At a Glance - Addressing climate change is critical to development and poverty reduction.
- The poorest countries stand to suffer the most from the effects of climate change.
- An effective response to climate change must combine both the mitigation of global greenhouse gas (GHG) emissions—to avoid the unmanageable—and adaptation efforts at the regional, national, and local levels—to manage the unavoidable.
- There is a double challenge of reducing global carbon emissions while meeting the energy and sustainable growth needs of the world’s poorest people and countries. Climate change should not be allowed to halt or slow the economic progress of developing countries.
- A “climate smart” world is possible: Climate change is an added cost and risk to development, but a successful global climate policy can open new economic opportunities to developing countries.
- Delaying mitigation action on climate change now will come at a huge cost to society as CO2 levels rise along with the likelihood of catastrophic impacts. An investment of 2 percent of global GDP per annum over the next 30 years to hold CO2 concentrations below 450 ppm is far less costly than waiting until crucial thresholds are exceeded and society is faced with the unmanageable.
Six Things to Know About the World Bank Group and Climate Change - Climate change is a major and urgent development challenge affecting the development prospects and opportunities of our client countries and, as such, is part of the World Bank Group core mandate.
- The World Bank Group adheres to the principles, policies, and directions of the UN Framework Convention on Climate Change (UNFCCC) process and its principle of common but differentiated responsibilities, respects the primacy of the UNFCCC process, and stands to support its decisions and outcomes.
- The World Bank Group contributes to UNFCCC negotiations by sharing relevant knowledge and experience, with the focus on articulating the needs and priorities of developing countries and with particular attention to the needs of the poorest and most vulnerable countries and population groups.
- The World Bank Group believes that a successful global climate agreement can and should open new economic opportunities for developing countries and must fully recognize their development needs and imperatives, including reliable access to affordable modern energy and adequate assistance to adapt to inevitable changes in climate.
- The World Bank Group calls on developed countries to demonstrate leadership in reducing their “carbon footprint” and transfering enabling finance and technology to developing countries.
- The World Bank Group supports its clients in undertaking climate actions (with adaptation and/or mitigation benefits) in the context of country-led development programs by assisting with mobilizing and accessing finance, deploying new technology, and developing policy, knowledge, and capacity.
The Poor Are Disproportionately Affected Developing countries are the most vulnerable to climate change, with poor people most at risk from the increased impacts of extreme weather events (i.e., floods, droughts, and storms). Human-induced climate change is expected to increase climate variability and to negatively affect agricultural productivity throughout the tropics and sub-tropics, further decrease water quantity and quality in most arid and semi-arid regions, increase the incidence of malaria, dengue fever, and other vector borne diseases in the tropics and sub-tropics, and harm ecological systems and their biodiversity. In addition, sea level rises associated with expected increases in temperature could displace tens of millions of people in low-lying areas, such as the Ganges and Nile deltas, and could threaten the very existence of small island states. Ocean acidification, the result of increased atmospheric CO2 entering the ocean, has already been documented in the Southern Ocean, putting marine food chains at risk as well as coral reefs and the coastal communities that depend on them for food security and livelihoods. World Bank Group Strategic Framework on Development and Climate Change From 2005-2007, the World Bank Group, together with the other Multilateral Development Banks (MDBs), developed and implemented the Clean Energy Investment Framework (CEIF) that served to help developing countries to: (i) increase access to energy, especially in Sub-Saharan Africa; (ii) undertake country-led actions to lower the carbon intensity of growth; and (iii) adapt to climate variability and change. At the 2007 World Bank/IMF Annual Meetings, the Development Committee welcomed progress made in implementing the CEIF and called on management to develop a comprehensive strategic framework for World Bank Group engagement on climate change while retaining the focus on overcoming poverty. A year later, at the 2008 Annual Meetings, Development and Climate Change: A Strategic Framework for the World Bank Group was endorsed by the Development Committee. The Strategic Framework was developed through extensive consultations with stakeholders that included developing country clients, development partners (UN agencies, regional development banks, bilateral donors), the private sector, and civil society. It articulates the World Bank Group’s approach to carrying out its core mandate of supporting sustainable development and poverty reduction within the new reality of a changing climate, which has major impacts on development and requires global action. Building on the World Bank Group’s core mandate and competencies, and recognizing the primacy of the UNFCCC process, the Framework is helping the World Bank Group increase the effectiveness and benefits of support to developing countries as development and poverty reduction efforts become constrained and threatened by the added costs and risks of climate change. Adaptation to climate variability and change will be at the center of World Bank Group support to developing countries because it is critical to sustaining and furthering development gains. It is important to stress that resources will not be diverted from financing core development needs. Access to energy will remain a top priority for the World Bank Group, to be addressed through the Sustainable Infrastructure Action Plan, the Africa Action Plan, and the forthcoming Energy Sector Strategy. The World Bank Group will focus on helping its clients acquire additional financial resources, technology, technical assistance, and knowledge for adaptation and mitigation—and use them well in their national, regional, and local development programs with mitigation and/or adaptation co-benefits. - The Strategic Framework for Development and Climate Change is based on six action areas. The World Bank Group intends to:
- (1) support climate actions in country-led development processes;
- (2) mobilize additional concessional and innovative finance;
- (3) facilitate the development of market-based financing mechanisms;
- (4) leverage private sector resources;
- (5) support accelerated development and deployment of new technologies; and
- (6) step up policy research, knowledge, and capacity building.
To date, implementation progress highlights include: - IFC, MIGA, and all Bank regions have developed climate change strategies or/and business plans;
- Climate change issues are being integrated into new sector strategies under preparation;
- More than 60 percent of all new Country Assistance or Country Partnership Strategies in FY 2009 substantively addressed climate-related issues;
- A growing range of activities and instruments to support climate resilient development and adaptation;
- Continued growth in energy efficiency and renewable energy financing;
- Significant progress with new and innovative financing such as the Climate Investment Funds, the Forest Carbon Partnership Facility, climate risk management products, and “Green Bonds”;
- Rapid build-up in research and knowledge: The 2010 World Development Report on Development and Climate Change was launched on September 15, 2009. The global study on the Economics of Adaptation to Climate Change is scheduled to be launched just before the Annual Meetings. Several regional and sectoral flagship reports that address climate change issues were recently completed;
- Knowledge dissemination for key emerging technologies, such as Concentrated Solar Power and Smart Grids; and
- Low carbon country case studies designed to explore options for lower carbon development. They have been prepared for Mexico, are in final review stages for Brazil and India, and are underway for South Africa, Indonesia, and Poland.
Climate Investment Funds - The Climate Investment Funds (CIF), approved by the Bank’s Board of Directors in July 2008, are a collaborative effort among the MDBs and member countries to bridge the financing and learning gaps between now and a post-2012 global climate change agreement. A sunset clause enables their closure after a new financial architecture has become effective under the UNFCCC regime. With more than US$6.3 billion in donor pledges and all programs now approved, the Climate Investment Funds have stimulated new low-carbon or climate resilient work in more than 20 countries.
- The CIFs, comprising two distinct funds, provide a comprehensive structure through which concessional financing may be made available quickly and flexibly for both low-carbon growth and climate resilience activities.
- The Clean Technology Fund finances the acceleration of transformation to low-carbon growth paths through the cost-effective mitigation of greenhouse gas emissions. Three investment plans have been approved for CTF co-financing, and work is underway on 11 more.
- The Strategic Climate Fund is made up of targeted programs with dedicated funding to provide financing to pilot new approaches with potential for scaling up: the Pilot Program for Climate Resilience, the Forest Investment Program, and the Scaling Up Renewable Energy in Low Income Countries Program.
The Pilot Program for Climate Resilience (PPCR) will explore practical ways to mainstream climate resilience into core development planning and budgeting, building on National Adaptation Programs of Action (NAPAs). It is strategically aligned with, and maintains strong links to, the Adaptation Fund established under the Kyoto Protocol. Work is underway to identify and begin activities in nine countries under the PPCR: Bangladesh, Bolivia, Cambodia, Mozambique, Nepal, Niger, Tajikistan, Yemen, and Zambia. Two regional pilot programs are in the Caribbean region and in the Pacific. Carbon Finance and Market Innovation The World Bank Group continues its pioneering work in carbon finance, currently managing 10 funds and two facilities, with US$2.3 billion in committed funds, of which more than US$1.9 billion is tied to emission reductions purchase agreements. The new facilities, the Forest Carbon Partnership Facility (FCPF)—for reduced emissions from deforestation and forest degradation (REDD)—and the Carbon Partnership Facility (CPF)—for programmatic and sector-wide intervention—are further broadening the scale and duration of carbon finance for developing countries. The FCPF, with pledges of US$109.8 million for REDD readiness and US$50 million for its carbon fund, is operational and includes 37 REDD country participants, with three countries having submitted REDD readiness proposals.
The World Bank Treasury supports the flow of innovative financing for “climate smart” investments, including through Uridashi “WB Cool Bonds” (five-year, US$-denominated notes tied to Certified Emission Reductions (CERs) generated by specified GHG-reducing projects in China and Malaysia), Green Bonds (US$665 million through two issuances for adaptation and mitigation projects); and Eco-3-Plus Notes (US$390 million in three transactions for “green” activities). Climate risk management products include the Caribbean Catastrophe Reinsurance Facility and weather hedges, and a Central American Weather Risk Management Program developed in Honduras, Guatemala, and Nicaragua. The Bank completed the inaugural sale of CERs for the UN Adaptation Fund in May 2009 and June 2009, raising US$20.2 million. Assessing Climate Risks and Greenhouse Gas (GHG) Emissions in the World Bank Group’s Portfolio The World Bank Group is giving considerable attention to strengthening the resilience and adaptation of developing nation economies and communities to increasing climate risks. Adaptation will require more resilient infrastructure, broader disaster preparedness and relief measures, and new agricultural technologies and practices to counter increased climate risks. For example, the World Bank Group is enhancing the development effectiveness of its operations by developing, testing, and increasing the application of screening tools for climate risk in hydropower and major water investments with long life spans, and in providing analytical tools and operational guidance for dealing with climate risks in agriculture.
To improve the knowledge base, capacity, and access to additional climate finance, the World Bank Group is developing methods to analyze climate risks and GHG emissions at the project level. Some of these tools, such as accounting for and valuing GHG emissions, are already used in the Global Environment Facility (GEF) and carbon finance projects. Their application is being extended, for learning and information purposes, to a larger pool of projects selected on a demand basis. In-House Efforts In 2006, the World Bank Group became the first multilateral development bank to become carbon neutral at its headquarters. The World Bank Group’s Washington, D.C., facilities, business travel, and conference facilities, as well as travel and hotels for delegates associated with the Spring and Annual Meetings, are carbon-neutral through a strategy of energy efficiency and reduction measures, carbon offsetting, and green power purchases. In addition, the World Bank Group has committed to an annual carbon emissions reduction target of 7 percent by 2011 for U.S.-based building operations. Calvert Funds, a leader in the socially responsible investment community, has listed Bank bonds as an eligible socially responsible investment. The World Bank Group continues to develop new bond products for investors who are concerned about the social and environmental impacts of their investments. For more information on the World Bank and climate change, please see the website:
www.worldbank.org/climatechange Media Contacts:
Jeff Brez, (202) 458-7628, jbrez@worldbank.org
Robert Bisset, (202) 458-5191, rbisset@worldbank.org
Roger Morier, (202) 473-5675, rmorier@worldbank.org Updated September 2009 |
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