Climate finance is a key topic in successful climate action, but it is one which is often overlooked. Vulnerable countries need financial assistance to combat the impacts of climate change.
At COP 23, it was announced that the European Investment Bank (EIB) and the Caribbean Development Bank (CDB) have set up an emergency post-disaster reconstruction financing initiative to help the Region recover from recent hurricane events.
The arrangement will support investments for infrastructure reconstruction projects in the Caribbean in the wake of the recent hurricanes. The new USD 24 million financing package is an addition to the USD 120 million Climate Action Framework Loan II signed in May this year, and which remains the EIB’s biggest loan to the Caribbean.
In order to help reduce the vulnerability of the Bank’s Borrowing Countries, all eligible investment under the new load will include infrastructure reconstruction, with a focus on “building back better,” and integrating climate risk and vulnerability into the projects. Such projects will benefit stakeholders as they help fill information/data gaps, build support for adaptation efforts, and build capacity to address the risks associated with climate change.
As well as infrastructure, financing to communities for low-carbon and climate-resilience measures such as improved water resource management are also foreseen.
CDB President Wm. Warren Smith and EIB Vice President responsible for Climate Action, Jonathan Taylor, signed the new agreement during the UN Climate Change Conference (COP 23) in Bonn, Germany. Small Island Developing States is a key theme for the event this year under the Fijian Presidency. Against this backdrop, CDB and EIB presented innovative solutions to climate challenges during an event focusing on climate action in the Caribbean, attended by the Prime Minister of Grenada, Dr. the Rt. Hon. Keith Mitchell and other stakeholders.
Jonathan Taylor, EIB Vice President said: “In response to the devastation caused by hurricanes in the region in recent weeks, the EIB and CDB rapidly agreed to commit additional resources to support reconstruction investment projects in the Caribbean.” He stated that they stand committed to developing a fruitful 40-year partnership with CDB, to support climate-resilient projects in the Caribbean and to help to adequately tackle the challenges related to climate change.
CDB President Wm. Warren Smith said: “The 2017 hurricane season was one of the most devastating the Caribbean has ever experienced, and underscored the urgent need for investment in climate-resilient infrastructure in our region.”
To date, CDB has committed all of the resources under the first Climate Action Line of Credit – USD 65.6 million – for seven projects. This co-financing is associated with total project financing of USD 191 million.
Since CDB’s Climate Resilience Strategy was approved in 2012, 58% of projects financed have included climate change adaptation and/or mitigation elements in the climate-sensitive sectors of water, education, agriculture, and physical infrastructures such as sea defenses, drainage, and roads. Using the Joint Multilateral Development Bank Methodology, climate financing represented 13% of total CDB project financing in 2015. In 2016, CDB approved USD 50 million for projects with explicit climate resilience and sustainable energy actions.
A pipeline of climate action projects amounting to over USD 300 million and which may be eligible for funding from this new loan has been developed with the financing of an EIB-funded technical assistance programme.