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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.

Talking to the UN Security Council about Climate Change

Rachel Kyte's picture

Flags at the United Nations. UN Photos

Last week, I had the honor of speaking to the UN Security Council about an increasingly dangerous threat facing cities and countries around the world, a threat that, more and more, is influencing everything that they and we do: climate change.

World Bank President Jim Kim was in Russia talking with G20 finance ministers about the same thing – the need to combat climate change. Every day, we’re hearing growing concerns from leaders around the world about climate change and its impact.

If we needed any reminder of the immediacy and the urgency of the situation, Australia Foreign Minister Bob Carr and our good friend President Tong of Kiribati spoke by video of the security implication of climate effects on the Pacific region. Perhaps most moving of all, Minister Tony deBrum from the Marshall Islands recounted how, 35 years ago, he had come to New York as part of a Marshall Islands delegation requesting the Security Council’s support for their independence. Now, when not independence but survival is at stake, he is told that this is not the Security Council’s function. He pointed to their ambassador to the UN and noted that her island, part of the Marshall Islands, no longer exists. The room was silent.

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?

A new treaty to control mercury…could be good for climate too

Laurent Granier's picture

courtesy: UNEP

Early in the morning on Saturday, January 19, 2013, negotiators from around 140 countries completed negotiations for the Mercury Treaty that will be adopted later this year in Japan. It will be known as the Minamata Convention, in deference to the victims of mercury poisoning from industrial pollution that occurred when residents of the Minamata Bay ingested contaminated fish and shellfish in the 1950s.

The Convention that took four years to negotiate under the auspices of the United Nations Environment Programme (UNEP) joins the ranks of a number of treaties that address chemicals and wastes. It is the first treaty to specifically address heavy metals.

Why is the international community concerned about mercury? Mercury is typically released into the environment in metallic, or “elemental”, form, or as an inorganic salt. In elemental form, it easily vaporises and can be transported great distances worldwide.  When deposited in the environment, mercury eventually can be transformed to its organic forms, including Methylmercury, which is highly toxic and readily accumulates and bioconcentrates in animals and humans. Eventually, mercury settles in cold climates and bioconcentrates up the food chains to the point that Indigenous Peoples in the North that rely on traditional foods are exposed to damaging high levels.

One of the reasons heavy metals are difficult to address is that they are mobilised through human activities, but they are also released in the environment through natural processes, for example through volcanic eruptions or in deep-sea vents. Nevertheless, estimates are that at any given time, 90% of the mercury cycling in the environment is linked to human activities – hence the need for action. The recently released UNEP Global Mercury Assessment 2013 outlines major sources of emissions, geographic and temporal trends, and behaviour in the environment. 

Moreover, international action is warranted because of the transboundary dimension of the issue. In the United States for example, it is estimated that half the mercury in fish caught in rivers comes from anthropogenic Continental sources – predominantly from coal burning – whilst the other half represents emissions from Asia. At the same time, by some estimates, approximately 50% of US releases are deposited beyond the country’s border. This is textbook justification for international action.

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.

Living Landscapes: Solutions for a Sustainable World

Peter Dewees's picture

Photo: Mduduzi Duncan Dlamini, Minister of Tourism and Environmental Affairs, Kingdom of Swaziland, providing the closing keynote for Agriculture, Landscapes and Livelihoods Day.

The final rounds of Forests Day and Agriculture Day wrapped up at the UN Climate Change Conference in Doha this week under a new shared banner: Living Landscapes Days.

Both Days have become annual events on the sidelines of the UN climate change conferences, meant to bring together scientists and policy makers and, originally, to bring forests and farming onto the Conference of Parties (COP) agenda. Forests have largely achieved this objective with the the emergence of various agreements about REDD+.

Agriculture has slipped down the list of priority issues tackled by the COP, which has been struggling to figure out what to do about extending the Kyoto agreements and a range of other issues, but is certain to re-emerge. The agriculture discussions this week at Doha aimed to identify scalable solutions to specific mitigation and adaptation challenges which can benefit farmers; gaps where there are limited existing solutions or limited available knowledge; and potential trade-offs in implementing existing, known solutions.

This year, the two worked together to build on the themes of climate-smart agriculture, which became prominent in Durban in the last COP: farming which builds soil carbon, increasing food security, and enhancing resilience to climate shocks.

Growing Cities, Healthy Cities

Charles Feinstein's picture

Ten years ago, the first Better Air Quality (BAQ) conference brought policy makers, experts, and advocates to Hong Kong to review the status of air quality in Asia and to recommend how to improve it. Today we are here once again to kick off the seventh BAQ in ten years, organized by the Clean Air Asia (formerly Clean Air Initiative for Asian Cities), Hong Kong Environmental Protection Department, and Hong Kong Polytechnic University.  The theme of BAQ 2012 is “Growing Cities, Healthy Cities,”

Since the first meeting, we can say with certainty that the average air quality in Asian cities have improved despite their economic growth. The yearly average PM10 (particulate matter less than 10 microns) concentration for cities in the about 20 Asian countries engaged in the Clean Air Initiative for Asia was above 80 µg/m3 (microgram per m3) in year 2000. Now it is around 50 µg/m3. Although there are huge differences in air quality between countries and cities within the Asia region, the overall trend over the last decade is that most of the countries and cities have shown progress. 

Most Asian countries have established, tightened and expanded ambient air quality standards (AAQS). A decade ago, only few Asian countries had standards, now there is regular air quality monitoring and air control programs.

Forging a new path forward on climate change

Vipul Bhagat's picture

As world leaders convene in Doha for this year’s UN Climate Change Conference  developing countries are looking for ways to maintain momentum for change to help them transition to climate-smart growth.

When it comes to delivering improved, cost-effective infrastructure and services – a precondition for green growth – public-private partnerships (PPPs) are one way forward. At a recent event co-sponsored with the United Nations Development Programme (UNDP) in Doha, we shared our unique perspective on public sector efforts to attract and leverage private sector climate finance through PPPs.

Some key takeways from the event include:

  • PPPs help tap new money for infrastructure:  Since the 2008 financial crisis, governments have limited financial resources to devote to capital expenditures and expanded public services. Involving the private sector offers a solution.
  • PPPs boost efficiency through cost savings and shorten delivery periods. They also spur innovation by bringing in private sector know-how.
  • PPPs facilitate projects under one umbrella: When it comes to climate initiatives, PPPs can efficiently organize and consolidate the numerous and complex arrangements that make a renewable energy (or any other climate-related) project work.
  • PPPs allow for appropriate allocation of supply and risk demand to the private sector, reducing taxpayer costs.
  • Since 1989, IFC has been the only multilateral institution providing advice to national and municipal governments on designing and implementing PPP transactions to improve infrastructure and access to basic services such as water, power, agribusiness, transport, health and education.

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