By: Mohamed Sahr
Climate finance has been a critical component of the global response to climate change. In fiscal year 2024, there has been a significant turnaround in addressing the challenges plaguing this sector. With a record $42.6 billion delivered by the World Bank Group, the increase in climate finance marks a significant step forward in the fight against climate change.
One of the key challenges addressed is the issue of green premiums. In the past, the high cost of financing green projects has been a significant barrier to their implementation. However, with a concerted effort to reduce these premiums, it has become more affordable for countries to invest in renewable energy and other sustainable projects.
Another significant hurdle has been overcome is the lack of focus on adaptation. Historically, climate finance has been heavily skewed towards mitigation efforts, leaving vulnerable communities exposed to the impacts of climate change. However, in fiscal year 2024, the World Bank Group has committed to increasing its climate finance to 45% of total lending, with half of that amount going towards adaptation efforts.
The World Bank Group’s record-breaking climate finance in fiscal year 2024 is a testament to the growing recognition of the urgent need to address climate change. With the increased focus on adaptation and the reduction of green premiums, the world is progressing towards a more sustainable and resilient future.
While fiscal year 2024’s achievements are significant, there is still much work to be done. To limit warming to below 1.5°C, climate finance must increase by at least fivefold annually. This will require a continued focus on speed, scale, and pragmatism.
The private sector is crucial in mobilizing the necessary financing. By working with policymakers and financiers, industries can address the remaining challenges and create a more sustainable and prosperous future for all.
This year, the World Bank Group delivered a record $42.6 billion in climate finance in fiscal year 2024—which covers July 1, 2023, to June 30, 2024—supporting efforts to end poverty on a livable planet and investing in cleaner energy, more resilient communities, and stronger economies. This is a 10% increase in climate finance compared to the previous year.
At COP28, the World Bank Group committed to increasing its climate finance to 45% of total lending for FY25, which runs from July 1, 2024, through June 30, 2025. At the same time, setting a goal for half of our public sector climate financing – IBRD and IDA – to support adaptation and half for mitigation. This goal is intended to signal to the countries we serve that the World Bank Group is focused on their adaptation challenges.
Each institution within the World Bank Group contributes to this objective, but there is more to do.
IBRD and IDA delivered $31 billion in FY24 in climate finance, of which $10.3 billion specifically supported investments in adaptation and resilience.
IFC, the private sector arm of the World Bank Group, delivered $9.1 billion in long-term climate finance.
MIGA, the World Bank Group’s political risk insurance and credit enhancement arm, delivered $2.5 billion in climate finance.
Together, World Bank Group climate financing was 44% of total financing in FY24, which reached $97 billion. Previous examples of climate projects include:
To protect hundreds of thousands of people from storm flooding, Bangladesh is building over 900 new cyclone shelters and rehabilitating 900 more, supporting the country’s construction of coastal embankments, enhancing early warning systems, and investing in erosion control.
Reducing methane emissions while helping farmers adopt sustainable practices to produce higher-quality rice in Vietnam’s Mekong Delta, home to 1.4 million rice-farming households.
In Dakar, Senegal, and Cairo, Egypt, fully electric Bus Rapid Transit (BRT) systems are helping to reduce reliance on fossil fuels and cut emissions. Dakar’s BRT, the first in West Africa, is projected to reduce 1.2 million tons of carbon dioxide over its lifetime. Cairo’s introduction of 100 electric buses lays the groundwork for a larger fleet to further decrease vehicle-related pollution.
In conclusion, fiscal year 2024 has been a turning point for climate finance, with a significant increase in funding and a renewed focus on adaptation. While there is still much work to be done, this year’s achievements demonstrate that progress is possible and that the world is moving in the right direction.
