According to the International Energy Agency (IEA), full implementation of countries’ submitted pledges for low-carbon development will require USD 13.5 trillion in investments in energy efficiency and low-carbon technologies from 2015 to 2030. That’s almost USD 1 trillion every year. This means all hands need to be on the deck if the global community is to address one of the biggest development challenges of our times.
Low Carbon Development
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.
Brazil, China, India, Indonesia, Mexico, Poland and South Africa are among the world’s largest emerging economies. And in the past five years, all have made substantive shifts towards lower-carbon growth strategies – shifts that are still underway. In 2007, these countries represented 33 percent of global CO2 emissions. By 2010, three of them – Brazil, China and India – accounted for over 40 percent of global investment in renewable energy.
Public Procurement. Energy Efficiency. These are not terms that one normally sees together. And honestly, neither is a subject likely to keep many people awake at night. But taken together, they can be a powerful force for energy security, greenhouse gas mitigation, and low carbon development.
The logic is simple. Governments on average account for 2-5 percent of national energy use, and this can rise to 20-30 percent in countries with high heating demand or low electrification rates. Between 12 and 20 percent of a country’s gross domestic product passes through public procurement systems. On both the energy and the procurement sides, government actions matter, influencing private sector purchasing and individual decision-making. Technical specifications used by governments also send signals to suppliers about the types of goods and services that will be in demand, which in turn can influence the products they produce.
An important series of meetings on the Climate Investment Funds, hosted by the African Development Bank, began June 20 in Cape Town, South Africa. At one of the first events, discussion focused on how individual households, communities, cities, companies, and nations find and use tools to develop low-carbon, pro-growth, gender-sensitive, pro-access energy solutions. A key factor in this process is access to:
- information on technologies and policies
- tools to build integrated plans for the energy sector at small and large-scale.
At a session on lessons drawn from energy efficiency and renewable energy experiences, I promised to share a preliminary list of websites and online tools to assist local groups and communities gain control of the energy planning process. Here it is:
Low-Carbon Energy and Development Planning Tools
World Bank Low Carbon Development Portal –This comprehensive website provides direct access to a wide range of low-carbon development studies at the community, city, region, national, and global levels, including low-carbon studies (both documents and models) in Brazil and Mexico, rural communities in Nicaragua, as well as Nigeria and Kenya.
HEAT and TRACE - This portal provides access and documentation for a number of individual models, including:
- HEAT (Hands-on Energy Adaptation Toolkit),
- TRACE (Tool for Rapid Assessment of City Energy)
ESMAP (Energy Sector Management Assistance Program) - A general portal for myriad reports and models (including HEAT and TRACE) via the Energy Sector Management Assistance Program at the World Bank Group
HOMER Energy (Hybrid Renewable Energy Optimization Tool) - The HOMER energy modeling software is a powerful tool for designing and analyzing hybrid power systems, which contain a mix of conventional generators, cogeneration, wind turbines, solar photovoltaics, hydropower, batteries, fuel cells, hydropower, biomass and other inputs. It is used by tens of thousands of people worldwide. For grid-tied or off-grid environments, HOMER helps determine how variable resources such as wind and solar can be integrated optimally into hybrid systems.