Private investors increasingly have the appetite and capacity to invest in climate-smart projects in emerging markets. Yet they often lack the proper tools to make investments happen.
That leaves a significant gap in financing available to tackle climate change. Shifting to a greener path of growth could help countries accelerate job creation while cutting fuel costs and saving lives. By 2030, it could also open up at least $23 trillion in investment opportunities for businesses in some of the largest emerging-market economies.
IFC plays a key role in advancing private sector solutions to address climate change. In FY18, we provided $8.4 billion in climate-smart financing, including a record $4.5 billion mobilized from others. This accounted for 36 percent of our total commitments for the year — including funds mobilized from others — and exceeded our target for 2020. Our investments are expected to help our clients reduce greenhouse emissions by an estimated 10.4 million metric tons annually.
Our investment decisions increasingly are driven by climate-related considerations. In three industry sectors where greenhouse emissions tend to be high — thermal power generation, chemical and fertilizers, and cement — we now assign carbon prices to encourage the adoption of technologies and processes that will help lower emissions. This approach reflects the recommendations of the Report of the High-Level Commission on Carbon Prices.
Green bonds are an especially attractive financing tool for Infrastructure projects as they provide a potentially low-cost and long-term source of capital. At the end of FY18, IFC had issued a total of $7.6 billion in green bonds over the years. In 2018, we — along with Amundi, Europe’s largest asset manager — launched the world’s largest targeted green-bond fund focused on emerging markets, the Amundi Planet Emerging Green One. The fund, which closed at $1.42 billion, is expected to deploy $2 billion into emerging markets green bonds over its lifetime as returns are reinvested.
In 2017, IFC led World Bank Group efforts, with support from Australia, to help the Pacific Island nation of Fiji raise $50 million through a sovereign green bond — the first to be issued by a developing nation, and the first of its kind to be listed on the London Stock Exchange. Fiji needs investment of more than $4 billion in the next 10 years to reduce its vulnerability to climate change.
Sustainable power generation is a priority area. In Serbia, we are helping the city of Belgrade turn its waste-disposal problem into energy. The city generates 500,000 tons of waste each year — and the current landfill constitutes a significant environmental threat. In September 2017, we helped the city create a public-private partnership to build and operate a complex that will transform waste into energy and heat for the city.
In the Dominican Republic, IFC and Canada completed an $80 million financing package — including $17 million in blended-finance support — for the construction and operation of a new, grid-connected, 50-megawatt wind farm. The Pecasa wind farm will be one of the country’s largest and will reduce greenhouse gases by a volume equivalent to taking 20,000 cars off the road.