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Clean energy

Can disruptive business models and technologies be the key to unlocking trillions in climate finance?

Alzbeta Klein's picture



It is no secret that disruptive “technologies of tomorrow” are now regularly touted as a keystone to addressing a changing climate.  A recent study by IFC shows that building on technological innovation, global markets for climate-smart business already exceed US $1 trillion in size in key industries ranging from energy storage and electric vehicles to green buildings and supply chain logistics. By scaling up business models relying on these technologies, developing countries can unlock trillions more in investment opportunities while promoting shared and sustainable economic prosperity.

Latin America and the Caribbean: seizing a trillion dollar opportunity in climate investments

Christian Grossmann's picture
 Alessandra Bazan Testino / IFC
Green-bond supported wind farm in Penonome, Panama. Photo credit: Alessandra Bazan Testino / IFC 


First published by Capital Finance International.

Soon the world will celebrate the one-year anniversary of the historic climate agreement signed in Paris in December 2015. The agreement will be implemented through country-led greenhouse gas (GHG) emissions reduction commitments known as their intended Nationally Determined Contributions (NDCs), which to date have been submitted by 189 countries covering 95 percent of global GHG emissions. 
 
Apart from signaling concrete commitments, these reduction targets also offer a clear signpost of the investment direction countries need to follow as the global economy steers towards a low-carbon, climate-resilient pathway. Estimates point to between $57 trillion and $93 trillion in new low-carbon, climate resilient infrastructure investment by 2030.[1] How developing countries evaluate and respond to their infrastructure needs will greatly determine their ability to meet GHG reduction commitments.

Climate Investment Funds: The quiet motor behind our most impactful climate investments

John Roome's picture

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. 

Reflections on the Paris Agreement at a critical juncture for the CIF

Mafalda Duarte's picture



21 years is a long time. Long enough to raise a child and send him or her off to college. That is how long it has taken to get to the Paris Climate Agreement. The Paris Agreement does set a goal of holding the temperature increase to well below 2C and pursuing efforts to limit the increase to 1.5 C.  The latter goal is in line with what credible scientists have been telling us for a long time (only a 1.5C goal may prevent long-term multi-meter sea level rise, as an example).

Drum roll…Presenting the world’s largest concentrated solar power plant!

Mafalda Duarte's picture
Also available in: Français

Also available in: العربية | Spanish

Noor concentrated solar power plant is expected to supply 1.1 million of Moroccans with 500 MW of power by 2018. Photo: World Bank


Concentrated Solar Power is the greatest energy technology you have probably never heard of.  While it may not be as widely known as other renewable energy sources, there’s no doubting its potential - the International Energy Agency estimates that up to 11 percent of the world’s electricity generation in 2050 could come from CSP.  

And this week in Morocco, the King, His Majesty Mohammed VI, is officially opening the first phase of what will eventually be the largest CSP plant in the world – the same size as Morocco’s capital city Rabat.  I congratulate Morocco for taking a leadership role that has placed it on the frontlines of a revolution that is bringing low-carbon development to emerging and developing economies worldwide.
 
In collaboration with the World Bank and the African Development Bank, the CIF has already provided US$435 million into this three-phase Noor CSP complex in Morocco.

中国追寻新的发展之路

Xueman Wang's picture
Also available in: English
天津城市景观, 摄影:杨爱军 / 世界银行

在巴黎气候变化大会召开之前,180多个国家提交了有关走低碳发展之路的国家气候预案。

国家自主贡献预案主要包括到2025年或2030年之前计划实施的减排目标,但这些预案不仅仅是关于数字的,其中很多预案、特别是发展中国家提交的预案还提出了在国家整体发展框架内的气候行动,也包括适应行动。这并不令人吃惊,因为归根结底,应对气候变化就是关于有效地管理国家经济的。

这显然也是中国的情况。

China: in pursuit of a new development pathway

Xueman Wang's picture
Also available in: 中文
City landscape, Tianjin, China. Photo: Yang Aijun / World Bank


More than 180 countries have submitted their intended national climate plans to get on a low-carbon development pathway ahead of COP21 climate talks, now underway in Paris.

Called the Intended Nationally Determined Contributions (INDCs), most include mitigation targets to be implemented by 2025 or 2030. But these plans are not just about numbers. Many of them, particularly those put forward by developing countries, also propose climate actions within the countries’ overall development framework, including adaptation. Hardly surprising, as after all, tackling climate change is about effectively managing a country’s economy.

​This certainly seems to be the case for China. 

Behind the numbers: China-U.S. climate announcement's implications for China’s development pathway

Xueman Wang's picture
Solar cell manufacturing in China


The past five weeks have given us what may be defining moments on the road to a Paris agreement that will lay a foundation for a future climate regime.

  • On October 23, European Union leaders committed to reduce greenhouse gas emissions by at least 40 percent by 2030 and increase energy efficiency and renewable energy use by at least 27 percent by 2030.
  • On November 12, during the APEC Summit in Beijing, Chinese President Xi Jinping and United States President Barack Obama jointly announced their post-2020 climate mitigation targets: China intends to achieve peak CO2 emissions around 2030, with best efforts to peak as early as possible, and increase its non-fossil fuel share of all energy to 20 percent by 2030; and the U.S. agreed to cut emissions by 26-28 percent below 2005 levels by 2025.
  • On November 20, at the donor conference in Berlin, led by the U.S., Germany, and others, donors pledged about US$9.3 billion to the Green Climate Fund (GCF).

China’s announcement in particular is considered by many to be a game changer. China, the world’s biggest emitter with its emissions accounting for more than 27 percent of the global emissions, is setting an example for other major developing countries to put forward quantifiable emission targets. The announcement will hopefully also brush away the “China excuse,” used by some developed countries that have avoided commitments on the grounds that China was not part of action under the Kyoto targets.

Racing to a Competitive Economy: China Pursues High GDP, Low-Carbon Growth

Xueman Wang's picture
Also available in: 中文

 Yang Aijun/World Bank

December 2009 does not seem so long ago. The UN climate conference in Copenhagen had just come to a disappointing end, and I headed home feeling depressed.  I returned to China for holiday and was surprised to see the widespread awareness of climate change and the collective sense of urgency for action. The concept of "low carbon" was discussed in all major and local newspapers. To my amazement, I even found an advertisement for a "low carbon" wedding. I finished my holiday and went back to Washington with optimism and hope: Despite the failings of Copenhagen, China, the biggest emitter in the world and the largest developing country, was going through a real transformational change. China clearly saw action on climate change as serving its own interest and as an opportunity to pursue a green growth model that decouples economic development from carbon emissions and resource dependence.

In the past five years, the world has witnessed the emergence of China as a leader for tackling climate change.  A few weeks ago, colleagues at the World Bank Group heard an evidenced-based presentation by Vice Chairman Xie Zhenhua from the National Development Reform Commission (NDRC) of China, who showed what China had done in the past, is doing now, and plans to do in the future. He shared his candid assessment of the challenges, mistakes, and lessons learned from China's experience.

China’s progress is impressive. Between 2005 and 2013, average economic growth has been above 8 percent while the country’s emissions intensity has decreased by 28.5 percent compared with 2005 levels. This equates to emissions reductions of 23 million tons of CO2. These reductions were achieved through massive closures of inefficient coal fire plants, aggressive energy efficiency programs, expanding the renewable energy program, and large investments in clean technology.

While these numbers are impressive, sustaining them will be harder. Over the last 10 years, China has targeted its "low-hanging fruit" for mitigation options. The challenge today is how China will sustain annual GDP growth of more than 7 percent while continuing to reduce its economy’s emissions intensity.

Dealing with Uncertainties in Energy Investments

Uwe Deichmann's picture

 John Hogg/World Bank

According to the International Energy Agency (IEA), global energy demand is likely to grow by more than one-third between now and 2035. Mobilizing investment capital is one major task. Additionally, energy infrastructure such as electric power facilities has a long time span – up to 40 or 50 years in the case of base-load nuclear or coal plants. As the new Growing Green report, released by the World Bank’s Europe and Central Asia Region, points out, with such a long time span and the enormous amount of capital at stake, power sector investments need to consider at least three types of uncertainties—changing regulations, changing technology, and changing climatic conditions.

Regulatory Uncertainty

Regulatory uncertainty persists in countries without formal greenhouse gas emission restrictions. Even in the EU, the emissions trading system is still evolving and future prices for carbon emissions will in large part depend on political decisions. Such schemes may spread to other parts of Europe and Central Asia as the implications of climate change become more apparent and support for climate action rises. A price on carbon, either through a cap-and-trade sys¬tem or a tax, can profoundly alter the comparative economics of different power generation technologies. With a price on carbon emissions, the cost differential between fossil-fuel plants and low-carbon alternatives shrinks and in some cases disappears.

Many international firms and banks already incorporate an assumed carbon price into their financial investment feasibility calculations. Expectations of future carbon pricing have already altered investment decisions favoring natural gas over coal-fired power plants in the U.S. (although more recently the drop in gas prices has been a larger factor). Conversely, regulatory uncertainty also hinders investments in low-carbon generation. The IEA estimates (pdf) that uncertainty in climate change policy might add a risk premium of up to 40 percent to such investments, driving up consumer prices by 10 percent.

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