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.
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.
On the outskirts of Marrakesh’s historic medina, amid bustling construction and new housing developments, the Partnership for Market Readiness’ governing group gathered this month for its final meeting of 2013.
After nearly three years of operation, this group of 30 countries has much to be proud of.
So far, nearly $30 million in grant funding has been allocated to 16 nations to support the design and development of market approaches to greenhouse gas emission reductions. A one-of-a-kind platform to exchange ideas and lessons on market approaches to mitigation has been created. And a technical work program has been launched to support country implementation of critical tools such as data management systems, offset standards, and policy mapping exercises.
In just one day, the sun delivers about as much energy as has been consumed by all human beings over the past 35 years. So why haven’t we exploited more than a tiny fraction of this potential? There are many reasons: cost, storage, transmission, distribution, entrenched subsidies and technological challenges are but a few of them.
But the reasons not to take advantage of renewable energy are falling away. A report published this week by the Intergovernmental Panel on Climate Change (IPCC) found that close to 80% of the world’s energy demand could be met by tapping renewable sources by 2050, if backed by the right enabling public policies. I served as a Coordinating Lead Author for the Policy and Deployment chapter of the report, as well as member of the Summary for Policy Maker’s team, and I can attest to how much rigorous analysis and effort comparing data and sources went into this process and document.
The same Special Report on Renewable Energy Sources and Climate Change Mitigation found that the technical potential of renewable energy technologies “exceeds the current global energy demand by a considerable amount—globally and in respect of most regions of the world.”
These encouraging findings were released Monday, May 9, after being studied carefully, examined, and then approved by member countries of the IPCC in Abu Dhabi, United Arab Emirates.
The December 2011 Climate Conference (COP 17) in Durban, South Africa, presents a tremendously important opportunity to advance both the globally critical goal of climate protection, and to do so synergistically with a local agenda of sustainable development and poverty alleviation.
The COP 16 meeting in Cancun last year, while in many ways an important step forward, particularly on the role of energy efficiency, did not result in decisions on the global accord, and much remains to be done. One remedy for this situation may be to achieve local successes that demonstrate how climate protection and clean and efficient uses of energy can directly benefit the poor.
The fact that the COP will take place in Africa, which has the highest unmet need -- and demand for reliable and affordable energy access – brings to a head the need to find new tools and paths that can meet both goals. As the plans for the Durban Conference evolve, there must be a premium on action that implements this strategy.
A new multi-donor program which is part of the Climate Investment Funds and is managed by World Bank Group and Regional Development Banks, may be an ideal component of that plan: the new Scaling up Renewable Energy in Low-Income Countries (SREP) program, provides an exciting avenue to meet both goals. Six pilot countries, Ethiopia, Honduras, Kenya, the Maldives, Mali and Nepal, were selected for initial blocks of funding to bring clean energy technologies rapidly to meet the unmet demand for energy. Discussions are underway to bring in funding to double this pilot group.
Last month in South Africa, I had the opportunity to see just how a program like the SREP could build on both local innovative capacity, and the political attention that COP17 can bring to climate and development needs. The World Bank office in Pretoria hosted a meeting of African Ambassadors to South Africa, where I had the opportunity to discuss with them (see picture above) both market changes taking place in the region, and technology options to rapidly bring clean energy to the poor.
Negotiators have worked through the past three nights in search of agreements that all nations can sign up to (see my last blog). At 3 am this morning they reached consensus on a package of decisions that represents progress in the journey towards a global deal.
But most of those in Cancun have more down-to-earth reasons for being here. They’re here to initiate action – to share experiences, learn from best practice, forge new partnerships, and launch new programs.
Here’s a sample from the past 48 hours of some of the action that we’ve been moving forward, when many heads of state, ministers and global leaders such as Ban Ki Moon and Bob Zoellick were in town.
Developing Countries push the frontiers on Carbon Markets:
A new Partnership of Market Readiness was launched by the World Bank and by ministers from 15 countries with the purpose of supporting innovation in developing nations on market based instruments. Countries like China, Chile, Columbia, India, Indonesia, Mexico, Ukraine and many others – are introducing their own market based instruments. This new facility – now US$30 million but expected to rise to US$100 million – will provide technical support to these efforts, and seek to share practical lessons for others to follow.
This is part of a much bigger movement on carbon markets here in Cancun. The Clean Development Mechanism is in need of reform so that transactions costs are reduced and low income countries get better access to funds. [So far around US$25 billion has flowed to developing countries through carbon markets, but only 2% of this goes to Africa.] The High level Advisory Group on Finance estimates that US$30-50 billion could flow annually to developing countries through the offset markets by 2020 with moderate progress in policies. The fact that so many leading developing countries are now creating their own internal markets could help hugely in driving down the cost of mitigation, bringing in new technology and, over time, building a linked global market