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Climate Action 2014-2015

CLIMATE FINANCE GEARING

CLIMATE FINANCE GEARING UP CLIMATE ACTION IN THE ASIA-PACIFIC By Bindu N Lohani, Vice-President for Knowledge Management and Sustainable Development, Asian Development Bank Reducing the greenhouse gas emissions that are at the core of climate change is no longer an option – it is a necessity. Even if we stop emitting greenhouse gases, we shall still have to deal with the climate change caused by past emissions, so adaptation to climate change is also of paramount importance. We must recognise that there are limits to adaptive capacity, particularly in developing countries, and especially among the poor and vulnerable. The Asian Development Bank (ADB) is constantly striving to be a better partner to developing member countries in the fight against climate change. In 2013, ADB delivered more than US$3.3 billion in climate investments. In Asia-Pacific, 1.6 billion people still live on less than US$2 a day and are highly susceptible to economic and environmental shocks and natural hazards. More than 60 per cent of the region’s population works in agriculture, fisheries and forestry, the sectors most at risk from climate change. Seven of the ten nations most vulnerable to climate change are in the Asia-Pacific region, and burgeoning cities such as Kolkata, Mumbai, Dhaka, Guangzhou, Ho Chi Minh City, Shanghai, Bangkok, Yangon and Manila are among those most threatened by coastal flooding. On the other hand, developing Asia accounts for 33 per cent of world energy demand, and by 2035 this will increase to 41 per cent. Its share of worldwide energy-related carbon dioxide emissions more than doubled from 17 per cent in 1990 to 37 per cent in 2011. Without aggressive efforts to make growth less carbon-intensive, this will be 46 per cent by 2035. Given Asia-Pacific’s rising greenhouse gas emissions and its very many highly vulnerable people, the global battle against climate change will be won or lost in this region. Over the past year, ADB has undertaken a mid-term review of our corporate strategy, and committed ourselves to the following strategic priorities on climate change: Supporting clean energy investments Increasing assistance for sustainable transport Scaling up support for climate adaptation "More than 60 per cent of the region’s population works in agriculture, fisheries and forestry, the sectors most at risk from climate change." Strengthening integrated disaster risk management Promoting natural resource management Strengthening policies and capacity, and Facilitating access to global and regional funds. 44

CLIMATE FINANCE We strongly support measures to mobilise finance for scaled-up investment in low-carbon, climateresilient infrastructure. The 2013 World Economic Forum Green Investment Report estimates that US$700 billion per year is needed to make infrastructure ‘green’, on top of an underlying investment need of US$5 trillion, mostly in developing countries, to build that infrastructure. This is a huge challenge before global mean temperatures rise more than 2°C and our window for action closes; and will only be possible through a committed partnership between the public and private sectors, and, indeed, between developed and developing countries. THE ROLE OF GOVERNMENTS AND THE PRIVATE SECTOR Many governments in Asia-Pacific are implementing national climate action plans and pledging to reduce greenhouse gas emissions. But even if global emission-reduction pledges are realised, the 2013 Emissions Gap Report by the United Nations Environment Programme forecasts that we will still be emitting 8-12Gt of greenhouse gas emissions per year more than we should if we are to comply with the 2°C target in 2020. This means that we must redouble our efforts to reduce emissions. "Governments must use their limited public funds wisely, design the right type of financial instruments, and create a conducive environment for green investment and green growth." As such, governments must use their limited public funds wisely, design the right type of financial instruments, and create a conducive environment for green investment and green growth. Ultimately, though, it is the private sector that will provide the bulk of funds in the fight against climate change and we must find ways to unlock further private investment by helping countries establish effective regulatory frameworks and prepare bankable projects. ADB is working on both fronts. For example, we recently signed a Memorandum of Understanding on climate change with the National Development and Reform Commission (NDRC) of the People’s Republic of China, to jointly develop innovative climate change-related approaches and projects. ADB also supported the establishment a year ago of the Tianjin emissions trading scheme, one of seven city-level pilot schemes which will anchor the national carbon market set to start in 2016. ADB is also targeting private sector development and private sector operations to reach 50 per cent of its annual operations by 2020. In the last three years, about 38 per cent of ADB energy projects were private sector projects, many of them ground-breaking. A series of solar power projects in Thailand demonstrates the commercial viability of private sector utility-scale energy generation projects. Earlier this year, ADB, ORIX Corporation and climateactionprogramme.org 45