Why Developing Countries are Key to Global Efforts to Combat Climate Change

By Kyle Murphy, Senior Advisor to the CEO and Andrea Orr, Editorial Director

Last week on Earth Day, U.S. International Development Finance Corporation (DFC) unveiled a series of initiatives that will transform the way we invest in development to significantly reduce emissions over time and partner with vulnerable communities to respond to the impacts of climate change they are experiencing today and that are likely to grow in the future.

As America’s development bank, DFC plays a central role in mobilizing private investment in emerging markets, which are often the most vulnerable to climate change. DFC has more than $5 billion invested in renewable energy projects in developing contexts and has committed to focusing at least one-third of its new investments on climate beginning in 2023.

Technological advances and cost reductions have made renewable energy more attractive than ever as a core element of increasing global access to electricity and the tremendous opportunities it brings. DFC will meet its recently announced goal of achieving a net zero portfolio by 2040 by also pursuing ambitious development objectives in Sub-Saharan Africa, Southeast Asia, and Latin America.

The countries that make up these regions contribute only a small amount of global emissions, but they are vital partners in effecting a just transition to an inclusive global economy that is powered by renewable resources and prepared for the impacts of a changing climate. Many factors underpin the outsize importance of developing countries to the global effort to address climate change.

Unmet demand and expected growth

Potential to skip carbon-intensive technologies

A need for climate resilience

The seriousness and scale of these challenges requires a massive, global mobilization of public and private resources. Development finance institutions like DFC, in partnership with developing countries, will bring private investment into markets that most need rapid and innovative action to address the crisis. These partnerships can not only tackle unjust discrepancies in global access to energy but also be the laboratory for pioneering approaches to mitigate climate change and adapt to its unavoidable impacts. Innovations initiated and tested in developing contexts can help shape global efforts to prepare for rising sea levels, more extreme weather, and major changes to agriculture among other effects of climate change.

U.S. International Development Finance Corporation. Investing in development and advancing U.S. foreign policy. Twitter: @DFCgov