109 of the Bank’s targets. This means there is pressure for biomass and changing land use, while also generating emissions and creating indoor air pollution. Some areas of Africa have high percentages of the population with clean fuels and technologies for cooking; East Africa, West Africa, and Central Africa have very low rates of clean cooking. Electrification is an important part of improving people’s lives and the modern life. Unfortunately, installed renewable capacity is falling short of the Bank’s targets and the Bank’s own contribution is well below its own targets. In many RMCs, electricity transmission and distribution systems face high losses. Hence, energy efficiency is an important part of limiting GHG emissions, simply by getting more of the electricity generated to users. Unfortunately, the Bank’s targets for new and improved transmission and distribution lines have not been met. Meanwhile, the percentage of electricity being lost remains stubbornly high relative to targets, and targeted GHG emissions reduction from energy have failed to eventuate. Transport is an important part of integrating Africa, but at the same time, there is the possibility of induced transport demand and increased GHG emissions from road transport. Hence, while the Bank’s transport targets for roads constructed, rehabilitated, or maintained was not reached, the challenge is how to achieve these targets while also finding ways to limit GHG emissions of road users. The electrification of road transport is something that should be considered in addition to rail, especially as price parity for battery electric vehicles is reached with internal combustion engine vehicles. Renewable energy powered vehicles can also reduce demand for fuels and lower strain on foreign currency reserves needed to pay for regular fuel imports. Chapter 6: Challenges and lessons 43 Pillar 3 on mobilising climate finance Having all finance, regardless of source and aligned with climate-resilient low-carbon development, is essential to achieving such development. The technologies and practices supported by investments today will either lock in or lock out GHG emissions for a long time to come. As such, increasing the percentage of all finance that supports climate-resilient low-carbon development is essential. Prior to the COVID-19 pandemic, the Bank was reaching its targets, with a peak of 35% of all projects accessing climate finance in 2019. The year 2020 saw a drop off, with 32% of projects tagged as being climate finance. Another area of progress is the inclusion of climate change considerations at the design phase of projects. A significant percentage of climate finance around the world has focused on mitigation. However, given concerns around the impacts of climate change in Africa, the Bank had the target of parity between mitigation and adaptation finance. The Bank has surpassed this target in 2020 with 63% of finance labelled for adaptation, up from 36% in 2016. However, it should be noted that having a 50:50 balance of adaptation and mitigation finance is somewhat arbitrary, as it does not necessarily align with RMCs’ needs. A 50:50 ratio is only optimal if the finance needed to ensure resilience is the same as the finance needed to ensure lowcarbon development for a given year. It is important to note that there are many possible sources of climate finance. This includes taxes, international levies, capital markets, Key lessons and recommendations a given year. It is important to note that there are many possible sources of climate finance. This includes taxes, Figure 45: Overview of climate finance sources, managers, instruments, and projects Source: Modified from IPCC 2014c Source of capital Taxes and auctions of allowances Governments Grants Governments, corporations and households (developed and developing countries) Climate resilient low greenhouse emissions activity and development National, bilateral and multilateral financial institutions Project debt (market based or concessional) Commercial financial institutions Project level equity Corporate actors and institutional investors (private and public) Balance sheet financing Households Credit enhancement or risk management General tax revenue International levies Funds from capital markets Corporate cash flow Household income Manager of capital Financial instrument Project owner or sponsor Project focused on mitigation Mitigation finance Overview of climate finance sources, managers, instruments, and projects Source: Modified from IPCC 2014c
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