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CGD Policy Blogs

 

A wind turbine farm in Tunisia

Rethinking the World Bank Model for More Climate Financing

The fact is $100 billion a year is woefully insufficient to cover the cost of climate change adaptation, let alone financing clean energy transitions across the developing world. The adaptation price tag alone could reach $300 billion a year by 2030. According to the IEA, the cost of financing clean energy transitions could exceed $1 trillion a year by the end of the decade. These are big numbers. But they are achievable.

An image of the US Capitol Building.

A Domestic US Development Bank in the Works? Lessons from the MDBs

In the 117th Congress, US lawmakers have introduced four separate proposals to establish a national development bank. Three would set up national green finance institutions; the fourth would focus more broadly on providing public financing for high-tech domestic manufacturing, including green technology. (A version of the National Climate Bank proposal—or “Clean Energy Accelerator”—could soon come to the House floor as part of the Democratic budget reconciliation measure).

Joe Biden speaking at the 2019 Iowa Federation of Labor Convention in Altoona, Iowa. Photo by Gage Skidmore / via Wikimedia Commons

$1.9 Trillion and No Money for the Multilateral Development Banks?

The Biden administration and the Congress rightly went big in the recently passed American Rescue Plan at a time of tremendous need. The package was appropriately focused on the domestic side, but it did not neglect the rest of the world. One might reasonably ask then why $1 billion or $2 billion could not have been included for fighting the poverty, food insecurity, and health crises driven by the pandemic. That would have amounted 0.05 to 0.1 percent of the total package. And it would have been multiplied many times over in additional poverty reduction dollars, because that it was the MDB model does.

Stacks of US dollars. Adobe Stock

More Than $1 Trillion in MDB Firepower Exists as We Approach a COVID-19 “Break the Glass” Moment

In retrospect, the scale up in MDB financing during the 2008-2010 crisis, though significant, now looks conservative as we consider the potential scale of damage from the current COVID-19 pandemic. To put the question bluntly, if the human and economic devastation follows a worst-case scenario, just how much could the MDBs do to respond? We attempt to answer that question by assessing the legal, rather than prudential, constraints on MDB lending.