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AT A GLANCE

·         Addressing climate change is critical to development and poverty reduction.

·         The poorest countries stand to suffer the earliest and the most from the effects of climate change.

·         An effective response to climate change must combine both mitigation of global GHG emissions—to avoid the unmanageable—and adaptation at the regional, national, and local levels—to manage the unavoidable.

·         Climate change should not be allowed to halt or slow the economic progress of developing countries.  There is a double challenge of reducing global carbon emissions while meeting the energy needs of the world’s poor.

·         The World Bank Group is working to help poor countries access additional concessional funding and suitable technologies to enable them to cope with climate change and still achieve economic growth, poverty reduction, and the MDGs.

The Poor Are Disproportionately Affected

Developing countries are more vulnerable to climate change than rich countries, 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 impact 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 the Nile deltas, and could threaten the very existence of small island states.

Development and Climate Change: A Strategic Framework for the World Bank Group

In 2005-2007, the World Bank 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 carbon intensity of growth; and (iii) adapt to climate variability and change.

At the 2007 Annual Meetings, the Development Committee welcomed the progress made in implementing the CEIF and called on management to develop a comprehensive strategic framework for Bank Group engagement on climate change while retaining the focus on overcoming poverty. Produced over the last year through extensive consultations with a full range of stakeholders, Development and Climate Change: A Strategic Framework for the World Bank Group will be discussed at the 2008 Annual Meetings by the Development Committee.

Building on the WBG’s core mandate and competencies, the Framework will help the 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 WBG 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 WBG, to be addressed through the Sustainable Infrastructure Action Plan, the Africa Action Plan, and the forthcoming Energy Sector Strategy. The WBG 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.

Development and Climate Changeis a strategic framework based upon six action areas, where the 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.

The development of the Strategic Framework included extensive consultations with stakeholders that included developing country clients, development partners (UN agencies, Regional Development Banks, bilateral donors), the private sector, and civil society through September 2008. It included an assessment of the WBG’s comparative advantage in the context of the roles and responsibilities of multiple international players and its contribution to the UNFCCC process.

The Imperative of Increasing Energy Access

The International Energy Agency estimates baseline annual energy investment needs in developing countries to an average of around $450 billion over the next 25 years. Readily identifiable funding is available for about 60 percent of this. In addition, tens of billions of US dollars per year are also required to cover the incremental costs of transitioning to a low carbon economy. In March 2007, the World Bank set goals to:

• increase access to electricity in Sub-Saharan Africa from about 25 percent to 35 percent by 2015 and 47 percent by 2030;
  
• reduce greenhouse gas emissions from the current business-as-usual path through increased lending for clean energy projects; and
  
• pilot adaptation instruments in order to mainstream climate change adaptation into the development process.

Low carbon country case studies, designed to pave the way for a transition to a low carbon economy, are underway for India, Mexico, Brazil, South Africa, and Indonesia.

Climate Investment Funds

The Climate Investment Funds (CIF), approved by the World Bank’s Board of Directors on July 1, 2008, are a collaborative effort among the Multilateral Development Banks (MDBs) and countries to bridge the financing and learning gap between now and a post-2012 global climate change agreement. On September 26, 2008, donor countries made pledges exceeding US$ 6 billion to the funds over a three year period.  The CIFs will provide financing additional to existing Official Development Assistance (ODA) to enable countries to continue on their development path and achieve the Millennium Development Goals.  A blend of financial instruments will be used in a tailored approach to achieve maximum impact in a given country.

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.

Clean Technology Fund:  will accelerate transformation to low carbon growth paths through cost-effective mitigation of greenhouse gas emissions. Innovation and deployment of clean technologies at scale will be central to success.

Strategic Climate Fund: will be comprised of targeted programs with dedicated funding to provide financing to pilot new approaches with potential for scaling up.

Global Gas Flaring Reduction (GGFR)

Through the Global Gas Flaring Reduction (GGFR) partnership, the World Bank Group is helping oil producing countries and companies to increase the utilization of natural gas, which would otherwise be flared or released to the atmosphere and thus harm the environment.  The GGFR partnership estimates that about 150 billion cubic meters of gas is flared every year (equivalent to about 30 percent of the European Union’s annual consumption of gas and 25 percent of US consumption), releasing about 400 million tonnes of CO₂.  The World Bank Group has eight projects under active preparation in five countries to address this problem.

Assessing Climate Risks and GHG emissions in the World Bank Group’s Portfolio

The Bank will give considerable attention to strengthening resilience of developing nation economies and communities to increasing climate risks and adaptation. Adaptation will require more resilient infrastructure, broader disaster relief and preparedness measures, and new agricultural technologies and practices to counter increased climate risks. For example, the Bank will enhance the development effectiveness of its operations by screening for climate risk in hydropower and major water investments with long life spans.  It will also facilitate customized applications of climate risk insurance products.

To improve the knowledge base, capacity, and access to additional climate finance, the WBG 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 GEF and carbon finance projects. Their application will extend, for learning and information purposes, to a larger pool of projects. The Bank will select pilot projects on a demand basis and will work in close cooperation with clients and local institutions.

In-House Efforts

In 2006, the World Bank Group became the first multilateral development bank to become carbon neutral. 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 Bank Group has committed to an annual carbon emissions reduction target of 7 percent by 2011 for our US-based building operations. Calvert Funds, a leader in the community, has listed World 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.

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For more information on the World Bank and Climate Change, please see the website:

www.worldbank.org/climatechange

Media Contacts:

Roger Morier: (202) 473-5675
Email: rmorier@worldbank.org

Robert Bisset: (202) 458-5191
Email: rbisset@worldbank.org    

Jeff Brez:  (202) 458-7628
Email: jbrez@worldbank.org

Updated October 2008