As I join my colleagues this week in Cape Town (South Africa), to exchange positive experiences on climate resilience at the 2018 Adaptation Futures Conference, I could be somber. The world’s premier knowledge event related to adaptation is taking place in a city coping with its worst drought ever. Signs at the airport, throughout the city and the hotel warn: “Don’t Waste a Drop!”, “Every Drop Counts” or simply “Save Water.”
It does not happen often that one of the finest actors of our time tweets about a World Bank supported project and invites all his fans to have a look at the impressive pictures taken from space. In fact, I can’t remember having seen that before.
But this is what Oscar winner and climate activist Leonardo DiCaprio did a few months ago when the Noor Concentrated Solar Plant (CSP) in Morocco—the largest CSP plant in the world - was opened. Once finalized, in two years, it will provide clean energy to 1.1 million households. I visited the plant two weeks ago and it is truly an impressive site. The indirect benefits of the project might even be larger: it has advanced an important and innovative technology, it has driven down costs of CSP, and it holds important lessons for how public and private sectors can work together in the future.
I am proud that the World Bank, jointly with the African Development Bank and a number of foreign investors, supported this cutting-edge solar energy project. But it was made possible thanks to the Climate Investment Funds (CIF), which put in US$435 million to “de-risk” the investment, playing an essential role to kickstart the deal.
It's been two months now since the historic climate change conference, COP21, wrapped up in Paris, concluding with 195 countries pledging to take actions to keep global warming to under 2 degrees Celsius. This is an unprecedented achievement in the long history of international climate policy.
Compared to past negotiations, there was a different atmosphere in Paris. The negotiators were determined to find common ground rather than draw insurmountable lines in the sand. Investors lined up with billions of dollars in new financial commitments in addition to the suggested roadmap for developed nations to contribute to the needed $100 billion annually for mitigation and adaptation efforts.
And the private sector was more active and visible than ever before: CEOs from industries as far ranging as cement, transportation, energy, and consumer goods manufacturers announced their own climate commitments in Paris to decrease their carbon footprints, adopt renewable energy, and improve natural resource management.
This enthusiasm was especially apparent during the CEO panel that IFC, the organization I represent, convened during the Caring for Climate Business Forum by UN Global Compact. CEOs from client companies in India, Turkey, Thailand, and South Africa discussed their innovative climate change initiatives, investments, and technologies, and the challenges of scaling up their climate business.
As world leaders come together at the UN General Assembly to adopt new sustainable development goals, climate change activists gear up for Climate Week in New York City and the Pope brings his message to the United Nations, a shared vision of our future is coming into clear focus.
If we are to eradicate poverty, we need to tackle climate change. And since 2008, the $8.1 billion Climate Investment Funds (CIF) has been showing it is possible for countries to pursue sustainable development in a way that does just that.
Climate change is a threat to global development and to poverty alleviation. And yet, reducing greenhouse gas emissions is proving difficult because all players in an economy contribute to the problem. To make a difference, we must reduce our emissions in a coordinated manner.
This is no easy task. So where do we go from here?
One approach involves pricing the “externalities” that are contributing to climate change. Pricing externalities into the costs of production is nothing new. A classic textbook example is the paper mill that sits upstream from a fishing village.
Discharge from the mill pollutes the river, diminishing the fishermen’s catch. The mill freely uses the water of the river in its production of paper, but does not pay for the damage of the negative externality that it causes. To remedy the situation, regulations can be put in place to stop waste from going into the river – or the mill can pay a fine equivalent to the loss of the fishermen’s revenue.
The latter is an example of an externality priced into the cost of production. The same can be done to combat climate change.
In this case, carbon emissions are the externality that must be priced. Doing so provides a cost-effective and efficient means to drive down greenhouse gas emissions as the cost of such pollution goes up.
Some 2000 visitors from more than 100 countries are leaving Barcelona today at the end of Carbon Expo. The meeting, now in its 10th year, got off to a great start on Wednesday with the director of the World Bank´s Climate Policy and Finance unit, Mary Barton-Dock, welcoming the participants, followed by stimulating opening remarks from Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC).
Figueres urged the audience to continue building carbon markets and not wait for policy perfections. She also encouraged participants to continue making the case for carbon markets to policy makers, who have committed to a global agreement on emissions by 2015. She emphasized the importance for the private sector to more loudly voice their willingness and ability to move to a low-carbon growth trajectory and compared the carbon market to a tree planted just a few years ago, not possibly imagining that today it would have sprouted 6,800 projects registered with the UNFCCC in 88 countries, representing 215 billion dollars of investment.
However, Figueres also acknowledged the importance of domestic initiatives that were putting a price on carbon, at a time when a global agreement continued to challenge policy makers.
The next two weeks will see nearly 20,000 people descending on Durban for this year’s Climate Change negotiations. What might they achieve? Not much, if you believe some of the pessimistic assessments in the press. Are the gloomsters right? No, not necessarily.
What could be achieved?
Here goes… starting with the practical decisions that are on the agenda, and could affect peoples’ lives fairly quickly:
- A global system of technology centers that would provide access to knowledge and capacity building in developing countries for climate smart technology – which in turn could yield more investment, more jobs and lower costs.
- A system that would help developing countries prepare and finance their adaptation plans.
- A decision to incorporate agriculture fully into the Convention (something that, oddly, has never been done), allowing poor farmers to benefit from climate finance.
- Simpler rules on how to credit greenhouse gases from forests, in turn making it simpler to prevent deforestation, and for forest dwellers to access support.
- Common rules allowing city-wide approaches to dealing with climate change. (Many cities are showing more leadership than countries).
- New eligibility procedures that would help bring sustainable energy to the 65% of African households that currently have no electricity.
- Agreements that would encourage the development of a long-term networked carbon market that would lower the costs of addressing climate change and bring finance and technology to developing countries.
There is a risk that these measures will be crowded out by the big political decisions at Durban. This would be a mistake. While not game-changers individually, they are important building blocks towards an eventual global deal.
|An IFC investment helps provide clean, affordable water to underserved communities in developing countries.|
Many of the measures proposed in the World Development Report (WDR) 2010 will require substantial engagement with the private sector. The UN Framework Convention on Climate Change has estimated that more than 80 percent of the investment required for climate change mitigation and adaptation will have to be privately financed. For this to happen, the key requirement will be meaningful targets and supportive public policies.
One area in which private initiative will be critical is in the development and dissemination of new climate friendly technology. As the advance edition of the WDR states, "Technological innovation and its associated institutional adjustments are key to managing climate change at reasonable cost. . . . Mobilizing technology and fostering innovation on an adequate scale will require that countries not only cooperate and pool their resources but also craft domestic policies that promote a supportive knowledge infrastructure and business environment."
For several reasons, an increased focus on accelerating new technology is urgently needed.
A year ago I was assigned from a World Bank operations team providing support to countries in Europe and Central Asia on energy, climate mitigation and adaptation to work in a Bank administered trust fund, the Energy Sector Management Assistance Program (ESMAP), as a thematic coordinator for energy and climate change in this program. One of my roles is to coordinate a program that is providing support to six emerging economies—Brazil, China, India, Indonesia, Mexico and South Africa—that are proactively seeking to identify opportunities and related financial, technical and policy requirements to move towards a low carbon growth path.
The program has been underway for two years and individual country studies have been managed by World Bank operational teams. The governments of these countries have initiated country-specific studies to assess their goals and development priorities, in conjunction with greenhouse gas (GHG) mitigation opportunities, and examine the additional costs and benefits of lower carbon growth. This requires analysis of various development pathways—policy and investment options that contribute to growth and development objectives while moderating increases in GHG emissions.