How does the World Bank view climate change? Climate change is both a development and environmental issue. We are seeing the emergence of a global consensus that climate change is an issue that cannot wait and needs to be addressed sooner rather than later. From the recent release of the Intergovernmental Panel on Climate Change (IPCC), which provided additional scientific evidence about human induced climate change, to the launch of the Stern Report, which illustrates the economic impacts of inaction, the European Commission’s Energy Strategy that called for significant cuts in greenhouse gas emissions, the European Union’s 20 percent target for renewable energy by 2020, and the consideration given to climate change in the United States by the private sector, there is growing recognition and attention to both the risks of climate change and the new opportunities it creates to move towards a low carbon economy. What are the probable impacts of climate change? Developing countries are more vulnerable than rich countries, with poor people being the most at risk from the increased impacts of volatility in weather patterns (i.e., floods and droughts). Human-induced climate change is expected to negatively impact agricultural productivity throughout the tropics and sub-tropics, decrease water quantity and quality in most arid and semi-arid regions, increase the incidence of malaria, dengue and other vector borne diseases in the tropics and sub-tropics, and harm ecological systems and their biodiversity. In addition, the sea level rise associated with expected increases in temperature could displace tens of millions of people living in low-lying areas, such as the Ganges and the Nile deltas, and could threaten the very existence of small island states. What role is the Bank playing as a result of the G8 Plan of Action on climate change? The G8 Gleneagles Summit in Scotland two years ago asked the World Bank to produce a road map for accelerating investments in clean energy for the developing world, in cooperation with the other international financial institutions. The Clean Energy Investment Framework (CEIF) identifies the scale of investments needed: · To increase access to energy, especially in Sub-Saharan Africa, · To accelerate transition to a low carbon economy, and · To adapt to climate variability and change. According to the Framework, the power sector needs $165 billion in investments each year this decade. Only about half of that is financed. Tens of billions of US $ per year are also required to cover the incremental costs of transitioning to a low carbon economy. A CEIF Action Plan, which provides an update of work undertaken to date as well as actions planned by the World Bank Group in support of the CEIF, will be a background paper of the Development Committee (Ministers of Finance and Development) at the World Bank – IMF Spring Meetings in April 2007. What is the role of the carbon market and its potential as a source of financing for developing countries? Today, the World Bank is managing nearly $2 billion in nine carbon funds and facilities of which $1.4 billion has already been committed. In order to make a difference we need to go to a larger scale. The Carbon market needs to benefit developing countries more broadly. The UK’s Environment Secretary David Miliband recently indicated that carbon trading could generate in a few decades resource flows in the order of $200 billion a year, half of which could go to the developing world, that is to say about $100 billion per year. $100 billion may sound like a staggering amount to many people, and certainly it is a lot of money. But it is still only 7 percent of what the world spends on its annual oil bill of $1.5 trillion. The World Bank’s carbon funds are supporting low-carbon investments which include the destruction of industrial gases to the capture of methane in landfills, improved energy efficiency in steel production, bagasse co-generation, renewable energy (wind, geothermal, hydropower) and land use change, aforestation and reforestation. What are the Post Kyoto scenarios and the Bank’s role in the negotiations? The Bank is not a negotiating party. We are part of the UN system and as such we support the United Nations Framework Convention for Climate Change (UNFCCC) in different ways, through innovation, piloting new approaches, as we did in Carbon Finance, blending carbon finance, grants and loans, etc. What we know is that moving to a low carbon path will require more than investments alone. It will also require a long-term equitable global regulatory framework: · a framework in which rich countries show leadership by supporting developing countries in exchange for the global benefit of greener, smarter growth; · a framework that provides certainty to stimulate research and development in transformational technologies; and · a framework that allows carbon markets to thrive and bring financial flows to developing countries to the tune of $100 billion within a few decades. Whatever framework emerges for reducing carbon emissions, it should generate significant investment resources to help developing countries’ growth while improving conservation by using energy more efficiently and reducing the impact on the environment. In consultation with governments and private sector participants in these funds, the Bank is designing a new carbon finance facility that would purchase emission reductions beyond the regulatory period of the Kyoto Protocol (2008-2012). This will support long-term investments that reduce the carbon intensity of growth and help ensure continuity in the carbon market while international negotiations for a post 2012 framework continue under the UNFCCC. To what extent does the Bank invest in renewable energy? The share of renewable energy and energy efficiency lending by the World Bank Group more than doubled between 1994 and 2006, and our total energy lending is also growing. In the last 4 years it has increased from $1.5 billion to $2.5 billion per year in response to growing demands. At the Bonn Conference on Renewable Energy in 2004 the WBG adopted a target of a 20 percent average annual growth in energy efficiency and new renewable energy commitments between fiscal years 2005 and 2009. The Bank Group has gone well beyond that target in each year since. Overall, the Bank Group has committed more than $10 billion to renewable energy and energy efficiency in developing countries since 1990. What is the Bank doing to help poor and middle-income countries adapt to climate change? Developing countries and particularly the world poorest people would be the ones most harmed by changes of climate and extreme weather events such as floods, droughts, heat waves, and rising sea levels. The World Bank was among the leaders in addressing adaptation to climate risk by pioneering insurance work in the Caribbean, in Latin America, and in South Asia. The challenge now is to replicate these lessons more widely, especially in Sub-Saharan Africa and the Pacific Islands. The Bank is also discussing with its partners ways to start now to achieve development that is sustainable and resilient to climate variability – or ‘climate-proofing’ its development investments. The Bank’s adaptation work program is designed to enable the World Bank Group to scale up assistance to developing countries so that they can implement measures to adapt to the social and economic impacts of climate change. Three parallel programs of activities are designed to: (a) understand the nature and degrees of risks; (b) building capacity to manage risks; and (c) invest in adaptive measures to minimize and mitigate risks. Since the initial work on the CEIF began two years ago, resources, staffing and activities related to adaptation have grown rapidly. Adaptation related activity within the World Bank has increased from only about ten projects and country advice before the CEIF, to about 40 projects (loan and grants) in 30 countries and 40 technical assistance initiatives being implemented or planned. Updated: August 2007 |
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