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Carbon Finance

China Gets Ready for a New Carbon Era

Wang Shu's picture

 Rush hour traffic on a road in Beijing, China. - Photo: Shutterstock

Also available in Chinese

The 5th Assembly of the World Bank’s Partnership for Market Readiness (PMR) is coming to an end after rich and rewarding meetings in Washington DC this week. I had the opportunity to present China’s final Market Readiness Proposal (MRP) (pdf), or in more simple language, China’s proposal to build a national emission trading system (ETS). Together with China, the PMR also received proposals from Chile, Costa Rica and Mexico on their initiatives. (Also read: Can Carbon Taxes Be Effective?)

From the Chinese perspective, our MRP serves as a summary of the Government’s initial thoughts on how a domestic ETS would be established to cover the whole country. For this to happen, a lot of work needs to be done, and this proposal provides a framework and roadmap to guide us on our journey. We are expecting domestic and international institutions, experts and stakeholders from different levels to be involved in this design process. Above all, we hope to draw on the experience of existing carbon markets around the world as well as from the seven pilot ETSs - comprising five cities and two provinces - set to start this year in China. Facilitating continuous technical dialogues, PMR serves as a knowledge exchange platform for our team from China and all the participant countries. This is a unique and valuable experience. 

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?

Doha: keeping hope alive - just

Rachel Kyte's picture


COP President Abdullah bin Hamad Al-Attiyah gavels through the decision text. Photo courtesy IISD

The UN climate conference in Doha this past week kept the fight to combat global warming alive – 194 countries agreed to extend the Kyoto Protocol and to put in place a new agreement by 2015. The extension avoids a major setback in climate negotiations, but it does not fully reflect the urgency of the problems facing the warming planet.

To understand the true scale of those problems, read the new report Turn Down the Heat: Why a 4°C Warmer World Must Be Avoided. Its review of the latest climate science provides a powerful snapshot of what the future could be and warns that the world is on path to a 4°C (7.2°F) warmer world by century’s end if we don’t take action.

The report was referenced repeatedly during COP 18 and is one of several reports helping to put science at the center of policy making.

As is often the case in large international conferences these days, the greatest signs of momentum in Qatar were not inside the negotiating rooms but in the meeting halls where the informal process was underway. The World Bank played a key role in several agreements that will form a part of our ongoing commitment to step up to the climate challenge.

Working Coalitions

Increasingly like-minded coalitions are forming, across dividing lines of developed and developing countries, public, private sectors and civil society, in order to get on with the business of emissions reductions. One highlight of the conference was the meeting of the Climate and Clean Air Coalition, a remarkable group of countries united to reduce SLCPs, short-lived climate pollutants - methane, HFCs, black carbon.

Climate Lessons from a Hotter Arab World

Rachel Kyte's picture

Photo credit: Curt Carnemark/World Bank

This week in Doha, the marble corridors of the Qatar National Convention Center resonate with voices from around the world. Over half way through the conference, as ministers arrive and the political stakes pick up, a sense of greater urgency in the formal negotiations is almost palpable. But in the corridors, negotiations are already leading to deals and dreams and action on the ground.

UN Secretary-General Ban Ki-moon opened the discussions by saying we need optimism, because without optimism there are no results. He reminded us all that Superstorm Sandy was a tragic awakening. He reiterated the call for a second commitment period of the Kyoto Protocol, a global agreement and 100 billion in climate finance by 2020.

Meanwhile our focus was firmly on the region ...

When we look at the Middle East and North Africa, the challenges of climate change are evident. Farmers have been planting in drylands and dealing with climate variability and water shortages since the beginning of agriculture. They understand adaptation here, but no one is prepared for what we could face if the world doesn’t act to stop human-induced climate change now.

We published a report last week examining the science of climate change, and the findings should be alarming to anyone. If governments don’t take action to reduce greenhouse gas emissions, globally we’re headed for a 4 degree Celsius increase. The rise will be even higher across the Arab world, and the effects on water, agriculture, and livelihoods will be far more pronounced than what people here already face. Climate models show that over the last 30 years, temperatures in the Middle East and North Africa have increased 50 percent faster than the global average.

Aggressive mitigation is needed to slow greenhouse gas emissions, but here and in much of the world, adaptation is now critical to survive the changes that are already underway.

In a new report released today, Adaptation to a Changing Climate in the Arab Countries, we draw on the knowledge and expertise of the Arab world in adapting to changing climates. The authors, the majority of whom are from the region, consulted with civil society, academia, and governments, and worked in partnership with the League of Arab States.

Time to clear the smoke

Daniel Kammen's picture

In many parts of the world, a picture of a woman sitting in front of a smoky cookstove preparing a family meal remains an iconic picture of life today. For many families, the three- stone fire or a traditional stove as a cooking device has not changed over centuries.  This need not be the case, and in a growing number of nations, that traditional pattern is changing.

Serious research on improved cookstoves dates back to the 1950s. However, large-scale field programs focused largely on the inefficiency of designs. While the stoves may appear simple, the socio-cultural systems in which they operate, and their impacts on so many aspects of household and regional health and economics, is far from simple. Many approaches have been tried, with some successes and many failures.

Over the last few years, a more complete view of the full human and environmental health impacts of indoor air pollution and the global impact of the fuel and stove cycle has emerged. Poorly managed fuel systems encourage use of unsustainably harvested fuel such as charcoal produced from illegal and ecologically damaging informal production network.

The World Bank is looking at opportunities to improve not only cookstoves themselves, but also the full stove fuel cycle as a way to address energy poverty, human health, and the global greenhouse gas problem. I was delighted to see a new publication that looks at this nexus between health, environment and GHG benefits called Household Cookstoves, Environment, Health, and Climate Change: A New Look at an Old Problem. This report takes stock of existing knowledge on the subject and points out new opportunities by identifying `game-changers’ in the stove technology and fuels.

Adding climate finance to our promises

Kseniya Lvovsky's picture
Photo © istockphoto.com

Here is the sad truth: Presently, the resources available for developing countries to address the impacts of climate change cover 5% of estimated needs by 2020.

One of the challenges is to mobilize the resources needed without dipping into the same basket of current official development assistance (ODA). Another challenge is to measure and monitor what is 'new and additional' from the complex web of sources and channels.

More than a technical exercise, it is a useful tool to build trust and accountability with developing countries to show that assistance is being delivered in line with promises made. 

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