Credit: EBRD

By Vanora Bennett
LONDON, Nov 16 2022 (IPS)

As it moves to increase its climate adaptation finance, the European Bank for Reconstruction and Development (EBRD) has launched the EBRD Climate Adaptation Action Plan (CAAP) at COP27, the global climate summit taking place in Sharm el-Sheikh, Egypt.

Climate adaptation – adapting to already existing climate change and anticipating future changes in long-term planning – has been an increasing focus of attention in recent years as the current level of global warming is already causing extreme weather events to multiply and intensify. It is one of the core themes of COP27.

The EBRD is a leader on climate finance but its business model, with a focus on the private sector, means that it has done more mitigation than adaptation, which is often publicly financed.

The EBRD Climate Adaptation Action Plan brings together a number of elements to strengthen the Bank’s adaptation work: integrating adaptation into project and policy design, building partnerships, developing business and mobilising private finance.

“We don’t have one single answer on adaptation; our response is a combination of a number of different tools and approaches,” said Harry Boyd-Carpenter, EBRD Managing Director, Climate Strategy and Delivery. “We increasingly see adaptation not as a cost but rather as an investment that protect economic development and preserve the competitiveness of our clients.”

At last year’s climate summit, COP26, the Glasgow Climate Pact included a commitment from developed countries to at least double – from the 2019 levels of US$ 20 billion – the collective adaptation finance to developing countries by 2025. Increased adaptation finance is particularly important to address the climate vulnerability of EBRD regions

Several EBRD countries – especially those in the Southern and Eastern Mediterranean (SEMED) and Central Asia – are extremely vulnerable to the impacts of climate change. Between 2008 and 2018, insured losses to extreme weather events in EBRD economies totalled US$ 25 billion.

Chronic water stress has already changed the landscape, and warming in the region is expected to exceed the global average. In the face of these risks, the EBRD is building new partnerships to identify and support opportunities for investing in greater resilience.

During COP27, the EBRD signed a Memorandum of Understanding (MoU) to expand its partnership with the Global Centre on Adaptation. In line with the Bank’s conviction that Africa has strong potential as a global leader in climate adaptation, it also endorsed the Africa Adaptation Acceleration Programme (AAAP), which aims to mobilise US$ 25 billion over five years to scale climate adaptation action.

President Odile Renaud-Basso spoke at multiple events on the need for more adaptation finance, including the COP27 World Leaders event, Accelerating Adaptation in Africa, and discussed adaptation with the African Development Bank’s President Akinwumi Adesina.

Over the past decade, the EBRD has financed over 350 climate resilience investments with a business volume of more than €10 billion and adaptation finance exceeding €2.8 billion.

Since issuing the world’s first dedicated climate resilience bond in 2019, the EBRD has also prepared the Guide for Issuers on Green Bonds for Climate Resilience, together with the Global Center on Adaptation (GCA) and the Climate Bonds Initiative (CBI), to provide practical guidance to sovereigns, sub-sovereigns, financial institutions and corporates on raising capital in the green bond market to invest in climate adaptation and resilience.

At the forefront of climate finance, the EBRD has committed to make more than half of its investment green by 2025 and to align all its operations with the goals of the Paris Agreement by 1 January 2023. In preparation, the Bank now screens every project for its climate resilience and systematically identify adaptation opportunities.

Footnote: The European Bank for Reconstruction and Development (EBRD) was established to help build a new, post-Cold War era in Central and Eastern Europe. It has since played a historic role and gained unique expertise in fostering change in the region – and beyond – investing €170 billion in more than 6,400 projects.

At COP27, the EBRD launched its Climate Adaptation Action Plan to boost adaptation finance. The plan involves integrating climate resilience into project design, building new and enhanced partnerships, and mobilising private finance. Adaptation finance is deemed crucial to address climate vulnerability of EBRD regions.

Vanora Bennett is EBRD green spokeswoman / Ukraine, Moldova, Romania, Georgia and Armenia

IPS UN Bureau

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Credit: EBRD

By Vanora Bennett
LONDON, Jul 29 2022 (IPS)

Until Russia went to war on Ukraine in February, Ukraine was known as the “breadbasket of Europe”. One of the largest grain exporters in the world, it provided about 10 per cent of globally traded wheat and corn and 37 per cent of sunflower oil, United Nations figures show. The yellow and blue of its flag mimic its rolling golden fields under blue summer skies.

The war has darkened this picture beyond recognition.

Despite the conflict, Ukrainian farmers are still growing grain, at levels estimated to be around three-quarters of a normal year. But, with Russia blockading the Black Sea ports through which Ukraine would usually export about 5 million tonnes a month, the country is now struggling to get just 2 million tonnes a month out westward by choked road, rail and river routes.

This is not only an existential problem for Ukraine, whose grain exports are one of the biggest contributors to its economy, but also for the millions of people worldwide who would normally import and eat this grain. The World Food Programme (WFP) says that as many as 47 million people, particularly in sub-Saharan Africa, are at risk of acute hunger.

Addressing this food security risk is a double challenge for the European Bank for Reconstruction and Development (EBRD), which works both in Ukraine and neighbouring countries affected by the war, and in southern and eastern Mediterranean countries which are struggling to import food.

Vanora Bennet. Credit: EBRD

“The biggest issue is storing the grain. There is some warehouse and silo capacity free, but not enough for the harvest taking place now. We’ve been told they are missing 15 million tonnes of capacity, even before the spring crop harvest that’s coming in in two months’ time,” says Jean-Marc Peterschmitt, EBRD Managing Director for Industry, Commerce and Agribusiness. “It is unclear how it will play out.”

“For now, the only solution is temporary storage – silo bags or floor storage or even storage in the field with some basic covers, which obviously will deteriorate the quality of grain,” says Natalia Zhukova, EBRD Director, Agribusiness. “Silo bags can pretty much preserve the quality for 12 months because they are hermetically sealed so infections or pests cannot develop inside. But simple silos without proper drying or ventilation will obviously have problems.”

“Getting grain out of the country and being able to store the harvest inside the country are the mirror image of each other, because whatever you get out is freeing up storage capacity for the next harvest,” adds Peterschmitt. “Getting it out so far has been not a great experience. But it’s vital to find more ways to do that.”

As the quantity of Ukrainian crops waiting for export and potentially rotting in siloes and fields increases, hopes that Ukraine could soon resume exports in something like their usual quantities rose briefly last week when a tenuous U.N.-brokered deal to lift the blockade on the key Ukrainian port of Odessa was agreed in Turkey on 22 July.

Less than 24 hours later, however, Russian cruise missiles hit Odesa. US Secretary of State Antony Blinken, saying the attack cast serious doubt on the credibility of Russia’s commitment to the deal, accused Russia of “starving Ukraine of its economic vitality and the world of its food supply.”

Yet, by 25 July, Ukraine said it still hoped to start implementing the deal within as little as a week, and was making preparations including demining essential sea areas, and setting up naval corridors for the safe passage of merchant vessels and a coordination centre in Istanbul.

Still, for now, amidst the uncertainty, it’s back to working within the limits of wartime.

Within Ukraine, a significant part of the €1 billion of EBRD investment pledged for this year is earmarked to support domestic food security. As part of the EBRD’s Resilience and Livelihoods Framework (RLF), a €200 million multi-instrument Food Security Guarantee works across the food chain in Ukraine, both helping farmers buy fertiliser and retailers get food into the shops.

And there are other, smaller, freight transport options out of Ukraine for grain export if access to Black Sea ports continues to be blocked. The Danube River, whether in Ukraine or neighbouring Moldova or Romania, could be one option.

Throughput at Moldova’s Giurgiulesti Port on the Danube has already doubled in 2022. Another possibility might be supporting improvements to road and rail exports to help carry more freight overland.

In the southern and eastern Mediterranean (SEMED) region where the EBRD also works, meanwhile, all countries rely on imports to make enough dietary energy available domestically. The level of reliance on Russian and Ukrainian grain is unusually high.

Food prices are currently at an all-time high, making sourcing scarce imports from elsewhere ruinously expensive.

As the UN Food and Agriculture Organisation’s senior economist, Katya Krivonos, told a panel discussion at the EBRD Annual Meeting in May, Egypt, which has 5.4 million undernourished people, usually sources more than 40 per cent of its calorie imports from Russia and Ukraine.

“Climate conditions in SEMED don’t really allow them to grow grain. In arid countries, the question is how in the longer term to become more food secure, in a more sustainable way. We are looking at ways to help these countries find the commodities that they need,” says Iride Ceccacci, the EBRD’s head of Agribusiness Advisory.

In this region, the Bank is looking at expanding its work on agribusiness and food security beyond its current focus on the private sector to support SEMED countries to secure import of grains in this context of unprecedented high prices.

In Tunisia, 50 percent of all food calories are imported. Jordan imports approximately 90 percent of wheat and barley, which are essential staples and water intensive crops to produce. Morocco, which is generally less reliant on imports, is facing one of the worst droughts in decades.

In May, the EBRD joined forces with other international financial institutions – the Asian Development Bank (ADB), the African Development Bank (AfDB), the International Fund for Agricultural Development (IFAD), the Inter-American Development Bank (IDB), the International Monetary Fund (IMF) and the World Bank Group – to formulate an IFI Action Plan to Address Food Insecurity.

“People in SEMED are very frustrated that they came out of the COVID-19 pandemic, having coped with it with a lot of resilience, and were looking forward to some positive growth.

But instead, they’re now getting this massive new hit, mainly through high food prices but also through high energy prices, which affect fertiliser prices so will also have an impact on domestic food production,” says Heike Harmgart, Managing Director, SEMED, at the EBRD.

She adds: “Now middle-class people in Egypt are buying less meat because food price inflation has been so high in the supermarket. And governments are worried because high food prices were one of the triggers of the Arab Spring in 2011, and there’s a very clear connection between political unrest and high bread prices”.

“What everyone wants to avoid is social unrest. The EBRD has been working on urgent food security response projects to support SEMED countries, with a first transaction now Board approved for Tunisia. These investments include technical assistance designed to promote sustainable solutions for grain supply chains in the region.”

Gérald Theis, Chairman of CereMed UK Ltd, a big grain trader, vividly describes working first with the supply problems of the Covid era, which raised prices and the threat of protectionism, and then the war on Ukraine, which began on 24 February.

“February 24 was like 9/11, or a tsunami,” he told the EBRD Annual Meeting’s food security panel. “We didn’t sleep much for a while. In eight days, we saw a move of nearly US$ 200 dollars per tonne – a percentage rise of 160 per cent.”

Asked what his sense was of where food security was heading next season, he replied: “I’m sorry to say I don’t know, if we speak about long-term. Today I would say a day is like a month used to be before. Nobody knows when this war will end or how it will end.”

“Even if it stopped tomorrow, we traders don’t think that things will go back to normal – there are too many issues with logistics, broken bridges and railways, silos and sanctions. In this environment, we believe prices will stay at a high level and it’s going to be extremely volatile.”

Source: EBRD

Vanora Bennett is EBRD Green spokeswoman / Ukraine, Moldova, Romania, Georgia and Armenia

IPS UN Bureau

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In Serbia, EBRD supported privately financed wind farms at Cibuk – the biggest in the Western Balkans region – and Kovačica, helping Serbia reduce its dependence on ageing coal-fired plants running on polluting lignite. Credit: EBRD

By Vanora Bennett
LONDON, Nov 5 2021 (IPS)

The European Bank for Reconstruction and Development (EBRD) has announced its intention to double the mobilisation of private sector climate financing by 2025.

The way to achieve this target was set out in an Action Plan on Mobilising Private Capital for Climate Finance, unveiled at COP26, the global climate summit. With this plan the EBRD will support the transition to a low carbon economy in its countries of operations.

The EBRD’s plan spans the full range of activities to stimulate investment from green and sustainability-linked bonds through innovative financing mechanisms for industrial decarbonisation to targeted loans to support for the circular economy.

At the heart is a focus on policy activities to develop a regulatory environment that makes low-carbon investments commercially viable.

These activities, from the implementation of renewable energy auctions to the design of low-carbon sector pathways, are intended to trigger sustainable demand for climate-friendly investment and in turn for private capital.

“Globally, there is a significant increase in private capital committed to green finance. The EBRD will help direct that money to its countries of operations. Its ability to do so rests not on a single approach or instrument, but on a broad range of bespoke interventions. Some seek to increase the supply of private capital to EBRD countries of operations,” said EBRD President Odile Renaud-Basso.

“However, the key focus of the Bank’s work is to increase the demand for this capital: the supply of bankable investment projects that attract financial flows seeking a return. This requires approaches that respond to the specific situations of markets and clients.”

Together with other multilateral development banks (MDBs), the Bank plays a leading role in helping to decarbonise economies and enable the transition to a more sustainable future, with a focus on involving the private sector in tackling climate change.

A major challenge in emerging economies and developing countries is a shortage of bankable climate projects. Several factors limit the supply of such projects. The most fundamental is the lack of either an implicit or an explicit carbon price. Without a carbon price, many green investments are not commercially viable.

The 2021 United Nations Framework Convention on Climate Change (UNFCCC) conference is key to delivering climate action, with countries making more ambitious climate pledges to move closer to the goal of limiting global warming to 1.5C, with the aim of reaching carbon neutrality by 2050.

Financiers, including MBDs like the EBRD, are preparing to deliver more support to realise those plans.

The EBRD is supporting these goals not only with investments in green energy, energy efficiency and energy savings. The Bank is also supporting especially exposed countries like Kazakhstan or Uzbekistan to develop roadmaps to low or zero carbon economies and it is addressing the need for a ‘just transition’ with recent investments, for instance in North Macedonia.

The EBRD brings two recent commitments of its own on enhancing its climate action. One is to increase the proportion of its green investments to more than 50 per cent of the total by 2025. The second is by 2023 to align all its operations with the goals of the Paris Agreement.

The EBRD supports the green transition in the 38 economies in Europe, Asia and Africa where it currently invests.

Vanora Bennett is EBRD green spokeswoman

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