This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.
| Paris alignment | Reasoning |
|---|---|
| Transformational | Country Strategy papers integrate climate mitigation and adaptation as well as ambitious NDC goals. The Bank proactively seeks deep decarbonisation through a comprehensive approach to Long-Term Strategies. |
Explanation
IDB’s engagement with countries takes place in the framework of the Country Strategies preparation process. This begins with a Country Development Challenges document, which uses evidence-based analysis to address and prioritise country development challenges, then considers possible project and policy solutions for the Country Strategy’s four-year timeline. Following this, a synthesised Overview Paper is produced. Next, the relevant and specific Sector Notes are prepared to be validated by the Office of Strategic Planning and Development Effectiveness. The final four-year Country Strategy is then submitted to the Board for approval. Once approved, the Strategy becomes “active”.
The IDB has developed a comprehensive process for ensuring that climate is integrated into the Country Strategies work. This includes mainstreaming of climate change in the Country Strategy and strategic dialogue work*. The guidelines state that cross-cutting issues such as gender and climate change “must be taken into account in the analyses prepared and the relevant recommendations, as well as in the strategic objectives agreed upon in the [Country Strategy]”**. IDB’s Climate Change Action Plan also notes that whenever it is pertinent and agreed with the government, climate change-related indicators will be included in the Country Strategy results matrices. The Bank aims to address priorities in line with ambitious country NDCs throughout the Country Strategy process and implementation.
The Deep Decarbonisation Pathways in Latin America and the Caribbean (DDPLAC) Programme allows country-level university and civil society research teams, alongside international partners facilitated by the Bank, to develop multi-sectoral and cross-sectoral national long term decarbonisation pathways. This is a potentially transformational programme to support countries with long-term deep decarbonisation and 2050 planning. Aligning climate policies with long-term economic planning can reduce risks of stranded assets given the long lifespans of infrastructure. These pathway models will then inform Country Strategies and reprioritise projects, thus helping governments “identify financing gaps and possible approaches to catalyse investments”. Potential projects stated in the explanatory and progress report, Getting to Net Zero, include integrated land-use modelling in Peru, decarbonising transport in Costa Rica and bottom-up energy models in Argentina. The report states that more in-depth country reports are expected later in 2020.
DDPLAC work and the Bank’s NDC Invest Platform (a key part of IDB’s country-level work, see ‘Technical assistance’ page) the Bank is supporting Costa Rica’s decarbonisation through a Policy Based Loan. Announced in March 2020, the $320 million loan will assist Costa Rica in implementing climate-focused political reform, replacing high-emitting agricultural practices, conserving high-carbon ecosystems and encouraging the use of electric-mobility, in alignment with its National Decarbonisation Plan.
The NDC Invest approach to country work relating to decarbonisation is made up of four components:
- Updating NDCs to align with Long Term Strategies;
- Designing investment and finance plans;
- Using markets and investment to create transformative initiatives; and
- Mobilising private sector to act in green finance and sustainable projects.
The Bank’s support of Costa Rica is an example of the work they are doing to enable the development of Long Term Strategies in member nations. The Long Term Strategy is not necessarily directly related to the nation’s NDC, but the two are complementary; the Bank prioritises helping nations increase their NDC ambitions, like their work with the governments of Barbados, Chile, Costa Rica and Suriname. In addition, the Bank’s Long Term Strategy focus includes building local capacity by training academic and research teams to use modelling and analysis to better prepare decarbonisation strategies. Currently, this work is also being conducted in Columbia, Peru and Chile. The Bank assists in planning and sectoral assistance for Long Term Strategy plans which include resilience and adaptation, seen in Columbia’s updated Long Term Strategy and Chile’s work with the Bank regarding water sector strategy.
The framework includes advising the financial and investment plans to properly implement long term strategies (the NDC Invest platform includes an array of financing instruments, see ‘Technical assistance’ page). The NDC Invest ACL Fund has to date funded 19 projects (ten of which are country-specific) valued at $15 million and leveraged $687 million in investment loans for member countries.
*IDB presentation at World Bank Annual Meetings, Oct 2017.
**Information received from IDB.
Last Update: November 2020