Climate change presents serious and growing risks to the global economic system, with a number of recent studies showing the impact that climate change is already having on livelihoods and business models. For example, extreme weather, which can be exacerbated by climate change, caused economic losses of US$2.6 trillion from 1980 to 2012.
Addressing these risks is an economic and societal imperative. At the same time, it presents opportunities. Climate-smart investments in efficient, clean infrastructure, clean energy, resilient agriculture, and water resources offer stable, attractive returns for investors and communities when the conditions are right.
This week, I was in Lima at the Peruvian government’s Climate Finance Week and found many reasons to be optimistic that we can turn the climate challenge into an economic opportunity. This blog post shares some key themes that I took away from the event.
The World Health Organization kicked off its global high-level conference on Health and Climate Change this week in Geneva. What makes this conference particularly significant is the fact that while the WHO has been working on this agenda for the past 20 years, this is the first time it has led a conference with so many decision-makers involved.
The compelling state of scientific evidence – as documented in a separate chapter of the Intergovernmental Panel on Climate Change’s Fifth Assessment report – has lent a certain urgency to the climate change agenda in the health community. The audience for this conference included around 300 senior level participants from various WHO member countries, mostly from the health sector, including a number of ministers.
I am standing on the shore of Bến Tre Province in the Mekong Delta in Vietnam. One of the first questions is, would I be able to stand here in a few months’ time?
If you look just a few hundred meters out to sea, that was cultivable land up to three years ago. In the last three years this village has lost half of its land. Sea incursion is just one of the complex challenges that the authorities and the people who live in the Mekong Delta have to juggle at the same time. So the Mekong Delta, the decisions that are made here are affected by the upstream decisions of hydroelectric planning, irrigation, and other freshwater use. By the time the water gets here, some of that freshwater which is needed is no longer available.
In the rarified atmosphere of Aspen, Colorado, last week, I attended the 11th American Renewable Energy Day Summit. Over the years, the event has grown into a fascinating brainstorming and networking event bringing U.S. domestic and international figures in the renewable energy business together – financiers, technology entrepreneurs, government officials, activists, and scientists from across the energy challenges and opportunities.
We talked about international climate negotiations and renewable energy progress in China and India, but the strongest focus was on the challenges and great potential for U.S. innovation and how to bring climate change and energy policy back from partisanship.
Forward-thinking leaders from across business and government are speaking out in support of a price on carbon to lower climate-damaging emissions and encourage clean-energy innovation. Many work within carbon pricing systems found in more than 60 countries, cities, states, provinces, and regions – including seven local carbon markets in China – and they see positive effects in places such as British Columbia.
Businesses today understand that they must assess their supply chains for climate risk. A formal price on carbon provides market certainty for better decision-making and climate-smart investments for the future. That's why more than 250 corporate leaders, including Unilever, Ernst & Young, GDF Suez, Swiss Re, Statkraft, and Vattenfall, have expressed their support for pricing carbon through the Putting a Price on Carbon statement, and the list is growing.
We’re about 16 months away from the 2015 UN climate meeting in Paris, intended to reach an ambitious global agreement on climate change. Now, more than ever, there is a need for innovation to scale up climate action.
The Bank’s Carbon Partnership Facility (CPF) is helping blaze that trail.
The role of the CPF is to innovate in scaling up carbon crediting programs that promote sustainable, low-carbon economic growth in developing countries. In its first set of programs, the CPF moved past the project-by-project approach to larger scale through the Clean Development Mechanism’s Programme of Activities, catalyzing investment in methane capture from landfills, small-scale renewable energy, and energy efficiency.
By Stephanie Pfeifer, Institutional Investors Group on Climate Change (Europe); Nathan Fabian, Investor Group on Climate Change (Australia/New Zealand); Chris Davis, Investor Network on Climate Risk (North America); and Alexandra Tracy, Asia Investor Group on Climate Change.
The British economist Lord Nicholas Stern has labelled climate change “the greatest market failure the world has ever seen.” Failing to put a price on carbon emissions leaves the market with no way to address the harm created by these emissions. And with no cost attached to a harmful activity, participants in the market have no incentive to pursue less harmful alternatives. Thankfully, this is changing.
About 40 national and more than 20 sub-national jurisdictions globally have implemented or are scheduled to implement carbon pricing schemes. The world’s emissions trading schemes are valued at about $30 billion, with China home to the world's second largest group of carbon markets, covering the equivalent of 1,115 million tons of carbon dioxide emissions, after the 2,309 million tonnes covered by the EU’s Emissions Trading Scheme.
This progress is good news, and furthering the spread of carbon pricing is essential. Putting a price on carbon reduces emissions and the costs associated with these emissions, costs that end up being borne by everyone, including companies and societies, through an array of impacts resulting from climate change.
In January, World Bank Group President Jim Yong Kim urged the audience at the World Economic Forum in Davos to look closely at a young, promising form of finance for climate-smart development: green bonds. The green bond market had surpassed US$10 billion in new bonds during 2013. President Kim called for doubling that number by the UN Secretary-General's Climate Summit in September.
Just a few days ago—well ahead of the September summit—the market blew past the US$20 billion mark when the German development bank KfW issued a 1.5 billion Euro green bond to support its renewable energy program.
Someone once told me that all it takes is that first visit: once you have the dust of Africa on your feet, it will pull you back, again and again. This was before I knew that I would one day be part of the team leading delivery of the annual Africa Carbon Forum.
And so, it has come to pass: every year, and this was the sixth edition, the forum pulls its stakeholders together to build capacity on issues of climate change, and to help raise a voice for Africa on issues like the UN climate negotiations or policy discussions on the revision of the UN’s Clean Development Mechanism (CDM).
Since it was established, the Africa Carbon Forum has grown into what is often described as the leading event in Africa for players in energy and carbon markets. In the last four years, we have met in Marrakech, in Addis Ababa, in Abidjan, and now in beautiful Windhoek, where the splendid weather last week reminded me of just what we stand to lose if our mitigation efforts are not successful. I was not as fortunate, but a wonder-struck colleague spoke about the family of cheetahs that ran past the car as he drove in from the airport. Are we one of the last generations that will see these beautiful creatures in the wild because their habitat will change due to new climate patterns?
At the Forum's opening plenary (pdf), the Namibian Minister for Environment and Tourism, the Honorable Uahekua Herunga, urged us to work together to make carbon markets work for Africa and prepare the continent for future carbon trading. But, he insisted that developed countries need to act first and that mitigation actions should be taken within the UN’s Framework Convention on Climate Change (UNFCCC). He asked that the forum sends a powerful message from Africa to the 2015 UN climate meeting in Paris about mitigation opportunities in Africa.
From July 1, as part of the IDA-17 Replenishment all new operations funded by the International Development Association, IDA, the World Bank’s fund for the poorest countries, are to be screened for short and long-term climate and disaster risks (pdf) and, where risks exist, appropriate resilience measures are to be integrated.
Additionally, all IDA Country Partnership Frameworks are required to incorporate climate and disaster risk considerations into the analysis of a country’s development challenges and priorities and, when agreed with the country, incorporate such considerations into the content of the programs and the results framework.This is a major step forward in helping the poor and most vulnerable, those most at risk from climate change, prepare for the impacts of our rapidly warming world.
Bank staff can now access a new suite of online tools to help them identify potential risks to the projects and country plans they’re working on.
The new climate and disaster risk screening tools are exactly what they sound like: they provide due diligence at the early stages of project design to ensure that climate and disaster risks are flagged. Screening is a first, but essential, step to make sure that these risks are assessed and managed as we work on climate and disaster-resilient development.