Canada Global (Web News) According to Makhtar Diop, managing director of the International Finance Corporation, the World Bank will deploy $10 of its resources to invest in climate action for every $1 in grants it receives. He made this announcement during the World Government Summit on Monday.
In a session titled “Investing in a Sustainable Future: The Role of Climate Finance,” Diop told CNN’s Becky Anderson that “if we manage to have a bit more of grant money invested, then we will be able to multiply investment significantly.”
One of the most urgent challenges of our day, according to Anderson, is the climate disaster.
In order to alter the global economy and put us on a path to net zero by 2050, mobilising private wealth alongside private policy is critically essential.
Every year, $9 trillion in investments are required to achieve that aim. That is a rough estimate. If you’re being more cautious, you might say it’s $6 or $7 (trillion), but either way, that’s a lot of money, and 60% of the money is needed for investments in emerging economies. To put it bluntly, these markets are cash-starved, she said.
When questioned about how to close the financial gap for emerging countries, Diop responded, “The world doesn’t have a problem with resources; the difficulty is managing those resources to ensure we are employing renewable energy…
The management of the world’s current liquidity and its allocation to profitable investment are other issues.
According to Diop, the global energy shift will require $1 trillion in annual expenditures. He argued that the absence of a bankable project and obligation prevents the private sector from appropriately evaluating the risk.
Making judgements for investors is becoming more and more challenging due to a variety of factors, including conflicts and natural disasters.
Diop disclosed that he has signed a contract with the Abu Dhabi Development Fund to establish a $1.5 billion platform where both parties will co-invest in developing nations going through an energy transition.
According to Diop, “Today, when we talk about green hydrogen, which is a new form of energy, it is primarily located in developing nations where you have the sun and hydro (electricity) in abundance.”
These nations “may become energy exporters and (contribute) to the global public goods solution,” he said.
World Bank Group is debating a “evolution roadmap” to assess what else can be done to aid in the transition to a more energy-efficient society and aid nations in battling climate change, according to Diop