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The World Region

A Possible Rebirth of the Carbon Market?

Chandra Shekhar Sinha's picture

 Priya.Balraju1/Flickr
Photo courtesy: Priya.Balraju1/Flickr

Many people have voiced pessimism over an international agreement to address climate change since the 2009 climate conference in Copenhagen fell short of expectations. The lack of a comprehensive, global effort to curb emissions; the failure by the United States to pass meaningful federal legislation, the continued recession in Europe; and, most recently, the election results in Australia have undermined efforts to put a price on carbon and dampened hope for market-based solutions to climate change.

The somber mood was evident at the Carbon Forum Asia, held in Bangkok between September 24 – 27.  But participants at the event also found a glimmer of hope.

Effective Weather Forecasting Strengthens Climate Resilience

David P. Rogers's picture

 Curt Carnemark/World Bank

The latest report from the Intergovernmental Panel on Climate Change, released late last month, provides the strongest evidence thus far of how humans influence the Earth’s climate.

Weather hazards, already a present reality, are likely to become more extreme as a consequence of a rapidly warming planet.  Floods, droughts, storm surges and heat waves threaten the lives and livelihoods of everyone, but disproportionately effect the poor who are often most vulnerable and exposed to disaster risks.

Building resilience in this new world requires investments on many fronts, including in the often-neglected and underfunded national meteorological and hydrological agencies that give nations the capacity and ability to warn and respond effectively to weather-related hazards.

What’s a Group of Indigenous Peoples Doing in a Baroque Castle in Germany?

Kennan Rapp's picture

 Shutterstock

It is not often that you find Indigenous Peoples from around the world meeting in one of the most important baroque castles of Germany. Perched on a cliff, with a natural moat created by the river Lahn, the castle of Weilburg allows a bird’s eye view of the surrounding forest landscape.

These forests were not always lush and thriving. Centuries before, the construction of the castle led to massive logging in the adjacent forests and finally the ruling aristocrat ordered restricted use of timber for construction and introduced a new building code. As a result, Weilburg became the national center of a novel construction technique using clay and straw, which is now seen in towns across Germany.

Coincidently, a new approach to tackling deforestation is also what 80 Indigenous Peoples’ leaders, government representatives, civil society practitioners and international experts from 24 countries discussed this week at a three day workshop in Weilburg’s castle.

The central challenge was to identify practical approaches to ensure the full and effective participation of Indigenous Peoples in REDD+, a performance-based mechanism for reducing emissions from deforestation and forest degradation. The meeting was jointly organized by the Federal Ministry for Economic Cooperation and Development (BMZ), the Forest Carbon Partnership Facility (FCPF) and the UN-REDD Programme.

World Bank Green Bonds Surpass US$4 Billion Mark – Reflections Five Years On

Heike Reichelt's picture

 Dave Lawrence/World Bank

Since the launch in 2008, the World Bank’s green bonds have grown quickly and reached an important milestone in August. Earlier, this month, the World Bank launched a US$550 million green bond bumping the total amount of World Bank green bonds issued to over $4 billion dollars since the green bond program began. This milestone prompted us to pause and take stock of the program and the new market it helped start.

As countries move toward a low-carbon, climate resilient future, the appetite for innovative climate finance is growing. One way to fill this financing need is through the capital markets. The World Bank’s green bonds, first launched in 2008, have been recognized as a catalyst for the growing market of climate bonds. This market is on its way to becoming an important source of funding for countries looking to grow in a clean and sustainable manner. A sampling of expected project results – over 165,000 tons of carbon dioxide equivalent emission reduction benefits per year in Belarus, and 800,000 tons per year in China, reducing vulnerability to climate-related flooding and water scarcity flood events for about 500,000 farmer households in Indonesia, and producing 6MWhs of electricity out of a landfill in Jordan – highlights the crucial role green bonds and other innovative funding mechanisms could play in financing the fight against climate change.

The World Bank started issuing green bonds in 2008, responding to a group of Scandinavian pension funds interested in supporting activities that address mitigation and adaptation to climate. Skandinaviska Enskilda Banken (SEB) was the lead manager of this inaugural green bond.

Increasing Flood Risks Create Major Challenges for World's Coastal Cities

Stéphane Hallegatte's picture

 NOAA via Wikimedia
The flooding of New Orleans, caused by Hurricane Katrina in 2005, illustrates the vulnerability of cities that are highly dependent on coastal defenses. Photo: NOAA [http://commons.wikimedia.org/wiki/File:Katrina-new-orleans-flooding3-2005.jpg]

Increasing flood risks create a major political and institutional challenge for the world’s coastal cities, as ambitious and proactive action at the local level over the next decades will be needed to avoid large-scale flood disasters. However, the implementation of flood risk management policies meets many obstacles.

In a recent study written with colleagues Colin Green, Robert Nicholls and Jan Corfee-Morlot as part of an OECD project on urban vulnerability, we estimate how flood risks could change in the future in 136 coastal cities, in response to increasing population and wealth, local environmental change, and climate change. We find that because current flood defenses and urbanization patterns have been designed for past environmental conditions, even a moderate change in sea level is sufficient to make them inadequate, thus magnifying flood losses to catastrophic levels. If no action is taken to reduce flood vulnerability, most coastal cities would become inhospitable and dangerous places to live, with annual losses in excess of US$1 trillion dollars.

What can be done?

Our analysis suggests that upgrading defenses could mitigate these losses and the impacts of rising sea levels. However, these upgrades need to include a package of risk management policies. First, coastal defenses should make use of the protection the environment can offer for free: Marshes, seagrass beds, coastal and kelp forests, and coral reefs provide natural buffers that absorb the energy from waves and storms, making it easier and cheaper to protect urban development. In addition artificial constructions are also required to provide full protection. We are not only talking about dykes: a city surrounded by dykes will need pumping systems to drain rainfall water, and a harbor will need moving barriers to let ships in and out of the port.

Communicating Climate Risks to Investors: the Next Major Ratings Failure

Alan Miller's picture

 Reserves of coal outside a power generation plant. - Photo: Shutterstock

Only a few years ago, the failure to properly quantify and communicate the risks of a widely traded commodity, mortgage-backed securities, caused major damage to the US and ultimately the global economy. According to the IMF, total losses will approach $4 trillion (pdf). A significant share of the losses were incurred by pension funds and insurance companies typically viewed as among the more risk-averse and cautious segments of the investment community.

A new report by the Carbon Tracker Initiative and the Grantham Research Institute on the Environment and Climate Change evaluates the failure to properly value the risks of climate policy to companies with major fossil fuel reserves and finds a similar potential for massive financial fall-out. They conclude that “Between 60-80% of coal, oil and gas reserves of publicly listed companies are ‘unburnable’ if the world is to have a chance of not exceeding global warming of 2°C.” (A short video explaining the research and mapping the amounts of investment at stake in different countries is available online).

Climate Change: Lessons in Cross-Sector Collaboration

Lucia Grenna's picture

 The opening panel at the Alcantara dialogues with speakers from the worlds of fashion, architecture, production, government and international development. Photograph: Connect4Climate/Leigh Vogel
The opening panel at the Alcantara dialogues with speakers from the worlds of fashion, architecture, production, government and international development. Photograph: Connect4Climate/Leigh Vogel

Climate change is a pressing issue. Everyone knows that, certainly the development community and they don't need to be reminded of it. What they do need reminding of is that no one group can possibly solve this problem.

Strategic collaborations around climate change issues and action are essential. As World Bank president Jim Yong Kim said recently: "To deliver bold solutions on climate change, we need to listen to and engage broader and more diverse audiences." This is what the Connect4Climate (C4C) team has set out to do since the program began in 2011.

C4C is a global partnership program dedicated to climate change and supported by the World Bank, Italy's environment ministry and the Global Environment Facility (GEF). We operate as a coalition of more than 150 knowledge partners ranging from major UN agencies to academic institutions to media organizations and NGOs.

Our aim is to convene different organizations, groups and individuals who wouldn't normally speak to one another, around the table to talk about climate change. The first audience we had to convince of the merits of building relationships and networks outside of those which seem immediately relevant, was our own within the World Bank.

Shaping the Next Generation of Carbon Markets

Rachel Kyte's picture

 Smoke coming out of two smokestacks at a factory in Estonia. - Photo: World Bank/Flickr

Right now, the carbon markets of the future are under construction in all corners of the world.

China is determined to pursue low-carbon development and is embracing the market as the most efficient way to do so. Wang Shu, the deputy director of China's National Development and Reform Commission, told us this week that he sees the "magic of the market" as the most efficient way to drive China's green growth.

Five Chinese cities and two provinces are piloting emissions trading systems with the goal of building a national carbon market. Chile is exploring an emissions trading system and focusing on energy efficiency and renewable energy. Mexico is developing market-based mechanisms in energy efficiency that could cut its emissions by as much as 30 percent by 2020. Costa Rica is aiming for a carbon-neutral economy by 2021.

Each of the countries pioneering market-based mechanisms to reduce their domestic carbon emissions are leaders. Bring them together in one room, and you begin to see progress and the enormous potential for a powerful networking domestic system that could begin to produce a predictable carbon price -- a sina que non for the speed and scale of climate action we need.

That's happening this week at the World Bank.

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Climate Finance Untangled

Barbara Buchner's picture

Courtesy: CPIGlobal leaders have spoken strongly on the urgent need for climate action, putting it back on top of the 2013 agenda. During his inaugural address and State of the Union speech, President Obama gave clear signals about his intentions to address this issue in his second term. At the World Economic Forum in Davos, president of the World Bank Group Jim Yong Kim reminded economic leaders about the potentially devastating impacts that could occur in a world 4°C warmer by the end of the century.

Unlocking finance is an essential part of avoiding that future. But, before leaders can determine how much more money is needed, they need to establish how much is already flowing, what the main sources are, and where it’s going.

These are the key questions my team and I at Climate Policy Initiative aimed to answer with the release of the “The Landscape of Climate Finance 2012”. Our analysis estimated global climate finance flows at an average $364 billion in 2011. To put this in context, according to the International Energy Agency, the world needs $1 trillion a year over 2012 to 2050 to finance a low-emissions transition, so current finance flows still fall far short of what is needed.

Private finance dominates but public finance plays a key role

A couple of weeks ago in a freezing Washington I had the opportunity to share the findings of the report, and the Climate Finance Flows Diagram (or “spaghetti” diagram, so-called for its tangle of finance flows) to an expert audience of practitioners at the Word Bank’s premises.

Confirming last year’s findings, we found that private finance – predominantly of domestic nature – represented the lion’s share of this total, almost 74%. Public funds, estimated at $16 to $23 billion, played a pivotal role in catalyzing private investments, as well as providing bilateral aid to developing countries.

Engaging with Indigenous Peoples on forests

Benoît Bosquet's picture

A little while ago, I blogged about an unprecedented meeting of Indigenous Peoples’ representatives from 28 countries that took place on the idyllic islands of Guna Yala, Panama, in September 2011.

One and a half years later, it is fair to say that we have come a very long way as we welcome over 30 representatives of Indigenous Peoples and southern civil society organizations from Latin America, Africa, and Asia-Pacific for a workshop on the Carbon Fund of the Forest Carbon Partnership Facility (FCPF) here in Washington, DC this week. The Bank serves as the Trustee and the Secretariat of the FCPF, a global partnership that is helping countries draft REDD+ readiness plans and will provide carbon payments to countries that meet certain targets.

Since our initial meeting in Panama, Indigenous Peoples’ representatives adopted an Action Plan, travelled the world to meet, dialogue and learn, and gathered in regional follow-up meetings to build capacity and prioritize demands.

When I look back at the beginning of the series of dialogues with Indigenous Peoples, I remember that discussions mainly revolved about the role of Indigenous Peoples in REDD+ (which stands for Reducing Emissions from Deforestation and Forest Degradation). Indigenous Peoples were concerned that REDD+ could become a means for pushing them off their ancestral lands. With their livelihoods and cultural identity deeply connected to the forest and the land, losing access to them would mean losing everything. At the time, our engagement centered on broad questions such as, How do we ensure that REDD+ will not undermine customary rights to land?

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