Climate finance landscape of Asia Pacific region: overview
Between 2018 and 2019, the APAC region spent $519.9 billion in climate finance: US$225.6 billion in 2018, increasing by 30% to US$294.3 billion in 2019. The public sector contributed the most to total climate finance flows, at US$351.8 billion (68% of flows), of which US$241.7 billion came from development finance institutions (DFIs), the top public sector contributors. Public finance was the main source of climate finance for most subregions in APAC (except for South Asia, which relied almost equally on private finance). The private sector’s 32% contribution ($168.1 billion) to total flows during the period derived mainly from corporations, household spending, and commercial financial institutions.
Mitigation finance – particularly in the energy sector – dominated climate finance in the APAC region during this period, reaching US$472.5 billion (91% of total flows). This was mostly driven by finance directed toward solar photovoltaic (PV), wind, and hydropower generation in China and India. Financing for low-carbon transport also grew rapidly, as more corporations and public sector stakeholders invested in rail and transit, and electric vehicles gained wider use among households (CPI 2019).
Meanwhile remaining total flows were made up of adaptation finance (8%, equal to US$40.8 billion), and dual-benefit finance for both projects with mitigation and adaptation outcomes (1%, equal to 6.7 billion). Adaptation finance rose by 31% during this period, from US$17.7 billion in 2018 to US$23.1 billion in 2019, signalling efforts to achieve a better balance between mitigation and adaptation finance, in response to Article 9 of the Paris Agreement. However, a wide disparity remains between the estimated costs of adaptation and the documented allocation (IPCC 2022).
Despite increasing expenditure between 2018 and 2019, climate finance in the APAC region is still not at a sufficient level to help meet the goals of the Paris Agreement. Global investment must increase by at least 454% to US$4.1 trillion, to do so, with APAC needing an average of US$1.699 billion annually up to 2030 (or a total of US$16.999 billion over the next decade).
