Climate change: majority of China-backed development bank AIIB’s financing to go to mitigation and adaptation by 2025

Asian Infrastructure Investment Bank aims to allocate at least half of its annual financing to projects that tackle climate change by 2025, a senior executive says

Emerging and developing economies are at risk of being left behind, the bank’s chief economist said in advance of the COP27 climate summit

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People walk past the headquarters of Asian Infrastructure Investment Bank in Beijing. Photo: Reuters

Published: 4:00pm, 27 Oct 2022

Asian Infrastructure Investment Bank (AIIB), the China-backed multilateral development bank, aims to allocate at least half of its annual financing to projects that tackle climate change by 2025, according to a senior executive.

Last year, AIIB, which pools together resources from 105 member states to support projects aimed at improving economic and social conditions in Asia, allotted 48 per cent of its regular financing to climate mitigation and adaptation projects, said chief economist Erik Berglof. Its cumulative climate finance is estimated to reach US$50 billion by 2030.

It also aims to have at least half its approved regular financing go towards private-sector operations by 2030, up from 25 per cent last year, Berglof said in an interview ahead of the COP27 global climate summit scheduled to start on November 6 in Egypt.

“The private sector can contribute a lot of capital, skills, dynamism and experience,” he said, adding that AIIB’s aim is to provide not subsidies but rather a kind of insurance that protects promising climate-related projects in nations with high political and policy risks.

China has successfully brought down the cost of wind and solar power in the past decade, but should reduce the supply of domestic carbon emission permits to drive up the cost of emissions, an AIIB executive says. Photo: AFP

“We aim to provide stability to investment in nascent markets, and help get the biggest bang for the buck in terms of climate impact mitigation,” he said.