Climate change is the preeminent challenge of our time. We need financing to mitigate and adapt to its impacts.
Climate change cuts across most of the new Sustainable Development Goals which were agreed by global leaders in New York in September. Indeed, action on the global climate is essential to attain other development goals, such as poverty elimination, water and food security, and sustainable economic growth. We are also expecting that in December a new global climate agreement will be finalized at the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) in Paris.
The Asian Development Bank (ADB) announced last month that it will double its annual climate financing to $6 billion by 2020—taking it to around 30% of our overall financing. This commitment reflects the importance of addressing climate change in Asia and the Pacific, where rising sea levels, melting glaciers, and weather extremes like floods, droughts, and tropical storms are damaging livelihoods and taking too many lives.
This announcement by ADB comes against the backdrop of a pledge by developed countries to mobilize $100 billion a year from 2020 to combat climate change in developing countries. ADB’s doubling of climate finance reflects its strategic priorities as well as the increase of overall financing capacity by up to 50% due to a more efficient use of its balance sheet.
But finance alone is not enough to meet huge challenges. It is imperative that we combine increased finance with smarter technology, stronger partnerships and deeper knowledge.
The Asia-Pacific region currently generates 37% of global greenhouse gas emissions. This will rise without aggressive interventions including a shift to cleaner technologies such as solar, wind, and geothermal, and to sustainable transport and smarter, greener cities. Similarly, adaptation technology solutions such as advanced drainage systems, heat-tolerant road surfacing, or better irrigation—can help safeguard communities from climate impacts.
This is already happening in places like Indonesia, Southeast Asia’s largest economy, where an ADB-supported geothermal power project will enhance energy security and offer a blueprint for the next generation of geothermal plants. In the Maldives, one of the countries most vulnerable to climate change, innovative hybrid solar systems being built in 160 of 192 inhabited islands will reduce greenhouse emissions, cut the cost of electricity and enhance energy security.
Such major initiatives require careful planning and deep knowledge of local conditions to ensure the best technologies are selected and applied. This is why ADB will adjust its procurement systems to integrate cleaner and more advanced technology into its projects.
Adequate regulatory and financial arrangements should also be in place to ensure the technologies are economically viable. Otherwise, countries with constrained budgets will almost certainly opt for cheaper, more polluting energy sources based on fossil fuels.
Strong partnerships are an essential component of a successful climate response because public budgets in developing countries are limited and government cannot do it alone.
The private sector can bring crucial financing, technology, and expertise to global efforts against climate change. But business is sometimes reluctant to get involved as climate relevant technologies can be regarded as risky.
Proper risk sharing can entice private sector financing, but this often only happens if the government takes an enabling role in a venture by providing equity or guarantees. Public-Private Partnerships, or PPPs, are one way of attracting private sector involvement in climate-friendly projects.
We need more initiatives like ADB-sponsored Asia Climate Partners, a $400 million joint venture that will make private equity investments in environment and climate friendly companies and transactions. It aims to invest in areas including renewable energy, clean technology, natural resource efficiency, water, agriculture, and forestry.
Finally, successful global action on climate change will depend on access to climate-relevant knowledge and information. This will require expanded partnerships between financing and knowledge institutions.
A model for future partnerships is the recently launched Climate Services for Resilient Development. It teams governments with multilateral development banks such as ADB, philanthropic institutions, and private sector companies to develop new tools, services, and approaches to boost the climate resilience of developing countries. This diverse partnership delivers a broad range of expertise through the involvement of institutions such as NASA, Google, and the Skoll Global Threats Fund.
We have the ingenuity and the financial means to confront climate change. With the right technologies, partnerships, and knowledge, we can make real progress while there is still time.
Takehiko Nakao is president of the Asian Development Bank