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), a landmark programme which could significantly ramp up support for the region in the battle against climate change.

ADB President Masatsugu Asakawa, while announcing the programme on the opening day of ADB’s 56th Annual Meeting in Incheon, said: “Climate change is the critical issue of our lifetime and here in Asia and the Pacific we are on the frontlines of that battle.”

Asakawa added that the climate events the world has experienced over the past 12 months will only increase in intensity and frequency, “so we must take bold action now”.

“IF-CAP is an exciting, innovative programme that will have a real impact. And it is another example of how ADB serves as the climate bank for Asia and the Pacific,” he maintained.

According to statement released by the Manilla-based lender, IF-CAP's initial partners are Denmark, Japan, the Republic of Korea, Sweden, the United Kingdom, and the United States.

It should be noted that these partners are in discussions with ADB about providing a range of grants for project preparation along with guarantees for parts of ADB’s sovereign loan portfolios.

The statement mentioned that the reduced risk exposure created by the guarantees will allow ADB — which was established in 1966 and it is owned by 68 members, 49 from the region — to free up capital to accelerate new loans for climate projects.

“With a model of ‘$1 in, $5 out’, the initial ambition of $3 billion in guarantees could create up to $15 billion in new loans for much-needed climate projects across Asia and the Pacific. A leveraged guarantee mechanism for climate finance has never before been adopted by a multilateral development bank,” the press releases read.

IF-CAP financing will contribute to ADB’s raised ambition for $100 billion from its own resources for climate change for 2019–2030.

Moreover, the ADB is in discussions with potential partners — such as bilateral and multilateral sources, the private sector, and philanthropies, including the Global Energy Alliance for People and Planet — to catalyse climate investments.