Climate
Climate change is inextricably tied to poverty and economic growth, and we must invest now to counter its dire consequences. As we rise to meet the existential threat of climate change, we must be bold and leverage innovative solutions.
MCC is leading by example: promoting low carbon economic development to support countries’ transition away from fossil fuels, maintaining a coal free policy across our investment portfolio, integrating climate across our analytical tools and decision-making, catalyzing private capital for climate finance and elevating support for critical services and systems essential for sustainable growth and poverty reduction.
Our Commitment
MCC has made a commitment to expand and deepen our efforts to address climate change challenges across our investment portfolio and business operations, integrating climate considerations into all stages of program development and implementation.
MCC is rising to meet the existential threat of climate change and significantly stepping up its climate ambition to support sustainable and inclusive growth in its partner countries.
This document sets forth MCC’s strategy for more fully integrating climate considerations into MCC’s core business. This strategy will guide MCC’s work across all programs, whether under development, in implementation, or post-implementation.
$1.5 Billion Invested (and Counting)
From 2015 to 2020, MCC invested $1.5 billion—over 40% of our program funds—in climate-related activities, based on signed compact and threshold program agreements.
Our investments in critical sectors like energy, water, transportation, and agriculture are part of a holistic approach to building climate resiliency, promoting low carbon economic development and supporting countries in their transition away from fossil fuels.
Between 2021-2025, MCC expects to sign new compact and threshold program agreements worth more than $4 billion, making MCC well positioned to make significant contributions to tackling the climate crises.
“Climate change, if not proactively mitigated, puts agricultural production advances in Niger at risk and, this is in the sector which employs more than 80 percent of our population. Our partnership with MCC is rehabilitating pastoral lands, promoting soil nutrition and creating access to sustainable groundwater resources among rural communities including thousands of small-scale farmers. These actions will improve productivity while ensuring our land and natural resources are managed better now and remain available for future generations.”
—Mamane Annou
MCA-Niger’s Director General
MCC’s $300 million dollar Lesotho Health and Horticulture Compact places a strong emphasis on climate adaptation and resilience by replacing rain-fed agriculture with climate-smart irrigated horticulture and working within communities to address land degradation that threatens Lesotho’s water supply. MCC also seeks to leverage private finance to reduce food loss and waste.
MCC’s $20 million dollar threshold program with Solomon Islands includes a $6.5 million dollar Forest Value Enhancement Project that aims to improve management of natural resources in the forest sector. The project aims to reduce negative environmental impacts, increase and more equitably share the community and national revenues from forestry production, and achieve a more balanced regulatory and enforcement framework between logging and non-logging uses of forests.
The $202 million-dollar Kosovo Compact, with an additional $34 million contribution from the Government of Kosovo, supports MCC’s ambition to invest heavily in clean energy and expand and deepen attention to climate change across MCC’s investment portfolio. The program will support a new public or public-private partnership battery storage entity to own and operate 340MWh of energy storage that will help address the unreliable supply of electricity. The program is in support of the government of Kosovo’s just transition to a more inclusive energy sector and is aligned with recent changes in Kosovo’s long-term Energy Strategy and Energy and Climate Plan.
Replanting Trees One Seedling at a Time
Members of the Tiyanjane Horticultural Club learned new skills to help the community plant trees and improve the health of Malawi’s Shire River. Selling fruit trees and other plants from their roadside stand, they are investing their earnings in their families.
The Benin Power Compact has the potential to leverage $100 million in private investment and increase utility-scale and off-grid solar power generation creating an enabling environment for independent power producers. This potential could deliver electricity to nearly 630,000 people in the poorest areas of Benin for the first time.
MCC’s $350 million compact with Mongolia is working to maintain a sustainable, affordable water supply for all Ulaanbaatar’s residents and industries. In August 2022, MCC and the Government of Mongolia broke ground on a water recycling plant. The plant will boost bulk water supply production capacity in Ulaanbaatar by 65 percent over its lifetime. Once operational, this plant will help alleviate the strain on groundwater aquifers along the Tuul River, which has been exacerbated by climate change, and provide the critical water resources needed to support the everyday wellness and economic growth of Mongolians.
In Niger, the agricultural sector employs more than 80 percent of the population and represents the second-largest export sector. Although poverty trends are slowly improving, with a climate prone to volatile weather conditions and a lack of access to critical inputs and information, agricultural productivity has stagnated. The $437 million Niger Compact includes investments in irrigation infrastructure and management systems, climate-resilient agricultural production, upgraded roads to improve market access, and management of natural resources, while seeking to empower entrepreneurs and smallholder producers. The compact has the potential to benefit approximately 3.9 million people.
Policy Reforms and Institutional Strengthening
MCC is also working hand-in-hand with governments in our partner countries to deliver policy and institutional reforms that integrate the needs of women and those most vulnerable, encourage government transparency and promote sustainability. These reforms can expand the impact of MCC investments by catalyzing private sector investments in and around our programs.
Regulatory reforms in MCC’s compact with Mongolia will increase transparency and efficiency by requiring the use of recycled water, strengthening climate resilience of Ulaanbaatar’s water supply, and paving the way for wastewater recycling for industrial uses throughout the country.
Partnerships
The climate challenges facing the development community are daunting, and we must partner to create a positive, lasting impact in the fight against climate change.
MCC is committed to expanding its collaboration with partners in the U.S. and internationally, growing a network of organizations and resources that leverage blended finance tools with a specific emphasis on and mobilizing private capital for climate.
The Jordan Compact included a public-private partnership to finance a wastewater treatment facility, which allowed Jordan’s government to treat 70 percent of the country’s wastewater and meet the region’s wastewater treatment needs through 2025. The plant has improved the long-term sludge management and disposal practices and helped preserve Jordan’s scarce water resources. The expanded plant provides 133 million cubic meters of high-quality treated water per year – equivalent to over 10 percent of Jordan’s entire annual water resources – for irrigation in the Jordan Valley.
In the Philippines, for example, MCC invested $228 million to rehabilitate 222km of roads on Samar Island. Recognizing the risks that climate change posed, MCC used climate models to build climate-resiliency into the design. The value of this approach became clear in November of 2013 when Typhoon Haiyan struck the Philippines with sustained winds of over 190 mph, making it one of the strongest storms to ever make landfall. The road was directly on the storm’s path, but it survived largely intact and provided a crucial artery for emergency response, subsequent reconstruction, and the ongoing development of Samar Island. The demonstration effect of this project has been powerful as well with the government of the Philippines now applying these design standards to other national roads.