Over $57bn pledged at 28th Conference of the Parties to fight climate change

As the 28th Conference of the Parties (COP28) in Dubai, United Arab Emirates (UAE), reaches its midpoint, the focus has shifted towards the mobilisation and delivery of financial resources needed to combat the climate crisis. This is particularly important for least-developed countries which are often most vulnerable to the impacts of climate change but are unable to mitigate and adapt to it because of financial limitations. 

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COP28 president Dr Sultan Al Jaber summarised things best when, in a media briefing on Monday, he said he was “pleased to say that we have also mobilised over $57-billion in new pledges and commitments only in the first four days: $30-billion in a new custom-tailored UAE catalytic fund that is 100% focused on solutions and bridging gaps to climate change; $725-million for Loss and Damage; $9-billion annually announced by the World Bank; over $3-billion for the Green Climate Fund; $2.7-billion for health; $2.6-billion for nature; $1.2-billion for relief, recovery, and peace; $2.5-billion for renewable energy; and $1.2-billion for methane reduction. On top of that, parties have rallied around a number of pledges and declarations that get the world moving in the right direction.”

Here is a breakdown of some of these and other developments and where matters of climate finance stand at this point in the negotiations:

$30bn in a new custom-tailored UAE catalytic fund

The UAE has pledged $30-billion to a new catalytic fund that is entirely dedicated to finding solutions for and bridging gaps in the fight against climate change. According to Reuters, “Dubbed ALTÉRRA, the fund will allocate $25 billion to climate strategies and $5 billion to incentivise investment flows into the Global South.” The fund aims to attract $250-billion of investment by the end of the decade. 

$725m for Loss and Damage

COP28 started strongly with the operationalisation of a “Loss and Damage” fund. This fund, a long-standing demand of developing nations, aims to help compensate vulnerable countries coping with the devastation caused by the impacts of climate change that are beyond their adaptive capacities.

The fund has already attracted more than $420-million, with contributions from countries including the UAE, Germany, the US and Japan. 

45% of World Bank annual financing to go to climate by 2025 

World Bank President Ajay Banga, at a Transforming Climate Finance Event, said, “The World Bank is setting an ambitious goal to devote 45% of our annual financing to climate by 2025. We’re putting our ambition in overdrive and putting to work more than $40-billion per year — around $9-billion more than the original target.”

$3bn more for the Green Climate Fund

The Green Climate Fund (GCF) received a significant boost with a pledge of $3-billion. The GCF explains its mandate is to “foster a paradigm shift towards low emission, climate-resilient development pathways in developing countries”.

In a statement, the fund said, “The additional USD 3.5 billion builds on momentum from GCF’s High-level Pledging Conference in Bonn in October, where 25 countries pledged their support to GCF [totalling] USD 9.3 billion. Total pledges now stand at a record USD 12.8 billion from 30 countries with further contributions expected.”

Special drawing rights for climate

France and Japan announced their support for the African Development Bank’s (AfDB’s) facility to leverage IMF special drawing rights (SDRs) for climate and development. This move aligns with the AfDB’s goal of mobilising financing for climate action and amplifying Africa’s voice and priorities on climate change. Reuters explains that SDRs are “rainy day foreign exchange reserves held at the International Monetary Fund, backed by dollars, euros, yen, sterling and yuan”. 

A statement released by the COP28 presidency noted that “The African Development Bank (AfDB) and the Inter-American Development Bank (IDB) have developed a hybrid capital-based mechanism to channel unused SDRs through MDBs [multilateral development banks]. Using this model, wealthy countries lend their SDRs to MDBs, who can use them to issue bonds, multiplying the available capital.”

Al Jaber added, “I’ve said all along that if we fail to include the developing world in our solutions to climate change we will all fail. The announcement of new SDR pledges for Africa, and the broad adoption of climate-resilient debt clauses is essential. It will help those most vulnerable to the shocks and disasters caused by climate change.”

A pledge to double climate finance for Africa

Several developed countries, including the UK, France, Germany and Canada, pledged to double their climate finance for Africa by 2025. The pledge, made at a high-level event hosted by the African Development Bank, aims to increase the amount of climate finance for Africa, which is the continent most vulnerable to climate change.

Dr Akinwumi Adesina, the president of the African Development Bank, said at the event, “Africa is choking from climate change. It loses $7-billion to 15-billion annually to climate change, which is projected to rise to $50-billion by 2030. However, Africa receives just 4.5% of total global climate finance. Access to financing for climate adaptation is even more challenging, with the continent receiving only $11-billion while its needs are 10 times higher. 

“The global call for doubling climate adaptation is timely. Now, we must turn that into action. Africa can no longer wait.” DM