IFC Study Finds Climate Pact Helped Open Up $23 Trillion in Emerging-Market Opportunities

A study released today by IFC, a member of the World Bank Group, shows that the historic global agreement on climate change adopted in Paris last year helped open up nearly $23 trillion in opportunities for climate-smart investments in emerging markets between now and 2030.

Since the Paris Agreement was adopted in December 2015, a total of 189 countries have since submitted national plans that target aggressive growth in climate solutions—including renewable energy, low-carbon cities, energy efficiency, sustainable forest management, and climate-smart agriculture. These plans offer a clear roadmap for investments that will target climate-resilient infrastructure and offset higher upfront costs through efficiency gains and fuel savings.

IFC’s study, based on the national climate-change commitments and underlying policies of 21 emerging-market economies, identifies sectors in each region where the potential for investment is greatest. This includes green buildings in East Asia and the Pacific—where China, Indonesia, the Philippines, and Vietnam show a climate-smart investment potential of $16 trillion. Latin America and the Caribbean offer the next largest opportunity—particularly in sustainable transportation, where the potential for investment in Argentina, Brazil, Colombia, and Mexico is about $2.6 trillion. Opportunities in South Asia are mostly in climate-resilient infrastructure, where $2.5 trillion of opportunities exist in India and Bangladesh.

“There has never been a better time than now for climate-smart investing,” said Philippe Le Houérou, IFC Executive Vice President and CEO. “This reflects the dramatic reduction in the price of clean technologies and the rise of smart policies that are driving businesses to invest. In this context, it’s important to set ambitious goals—which is why IFC has pledged to increase our climate investments to 28 percent of annual commitments by 2020 and catalyze another $13 billion through other investors.”
Sub-Saharan Africa represents a $783 million opportunity—particularly for clean energy in Cote d’Ivoire, Kenya, Nigeria, and South Africa. In Eastern Europe, the biggest markets

—Russia, Serbia, Turkey, and Ukraine—show a combined investment potential of $665 billion, mostly in energy efficiency and new green buildings. And in the Middle East and North Africa, the total
climate-investment potential for Egypt, Jordan, and Morocco is estimated at $265 billion, over a third of which is for renewable-energy generation, while 55 percent ($146 billion) is for climate-smart buildings, transportation, and waste solutions.

The report also finds that government action will be critical to take advantage in order to unlock the full scale of investment potential. It recommends that governments integrate national climate commitments into their development strategies and budget processes, strengthen the investment climate for climate-smart industries, and deploy public funds strategically to mobilize private capital—by reducing risk and providing project support, for example.

In Armenia, IFC has been supporting climate solutions, including renewable energy and energy efficiency, through financing rehabilitation of the Vorotan Hydropower Cascade, one of Armenia’s main power generating facilities, also helping local banks finance small hydropower plants and energy-efficiency lending packages for homeowners, and development of an energy efficient business complex in Yerevan.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with 2,000 businesses worldwide, we use our six decades of experience to create opportunity where it’s needed most. In FY16, our long-term investments in developing countries rose to nearly $19 billion, leveraging our capital, expertise and influence to help the private sector end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org

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