U.S. Treasury, USAID call on development banks to urgently negotiate on extreme heat

Despite a sharp increase in climate change investments, most of the money has gone to clean energy transitions and reducing carbon emissions, rather than helping countries cope with severe droughts, wildfires, storms and rising sea levels.

WASHINGTON, United States — The U.S. Treasury Department and USAID are convening an emergency meeting of the leaders of multilateral development banks to discuss extreme heat and its devastating impacts on developing countries, according to Treasury officials.

The private virtual meeting, held on Thursday morning, June 27, was the first of its kind and was aimed at finding ways to shift more resources to help countries build climate resilience and adaptation to reduce extreme heat disasters caused by record global temperatures this summer, Treasury officials told Reuters.

While investment in addressing climate change has increased significantly in recent years, much of the growth has been used to transition to clean energy and reduce carbon emissions, rather than to help countries adapt. Harmful effectsincluding more severe droughts, wildfires, fierce storms and sea level rise.

As heat waves sweep across the globe and kill at least hundreds of people, U.S. Treasury Secretary Janet Yellen will use the meeting to connect the urgent needs of developing countries hardest hit by the heat with broader work by multilateral development banks to boost lending capacity to help address climate change and other global crises.

“From the East Coast of the United States to India, extreme weather events, including heat waves, continue to grow more severe and frequent. Mitigating and responding to these events, and addressing climate change more broadly, are top priorities for the Treasury Department,” Yellen said in a speech to the bank seen by Reuters.

Yellen will tell the World Bank and its sister institutions that they should link rising temperatures to assessments of developing countries’ climate resilience and adaptive capacity.

USAID Administrator Samantha Power, who launched a summit in March and established an “action center” to draw international donors’ attention to the issue, said that of the 400 projects financed by the Climate Investment Funds, only seven directly address extreme heat.

“The multilateral development banks are our only hope for enough funding to directly address the extreme heat crisis,” she said, adding that rising temperatures could kill tens of thousands of people each year and cost the global economy an estimated $2.4 trillion by 2030.

With extreme temperatures impacting learning and closing classrooms, USAID is investing more than $8 million in Jordan to build heat-resistant schools.

World Bank Senior Managing Director Axel van Trotsenburg will represent World Bank President Ajay Banga at the meeting, as will Inter-American Development Bank President Ilan Goldfain and Asian Development Bank President Masatsugu Asakawa. Finance Ministry officials said the heads of the African Development Bank, European Bank for Reconstruction and Development and Japan International Cooperation Agency will also attend.

A source at the IDB said Goldfein will emphasize that mitigating heat is a key part of the bank’s climate strategy. The bank provided $100 million in technical assistance on climate issues and extreme heat in 2023, including helping Chile develop a strategy to keep cities cool by using green roofs, green corridors and reflective infrastructure surfaces.

Goldfein will also discuss the bank’s work in helping guide development banks to work in a more coordinated way to achieve greater scale and impact to combat climate change. This includes developing innovative financing tools, such as using IMF reserve assets to support blended capital, the sources said. Rappler.com