April 19, 2007—Ministers of Development and Finance from industrialized and developing countries, in Washington for the Bank-IMF Spring Meetings, generally endorsed the Action Plan for the deployment of the Clean Energy for Development Investment Framework (CEIF).
According to Agustin Carstens, Chairman of the Development Committee and Minister of Finance, Mexico, “the ministers noted that much of the future increase in demand will originate in developing countries, and that oil will continue to be the single greatest fuel source. It is thus vital to create a framework that supports investment and innovation in clean energy technologies.”
The CEIF, a platform for increasing private and public sector investments in clean energy, was discussed by the Development Committee, the governing body of the World Bank.
“We look forward to seeing progress on additional financing and implementation of the energy access agenda in Sub-Saharan Africa,” the ministers said in their final communiqué. The Development Committee also encouraged “the application and further development of existing financial instruments to promote the transition to a low carbon economy, including increased support for cost effective, affordable, efficient and renewable energy.”
The ministers recommended “mainstreaming considerations of climate variability and change into development projects”, asked the Bank to continue the “consultation and collaboration with the private sector,” and said work should continue on “an action plan for strengthened collaboration with the Regional Development Banks.”
According to the Action Plan, total energy support to developing countries from all sources (WBG, Carbon Finance, GEF) is expected to top $10 billion in the three year period since the CEIF was initiated (FY06-08), up from $7 billion over the previous three years.
For Germany, chair of this year’s G-8 process, “it is of top priority that the World Bank takes a leading role in addressing the issues of energy for development and climate change consistently.” Heidemarie Wieczorek-Zeul, Federal Minister for Economic Cooperation and Development, Germany, added that “the Action Plan's concentration on World Bank activities is therefore welcome, and the clear commitment to donor coordination, country ownership and alignment throughout the document is appreciated.”
The CEIF Action Plan aims to support increasing the number of households with access to modern energy in sub-Saharan Africa to 35 percent by 2015 and 47 percent by 2030, up from 25 percent currently. Meeting these targets will require an increase in financing from $2 billion to $4 billion per year.
The government of the United Kingdom expressed support to the CEIF through a statement signed by Gordon Brown, the Chancellor of the Exchequer, and Development Minister Hillary Benn. “The UK strongly supports the World Bank's continued work with the Regional Development Banks and the private sector on an Investment Framework for Clean Energy and Development. We welcome the World Bank Group Action Plan on taking forward the Investment Framework. This is a strong platform from which the Bank can make the necessary changes in its activities to help address the challenges of climate change.”
The Action Plan supports the transition to a low carbon economy, especially in the “Plus 5” countries (Mexico, Brazil, China, India, and South Africa) by expanding knowledge and investment support. World Bank Group lending for low carbon projects has grown from roughly $633 million per year in FY03-05, to about $1.7 billion in FY06 – representing, in FY06, 37 percent of new commitments, as compared to 14 percent in FY03.
Li Yong, Vice Minister of Finance, People’s Republic of China, said that “a long-term and stable global clean energy policy framework should reflect the principle of common but differentiated responsibilities. This principle not only demonstrates developed countries’ responsibilities to compensate for their greenhouse emissions to date, but also ensures that developing countries will be able to contribute to the global emission reduction without sacrificing their economic development, and achieve clean development.”
“We support the proposed Carbon Continuity Fund in the Bank’s Action Plan,” the Vice Minister added, “and urge the international community to reach the consensus as soon as possible.”
India, for its part, underlined the role the Bank is playing in moving a low-carbon economy agenda forward. “We welcome the steps proposed for transition to a low carbon economy, and have embarked on a Bank assisted country study on the subject. The international community has to fulfill its part and provide additional resources if economic development is not to be jeopardized by the transition to a low carbon economy,” said Ashok Jha, Finance Secretary, India.
Regarding the impacts of climate change, the document addressed by the Ministers emphasized the goal of the Action Plan “to assist developing countries reduce their vulnerability to climate variability and projected changes in climate by developing tools and methodologies to ‘climate-proof’ investments, and by increasing investment.”
For Trevor Manuel, Finance Minister, South Africa, “the impacts of greenhouse gases and the transition to low carbon economies pose special challenges for low income countries. The Global Environment Fund should be complemented through the search for more flexible instruments to help countries deal with adaptation to climatic variability and strengthening of policies to help countries deal with these emerging threats.”
The Ministers agreed that a review of the progress of the CEIF should be part of the Annual Meetings scheduled for October this year.
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