Private sector involvement in climate action is key for closing the climate finance gap, which by some estimates ranges in trillions of dollars. MIGA’s ability to mobilize private capital is essential for unlocking private sector potential for addressing climate finance needs in developing countries.
No one is more disproportionately affected by the risks and impacts from climate change than those in the least developed countries and emerging economies. Development inequality exacerbates the impacts of climate change on the poorest, and in the next two decades 143 million people could be internally displaced due to changing weather patterns, droughts, desertification, food scarcity, and other susceptibilities attributed to the adverse effects of climate change.
MIGA has made climate a priority area of its strategy along with IDA, and FCS and has sought to implement the commitments made in the WBG Climate Change Action Plan. From FY14-FY19 MIGA projects have reduced GHG emissions by 7.4 million metric tons per annum.
In the past six years, MIGA has doubled the size of its climate portfolio. In FY19, 62 percent of all projects supported climate mitigation and adaptation, and of these, 73 percent were in support of renewables. MIGA’s support for renewables focused heavily on Sub-Saharan Africa: We issued $137.1 million in support of 12 solar power plants, including concentrated solar, in Namibia and South Africa; and in Cameroon, MIGA guarantees supported the Nachtigal hydropower project, an example of the World Bank Group coming together to deliver impact on the ground. Also noteworthy in FY19 were climate-friendly projects in IDA countries and FCS, which include a raisin processing plant in Afghanistan and the first solar independent power producer in Malawi. These projects aim to crowd-in climate finance and bring private investment to more challenging markets.
In FY19 MIGA also supported clients in the financial sector by helping develop their procedures to track, identify, and report investments in climate projects. Leveraging a MIGA-backed loan, financial intermediaries have committed to investing $50 million toward climate finance.