Climate: Finance links called for amid challenges

Jin Liqun, a prominent participant in the recent World Bank and International Monetary Fund meetings, used a powerful analogy at the gathering to stress the challenges of securing funding to fight climate change.

Jin, president of the Asian Infrastructure Investment Bank, said if countries believe climate change is not "just crying wolf", they should "put up" their guns to fight it. "Please ask yourself, are you really braced for this kind of crisis?" said Jin.

He was speaking at the "Scaling Up Resilience and Sustainability Financing" seminar on day one of the weeklong World Bank/International Monetary Fund Spring Meetings, which concluded on Sunday in Washington, DC.

"This is the clear and present danger; this is really the existential threat to human society. So there's no reason whatsoever to relax the efforts on the issue of climate change," Jin told China Daily on the sidelines of the event on Saturday.

During the sessions, practitioners, influencers and many policymakers called for ramping up efforts to deal with climate disasters. However, IMF Deputy Managing Director Li Bo, said "only a fraction" of the funding required is ready.

Many governments, even those without huge resources surpluses, managed to allocate funds to cope with the COVID-19 pandemic because they realized it was a matter of survival, Jin said.

To reach net-zero emissions by 2050, annual clean energy investment worldwide would need to more than triple by 2030, to around $4 trillion, the International Energy Agency said in its latest assessment.

The Climate Policy Initiative, a nonprofit research group and international climate policy organization based in San Francisco, California, said in a 2022 report that the world needs at least $4.3 trillion in annual finance by 2030 to avoid the worst impacts of climate change, up from $653 billion in 2020.

Jin said the AIIB is doubling down on its efforts on climate financing. It had set an ambitious target of climate finance accounting for at least 50 percent of the bank's total financing by 2025, totaling about $50 billion by the end of this decade.

"In 2022, we delivered a record $2.4 billion in climate finance, or 56 percent of our total financing, reaching our climate finance goal three years early," he said.

The AIIB also plans to direct 50 percent of its funding to the private sector by 2030 to help it play a larger role in climate mitigation. "The private sector must play its part. AIIB is laser-focused on mobilizing private sector expertise and capital," Jin said. "We are investing in opportunities with the potential to leverage even greater amounts of private capital toward green infrastructure investment."

IMF Managing Director Kristalina Georgieva said that everyone — multilateral institutions, national authorities, and the private sector — has a role to play to finance countries' climate action.

Jin, who had worked for nearly two decades in China's Ministry of Finance and at two multilateral development banks before becoming the inaugural president of the AIIB in 2016, said he wants to take a further step to enhance the role of multilateral institutions in providing concrete solutions.

"How the multilateral system performs in this dawning era of uncertainty will shape the future of human prosperity," Jin said in a keynote speech at the "MDB Responses in the Polycrisis Era" event on Wednesday at the Rockefeller Foundation office in Washington.

"To meet the challenges ahead, our multilateral system must focus on getting fit," he said.

Jin proposed creating "an institutionalized forum" for international financial institutions to discuss progress and actions on climate finance. "If humanity's moonshot to net-zero is to be successful, then coordination and collaboration in climate finance is mission critical," he said.

MDB must strengthen their ability to operate holistically as a coordinated system, which could start with holding a joint meeting of the heads of MDBs every two years.

"We could target 2025 — the year that global emissions must peak to meet our 1.5 C degree warming pathway — as the year that MDBs come together to deepen their coordination on climate action," he said.

Jin also suggested setting up a marketplace for climate projects, which would serve as a platform that matches financing, technical assistance and projects.

"The climate financing obstacles ahead are tough, but they are not insurmountable. Reform of the multilateral system and the international financial system should be welcomed, and it must be ongoing," he said.

The AIIB was proposed by President Xi Jinping in 2013 and began operations in 2016. Membership has grown from 57 to 106, covering 81 percent of the world's population and 65 percent of global GDP, and it is rated Triple-A by the major international credit rating agencies.

Jin said that the AIIB is now broadly recognized as a multilateral development bank with the same high standards as its peers, such as the World Bank, the Asian Development Bank and the European Bank for Reconstruction and Development.

The bank's commitment to environmental, social and governance standards; its development objective of helping its members achieve net-zero transition; and its efforts to help many of its members overcome the COVID-19 pandemic have produced "tangible results", he said.

"The fundamental reason for the success of this bank is that we've met President Xi's expectation that the bank must operate by international best practices and must adhere to high standards," Jin said.