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Mobilizing Climate Finance to Build a Low-Carbon, Resilient Future

Rachel Kyte's picture

This past week, we saw our future in a world of more extreme weather as Super Typhoon Haiyan tore apart homes and cities and thousands of lives across the Philippines.

Scientists have been warning for years that a warming planet will bring increasingly extreme and devastating weather. Scientific certainty has brought climate change over the planning horizon, and the impact is now unfurling before our eyes.  This level of damage, with millions of people affected, will become more frequent unless we do something about it – fast.

Negotiators from around the world are here in Warsaw for the UN climate conference to work on drivers that can spur that action on a global scale.

It is not overly complicated. We need to get the prices right, get finance flowing, and work where it matters most. But, each of these will take political will to right-size our collective ambition – for ourselves and for the people of the Philippines and the Pacific Islands and the low-lying coasts of Africa and the Caribbean who are directly in harm’s way.

The investment needs for greener, low-carbon growth are substantial, especially in the fast-growing cities of developing countries. It is vital that finance flows to build low-carbon, climate-resilient infrastructure that can stand up to more extreme weather and climate impacts. We must mobilize investment for projects that will improve livability and lower greenhouse gas emissions, such as low-carbon transport, energy efficient buildings and clean energy.

Public money alone will never be enough to meet these needs, but public funding can play two critical roles: first, in crowding in private investments, and, second, in going to places and investing in projects that the private sector will not do alone.

Several climate funds are already proving climate finance, showing how these roles can work, and innovating as they go. The Climate Investment Funds (CIFs), for example, have committed $7.6 billion for 48 countries and leveraged almost $50 billion in investment from other sources, demonstrating how minimum concessional finance can catalyze transformational climate investments. The World Bank Group is in the process of designing a pay-for-performance auction facility for methane reduction that will test approaches for mobilizing finance, including using auctions to allocate its resources, with the potential for to scale across mitigation finance. The multilateral development banks have also harmonized a framework to track and report climate finance and provide increasing transparency on finance flows and have agreed shared guidelines on deploying concessional funds to the private sector.

The success of the climate negotiations rests heavily on climate finance pledges coming through and finance flowing to where it is needed most. We know that public climate finance is precious, not only as a signal of commitment to the UN Framework Convention on Climate Change and to the common cause the UNFCCC stands for, but also because it will be produced at a  time of economic hardship in many of the countries that will provide it, and, importantly, because it can be used flexibly to do things that other finance may not do.

Public finance can maximize the mobilization of other forms of finance through the astute development of the Green Climate Fund and through the use of the balance sheets, organizational capacity, and technical knowledge of the multilateral development banks and bilateral development financial institutions. The prize – the leveraging of institutional investors, sovereign funds, and pension funds, climate capital markets, and others – has proven difficult at a time when global financial markets retreat from risk. But by matching the specific financial fiduciary and risk/reward needs of investors with projects and project portfolios, and using public climate finance to develop new products and test their introduction, we can do this. Certainly at the World Bank Group, we will redouble our efforts.

But, while we can use climate finance smartly, governments will also need to send clear policy signals to redirect foreign and domestic investment into green and inclusive growth and low-carbon development. A robust price on carbon and  moving away from harmful fossil fuel subsidies that do little to efficiently protect the vulnerable from price shocks are two important steps. Also important are supervision and regulations that supports investment in clean and resilient development and raise questions about the wisdom of long-term investments in a carbon-intense economy.

As we try, with others, to support efforts to speed and scale mitigation action and investment in resilience, we will need a disciplined focus on getting prices right, getting finance flowing, and investing where it matters most.

Rachel Kyte
Vice President for Sustainable Development
www.worldbank.org/sustainabledevelopment
Twitter: @rkyte365

Photo: The UN Climate Conference opens in Warsaw. Credit: UNClimateChange

Comments

Submitted by Robert Watson M... on

Let us stand together towards solving environmental problems for the betterment of present and the coming generation

Rachel:

This is a very thought provoking and hard hitting article. I do hope the leaders at the UN Climate Conference understand the urgency to move fast from words to action to results.

As a first mover, private sector investor in clean energy projects in Sub-Saharan Africa, we have experienced these issues first hand, of course, from the other side of the table.

We are currently in the the process of implementing our first 5 MW solar power plant in rural Tanzania - to displace existing expensive fossil fuel generation which burns 21,000 liters of diesel a day!

While we appreciate the "building blocks" being set up by the World Bank in terms of government policy and regulations to promote sustainable development, unfortunately by themselves, they are not enough.

If the need of the hour is to speed and scale up, getting prices right and making finance available by themselves will not deliver results. You need the involvement of the private sector. They will be happy to share what has worked and what needs attention. Why - because they've been there and are anxious to make this work.

We will be happy to set time to share our experience.

Rgds
Mayank Bhargava
NextGen Solar

This is a great admission. Although Ottmar Edenhofer admitted in an interview a couple of years ago this is not about the environment but economic redistribution it was not shared widely so kept within a very small group of those interested. But this article says it loud and clear. Give us your money and we'll stop your house from burning down.

Who said the Mafia are only in Italy? That's the purest protection racket besides pay me a fiver and I'll look after your parked car. I will be sharing this page far and wide on my fraud sites, written to expose the level and scope of fraud across world governments and this has saved me trying for years to convince trusting people yes, the governments really want your money, it's only a really, really good excuse to make you offer them as much as they want and even more. Any remaining gaps and doubts around the genuine aims of the climate movement should now be gone, as you have now made it 100% clear you want our money and you can save the planet if we just give, give, give. We'll never know if it worked as the 2C point isn't expected to be anywhere before 2100 so it's a double shuffle to make any accountability totally impossible. Yes, of course we looked after your car/house/business, it's still there and hasn't burnt down.

I accept you are top of the pyramid and as such unable to be scrutinised and policed by anyone above you, but by exposing yourselves as only after people's money as 'insurance' many will realise that is your only interest and agenda, and will vote with their own new awareness and gradually inch out parties who promote this way of destroying our economies and standards of living. Thanks again for this article, no third party could ever have written anything exposing exactly how you operate as well as you have yourselves.

Yet another attempt to link typhoons to climate change. Why would you state something that is so easy to refute, doesn't that just undermine your argument? Scientists have not warned of more severe or more frequent storms because there is no evidence of a link. If the frequency of typhoons and hurricanes was to increase, that might bring them somewhat up to the normal level, but is is quite obvious that hurricane and cyclone frequency is decreasing. See this chart:

http://notalotofpeopleknowthat.wordpress.com/2013/11/14/most-intense-typ...

If you are not prepared to tell the truth, what reason would anyone have to trust what you are doing? Where are you getting your disinformation?

Submitted by Blog Admin on

Scientists have been clear in their expectation that extreme weather events will be more intense as climates warm. The report Turn Down the Heat: Climate Extremes, Regional Impacts, and the Case for Resilience, available online from the link below, has more details. The research in that report and others extends beyond a single region for a global perspective on climate change and its impact.

http://documents.worldbank.org/curated/en/2013/06/17862361/turn-down-hea...

Oh... Your disinformation comes from a green pressure group. That explains it. Their future depends on alarming pronouncements from models that haven't been validated. Bjørn Lomborg reminds us that 2013 is the 40th anniversary of the Limits to Growth, which used state of the art computer models that were not validated to predict that humanity faced a devastating collapse from the lack of food, oil, other commodities, etc. Now I see we are using unvalidated computer models to project "climate extremes" and other horror stories to prop up a failing theory of the catastrophic effects of fossil fuel use. Too bad the earth isn't cooperating. You will have to find another scare story to replace the last two that failed. Ocean acidification anyone?...

Even the IPCC, widely regarded as an unbiased source of information :-) knows this.

Here are a few excerpts from the IPCC AR5 WG1 chapter 2: (taken from Roger Pielke's testimony to the Senate)

“Overall, the most robust global changes in climate extremes are seen in measures of daily temperature, including to some extent, heat waves. Precipitation extremes also appear to be increasing, but there is large spatial variability"
"There is limited evidence of changes in extremes associated with other climate variables since the mid-20th century”
“Current datasets indicate no significant observed trends in global tropical cyclone frequency over the past century … No robust trends in annual numbers of tropical storms, hurricanes and major hurricanes counts have been identified over the past 100 years in the North Atlantic basin”
“In summary, there continues to be a lack of evidence and thus low confidence regarding the sign of trend in the magnitude and/or frequency of floods on a global scale”
“In summary, there is low confidence in observed trends in small-scale severe weather phenomena such as hail and thunderstorms because of historical data inhomogeneities and inadequacies in monitoring systems”
“In summary, the current assessment concludes that there is not enough evidence at present to suggest more than low confidence in a global-scale observed trend in drought or dryness (lack of rainfall) since the middle of the 20th century due to lack of direct observations, geographical inconsistencies in the trends, and dependencies of inferred trends on the index choice. Based on updated studies, AR4 conclusions regarding global increasing trends in drought since the 1970s were probably overstated. However, it is likely that the frequency and intensity of drought has increased in the Mediterranean and West Africa and decreased in central North America and north-west Australia since 1950”
“In summary, confidence in large scale changes in the intensity of extreme extratropical cyclones since 1900 is low”

Roger: "There is really not much more to be said here -- the data says what it says, and what it says is so unavoidably obvious that the IPCC has recognized it in its consensus".

I'm sure thankful the data doesn't match the models. Now can you guys find something productive to do with your money that will actually help humanity?

Submitted by Maimunah Jaffar on

Developing countries need to built awareness on this climate change NOW, not only awareness to decision maker but most importantly the communities. Agree technology requires money and a lot of funding but developing countries should start from community levels. Communities can play important role in reducing carbon emmision in their day to day lifestyle. This requires mind set change, and if everyone participate, it will contribute to positive change. We, in Iskandar Malaysia an economic region in Malaysia - is doing just that, its a long way but YES, WE HAVE TO START NOW.

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