MANILA, PHILIPPINES (25 September 2015) — Asian Development Bank (ADB) President Takehiko Nakao today announced that ADB will double its annual climate financing to $6 billion by 2020, up from the current $3 billion. ADB’s spending on tackling climate change will rise to around 30% of its overall financing by the end of this decade.

ADB’s announcement comes against the backdrop of a promise by developed countries to mobilize $100 billion every year from 2020 to counter climate change in developing countries.

Out of the $6 billion, $4 billion will be dedicated to mitigation through scaling up support for renewable energy, energy efficiency, sustainable transport, and building smart cities. $2 billion will be for adaptation through more resilient infrastructure, climate-smart agriculture, and better preparation for climate-related disasters.

ADB’s doubling of climate finance‎ reflects its strategic priorities as well as the increase in ADB’s overall financing capacity by up to 50% due to a more efficient use of its balance sheet by combining the equities of its Ordinary Capital Resources and Asian Development Fund (concessional finance window) in 2017.

“World leaders gathering in New York this weekend will commit to achieving 17 historic Sustainable Development Goals (SDGs) by 2030 and ADB stands ready to be an important part of global efforts to finance these goals,” Nakao said. “Nowhere is tackling climate change more critical than in Asia and the Pacific, where rising sea levels, melting glaciers, and weather extremes like floods and droughts are damaging livelihoods and taking far too many lives.”

SDG 13 specifically calls for urgent action to combat climate change and its impacts. Also, mitigating and adapting to a changing climate are key to most of the other goals including ending poverty, achieving food and water security, providing access to energy, and building  sustainable cities.

Later this year, at the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) in Paris, the international community is expected to finalize a new global climate agreement and the way to finance it.

In addition to scaling up its own climate financing, ADB will continue to explore new and innovative cofinancing opportunities with public and private partners. For example, ADB will seek to mobilize concessional financing from the Green Climate Fund, which is becoming operational, for ADB’s adaptation projects in poorer countries. ADB will tap institutional investment through private equity funds like the ADB-sponsored Asia Climate Partners. ADB will also issue more green bonds as an important source of funding for its climate operations.

 Nakao stressed the importance of technology in tackling climate change, and said that ADB will adjust its procurement systems in order to facilitate the integration of cleaner and more advanced technology into its projects. ADB will also strengthen partnerships with centers of excellence across the world to provide its member countries with cutting-edge knowledge and expertise on climate change.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.

FAST FACTS

ADB’s additional climate finance is new money and reflects the Bank’s prioritization of climate change as a key development issue for the region. The 100% increase in financing for climate change will be funded from the merger of its concessional lending arm, the Asian Development Fund, with its Ordinary Capital Resources balance sheet announced in May 2015. The merger will boost ADB’s total annual lending and grant approvals by 50% to as high as $20 billion by 2017.

The new financing target marks the first time ADB has adopted an explicit target for climate-related investment.

Developed countries promised in 2010 toprovide $100 billion in new financing every year from 2020 onwards to help developing countries mitigate and cope with climate change. So far, only around a third of this is flowing.

Asia-Pacific is highly susceptible to environmental shocks and disasters caused by natural hazards, and its many poor particularly so. In Asia-Pacific, 1.6 billion people still live on less than $2 a day. More than 60% of the region’s population works in agriculture, fisheries, and forestry, the sectors most at risk from climate change.

Asia-Pacific is home to 552 million hungry people, two-thirds of the world’s total, and climate change further threatens food security.

Economic costs of climate change are high: ADB studies show that South Asia, for example, could lose 8.8% of its gross domestic product annually by 2100 if there is no action to stem climate change while Southeast Asia could forego 6.7% annually.

Six of the 10 nations most vulnerable to climate change in 2013 are in Asia-Pacific (Philippines, Cambodia, India, Pakistan, Lao PDR, Viet Nam). 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.

Between 2005 and 2014, disasters (including non-climate-related disasters) have affected 1.4 billion people and caused 424,819 deaths. They caused $722 billion in direct physical losses, 48% of the global total in that period and equivalent to $198 million per day.

On the other hand, developing Asia accounts for 33% of world energy demand and by 2035, this will increase to 41%.

Asia-Pacific’s share of worldwide energy-related carbon dioxide emissions more than doubled from 17% in 1990 to 37% in 2011 largely due to the swift growth of Asian cities. Without aggressive efforts to make growth less carbon-intensive, the share will be 46% by 2035.

Since 2011, ADB has spent close to $13 billion on climate change. In 2014, 77% of ADB’s $3.2 billion in spending was on mitigation, notably on promoting renewable energy, energy efficiency, and sustainabletransport. The rest was invested in helping the region to adapt such as by strengthening coastal protection against floods, making infrastructure climate-resilient, and boosting disaster preparedness.