COP27: MCC, USAID Partner to Scale-Up Green Finance in Developing Economies
For Immediate Release
November 9, 2022
WASHINGTON (Nov. 09, 2022) — The U.S. government’s Millennium Challenge Corporation (MCC) and the U.S. Agency for International Development (USAID) announced today they will work together to expand the use of green financing in low- and lower-middle income countries through the Joint Green Finance Pilot Program.
By expanding the types of technical tools available to enable the use of green bonds and other blended finance products, MCC and USAID have the potential to unlock billions in new climate finance for developing countries.
“Working in partnership, and in line with market experience and potential, we aim to catalyze green finance in emerging economies with potential to leverage more than $1 billion,” said MCC Chief Executive Officer Alice Albright. “At MCC, we will work alongside partner countries to provide training, implement reforms, and set up institutions necessary to create long-term climate-finance opportunities. This will create pathways for the private sector to invest in climate solutions and do so in emerging markets with economic potential.”
As part of the Joint Green Finance Pilot Program, MCC will explore green finance possibilities with select country partners developing compacts — specifically, Indonesia, Mozambique, and Zambia. Although the agency has not finalized its contribution total, financial models indicate that by investing between $50-$80 million in the pilot program MCC can yield up to $800 million in additional project financing. This estimate will grow to more than $1 billion as USAID works with up to five additional countries to develop green bonds as part of the joint venture.
“As part of the U.S. government’s commitment to the global community, MCC is delivering on a host of climate investments to meet the U.N. Sustainable Development Goals and the Paris Climate Agreement,” added Albright.
A legacy of Climate Investments
Poverty and economic growth are inextricably linked to climate change. This is why building climate resiliency in partner countries has long been a core focus at MCC. From promoting conservation activities in Mozambique and delivering low-carbon economic development models in Kosovo, to supporting countries’ transition from fossil fuels by expanding renewable energy in Indonesia and Liberia.
- The $391 million Benin Power Compact has the potential to leverage $100 million in private investments to increase utility-scale and off-grid solar power generation. This program has the potential to deliver electricity to nearly 630,000 people in the poorest areas of Benin for the first time.
- The $350 million Mongolia Water Compact is working to create and maintain a sustainable, affordable water supply for homes and businesses in the capital city of Ulaanbaatar. MCC’s investments include an advanced water purification plant that will draw water from sources that are replenished by treated wastewater as well as a water recycling plant that will provide water to some of the largest consumers of water in the city.
- The $442.6 Niger Compact focuses on agriculture and includes investments in irrigated agriculture that aims to strengthen rural communities’ resilience against climate change. This includes the promotion of sustainable land management for agriculture lands, natural resource management, and a community-focused climate resiliency grant program.
In total, MCC has invested roughly $1.5 billion in climate-related activities between FY15-FY20 and expects to invest an additional $1 billion between FY21-FY24.
The Millennium Challenge Corporation is an independent U.S. government agency working to reduce global poverty through economic growth. Created in 2004, MCC provides time-limited grants and assistance to countries that meet rigorous standards for good governance, fighting corruption and respecting democratic rights.