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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.

Carbon Pricing Incentivizes Clean Energy Innovation

Kerry Adler's picture
SkyPower's Fort William First Nation Solar Park is one of the first utility-scale solar parks in North America to be developed on First Nations lands. Photo courtesy of SkyPower


By Kerry Adler, President and CEO of SkyPower

​​The fundamental inequality that exists between emitters of carbon and the victims of its devastating byproduct requires global cooperation and intervention beyond our willingness to act thus far. Today, we have the necessary technology, ingenuity and global monetary tools to incentivize a shift to cleaner energy.

Placing a price on carbon enhances the competitive position of renewable energy technologies, such as utility-scale solar, relative to fossil energy, thus encouraging migration away from high-carbon fuels. It is an important step, and it can be supported with other initiatives to ensure accountability.

In the private sector, transparency regarding carbon emissions is essential. With the advent of the Internet and the plethora of information available today, it is not only possible, but imperative that emitters of carbon are held accountable in a public forum.

Gov. Brown: CO2 Emissions Already Carry a Cost – to Public Health, Economy & Climate

Jerry Brown's picture
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Jerry Brown is the governor of California. He spoke ahead of the UN Secretary-General's Climate Leadership Summit about politics and the value of his state's emissions trading system in building a healthier, cleaner future. The state's economy is growing, and its climate work is setting a pace for the nation.

Carbon Partnership Facility: Innovation in Scaling-up Emission Reductions

Richard Zechter's picture
LED lights are part fo an energy efficient street lighting program in Thailand. Carbon Partnership Facility

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.

Green Bonds Market Tops $20 Billion, Expands to New Issuers, Currencies & Structures

Heike Reichelt's picture

Also available in Français | Español | 中文

Annual Green Bonds Issuances


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.

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.

Race Against Climate Change is a Marathon

Patricia Bliss-Guest's picture

 AfDB

Looking back at 2013, the Climate Investment Funds’ (CIF) fifth year, I am encouraged by the amount of ground we have covered. Not only are we beginning to see more tangible results of CIF investments, we are also venturing into new territory both geographic and financial. New contributions of $400 million received in 2013 make us the largest source of climate finance with pledges of $8 billion, demonstrating the confidence donors have in our mission and multilateral development bank (MDB) partnership to deliver on the promise of transformative, climate-smart development.

The CIF was created to trigger investments for immediate climate action and to facilitate learning on the technologies and methods needed to promote clean technology, renewable energy, sustainable management of forests, and climate-resilient development. The clock is ticking in the race against climate change, and we are on the move.

In Mexico, for example, $45 million from the Clean Technology Fund (CTF) has leveraged over $500 million of commercial resources to help catalyze the commercialization of Oaxaca’s wind industry. In Turkey, $149.5 million in CTF financing has attracted $1.38 billion from other sources to expand national bank lending to renewable energy and energy efficiency markets to stimulate their growth. And in Morocco, $197 million in CTF financing has played a pivotal role in launching the first phase of the 500MW Ouarzazate concentrated solar power complex by raising awareness and attracting over $1 billion in additional financing.

Kenya’s first Carbon Credits from Geothermal Energy Pay for Schools

Patricia Marcos Huidobro's picture

Kids at the Oloirowua Primary School in Suswa, Kenya.

Last month, I drove through dust on bumpy dirt roads from Nairobi to visit the Oloirowua Primary School in Suswa, 140 kilometers northeast of the Kenya capital. The school sits on the vast savannah near Hell’s Gate National Park, an area with substantial geothermal potential.

Here, KenGen, Kenya’s electric generating company, has built the country’s largest geothermal plant with support from the World Bank. It’s part of the utility’s effort to “green the grid.”

At the school, classes are being taught outdoors and kids sit under a few trees with notebooks in their laps. Their old and crumbling school will soon be replaced by a new building that will accommodate 200 students. Their faces light up when they talk about the new school, and I feel thankful for being able to work with projects like this where I see the direct effects of our work on kids’ education.

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.

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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