Climate change is one of the main systemic and complex challenges the global community is dealing with in this century. Although countries are increasing their climate ambitions and more climate action momentum is visible recently, the world is still on a catastrophic pathway to global warming of 2.7-degrees. The consequences are already evident today, but scenarios predict that the impacts of climate change will be even worse in the coming decades.
We will be seeing more droughts and heatwaves, rising sea levels, and stronger weather extremes like hurricanes. It is expected that more than 200 million people will be forced to migrate within their own countries by 2050. Societies will have to adapt to these changes, among other climate-related impacts.
Acting on climate change requires bold initiatives
Nevertheless, we can still move the needle towards a green and sustainable future managing the impacts of global temperature increase. Efficient cooperation and well-implemented climate projects, built on solid strategies, policies, and funding, are needed. In Latin America and the Caribbean (LAC), the IDB Group and NDC INVEST are constantly working on enabling the conditions to realize best-practice climate action in the region’s transition to a net-zero future.
Together we are building a regional roadmap for a new sustainable world.
Transitioning to a green, inclusive and resilient future brings economic and societal benefits. It creates new economic sectors, jobs, and growth and supports innovativeness and entrepreneurial thinking. Countries can modernize their energy sectors by installing renewable energy generation and decrease dependency on fossil energy imports. People can enjoy cleaner air, better transportation systems and profit from lower costs due to energy-efficient housing.
Especially given the current circumstances, creating a win-win situation for countries in the LAC region by combining short-term pandemic relief with long-term climate action is crucial. This results in strong demand for flexible funding in focus areas, such as the health sector, provision of public services, employment generation, and digitalization. NDC INVEST brings these priority areas together with mitigation and adaptation opportunities, ensuring a just transition to a clean future.
For instance, to address the challenges and to reap the benefits of the transition, our recent publication Fiscal Policy and Climate Change recommends that LAC finance ministries consider fiscal policies to accelerate the transition to green economies. This includes, for example, raising standards in national investment systems so that all new infrastructure meets resilient criteria and is consistent with net-zero emissions. Our insights are based on findings that decarbonizing the region’s economies can create 15 million net new jobs by 2030 and every dollar invested in resilient infrastructure and economies can generate up to four dollars in economic benefits.
NDC INVEST is a transformational platform for creating and realizing ambitious climate goals
Through the structured approach of NDC INVEST, we enable a transition to a net-zero, resilient and sustainable development that improves the quality of life and prosperity in LAC. In 2020, NDC INVEST supported 331 initiatives in 25 IDB Group member countries through the IDB, IDB Invest and IDB Lab. Compared to 2019, the number of initiatives increased by 25% in 2020, confirming the high demand for solutions provided by NDC INVEST.
Around 2/3 of the initiatives are implemented within the public sector, while the remaining 1/3 is focused on advisory services and innovation promotion in the private sector. From a geographic perspective, most of our initiatives (about 75%) are engagements realized in a specific country of the LAC region. The remaining NDC INVEST initiatives have a regional character, bolstering cooperation between countries in the region and ensuring that the regional impact of the expertise and experience of NDC INVEST is maximized.
As these numbers show, the NDC INVEST platform has become a point of reference with its transformational work for climate action in the LAC region.
Examples of climate action and green investment in Latin America and the Caribbean
Encouragingly, in 2020 many countries in the region, from Jamaica to Chile, have already been connecting climate action with sustainable recovery. Moreover, positive developments such as the steep drop in the cost of renewable energy projects or electric vehicles increase the involvement of the private sector and citizens in adopting new and clean technology.
NDC INVEST is working with public and private stakeholders in the region to enable a policy environment for climate investments and accelerated innovation. Some of our successful case studies from 2020 display our support:
- In our publication “NDC INVEST: Supporting transformational climate policy and finance”, we describe our framework to support governments in the design of Long Term Strategy (LTS), Nationally Determined Contributions (NDCs) and investment plans. Through our research and experience supporting countries we have developed a toolbox for a green and sustainable development path. Together with the public sector in LAC, NDC INVEST is implementing these tools to systematically improve climate strategies and action.
- We have been supporting several countries in the region, e.g., Chile, Costa Rica, Suriname, and Barbados in the design of their updated NDCs. Thereby, we helped to create a link between long-term ambitions targeting full decarbonization and middle-term goals aiming at the highest possible reduction of greenhouse gas emissions until then. Additionally, we have contributed to estimate investment and funding needs related to the NDCs, subsequently minimizing the barriers countries face in the implementation process.
- Shifting the narrative from the costs to the aggregated benefits of green investments is essential to show the economic potential that decarbonization brings to the region. With our support, the governments of Chile and Peru developed cost-benefit analysis based on their LTS. In Peru, the results show that the implementation of the LTS can bring up to USD 140 billion in net benefit by 2050. We will continue this effort with other countries in the region to further establish that decarbonization is not only an environmental, but also an economic necessity for LAC.
With COP26 on the horizon, ambitious climate action is key for securing net-zero by mid-century, adapting to protect communities and habitats, and mobilizing climate finance. Coordinated climate initiatives through NDC INVEST, supporting both long-term strategies for decarbonization as well as the concrete implementation of mitigation and adaptation projects in the region, leads to maximized environmental benefits, reduced exposure to climate risk, and improved competitiveness. NDC INVEST remains the platform for ambitious climate action in the region.