Looking to the future to make the best decisions today: climate long-term strategies

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Children at Boesmanland School in Pofadder, Northern Cape Province, South Africa
Revenue from solar plants supports education programs including this class in Boesmanland School in Pofadder, Northern Cape Province, South Africa. Photo: CIF 2020

All countries have opportunities to reduce emissions at very low cost. With the drop in the price of renewable energy and savings from better energy efficiency, it is even often possible to reduce emissions at a negative cost. At first sight, it makes a lot of sense to focus on these opportunities and to leave other, more complicated or more expensive, interventions for later. But delaying the most difficult actions comes with significant risks. If retrofitting buildings or changing urban travel is difficult and expensive, it is tempting to delay action in these domains until 2030 or 2040. By doing so, however, a country may find itself with a massive stock of inefficient buildings and cities completely dependent on individual cars, with only two or three decades to decarbonize them. With less time in front of us, the task will only seem more daunting by then. Not having acted earlier – and more gradually – in hard-to-decarbonize sectors may well look like a missed opportunity.  

Long-term strategies – working back from 2050 to determine the decisions and investments that need to be made today – can help countries make these difficult decisions. These long-term strategies are called for under the Paris Agreement and already many countries – developed and developing, high and low carbon emitters – have started working on developing them. Effectively, these go beyond the time horizon of Nationally Determined Commitments (NDCs). With their (at least) a thirty-year time horizon, long-term strategies are powerful signal of the direction of travel, helping firms and households make and coordinate their own decisions. 

Many long-term strategies, such as those of Costa Rica and Fiji, link climate actions to broader development goals to make sure a country’s growth, employment, and poverty reduction objectives are aligned with its climate goals . The process of developing a long-term strategy can help build consensus by bringing together all parts of government and different parts of society, to discuss long-term goals and the different pathways to get there. The results of this process can be embedded in legislation to crystalize the commitment. 

Long-term strategies also provide essential markers that help countries know what to prioritize in their five-yearly NDC updates and national development plans and sectoral plans.  For instance, long-term strategies are usually translated into sector-level medium-term milestones for 2025 or 2030, such as the share of renewable energy in power generation, the model share of public transit and soft transport modes, the number of high-efficiency buildings constructed, or the level of a carbon tax. These sectoral milestones can then be implemented by the relevant ministry or agency, for instance becoming part of the mandate of the ministry of energy or transport, ensuring consistency and coordination across government bodies. 

The World Bank is working to support countries in their efforts to develop and implement these strategies, building on detailed analytical and operational work, across different sectors. Our guiding questions focus on the risks that countries face if they fail to decarbonize and the opportunities that exist when they do. Risks can include a loss of market access and export revenues as major consumer markets shift to zero-carbon economies, and opportunities can include jobs in green growth sectors, reduced energy imports bills, and cleaner air and water sources. Adaptation is clearly at the forefront of many countries’ agendas, and this can also be covered in many long-term strategies. 


"The World Bank is working to support countries in their efforts to develop and implement climate long-term strategies, building on detailed analytical and operational work, across different sectors."


  

Our support builds on the important role ministries of finance, economy and planning can play in making climate policy a reality.  The Coalition of Finance Ministers for Climate Action, comprising today members from over 50 countries, has prioritized long-term strategies as the first of its six guiding principles. Each long-term strategy will be based on rigorous macro-economic modelling, in-depth sectoral analyses and a structured assessment of interactions across sectors. Our approach also prioritizes managing the distributional impacts of climate change on the poor and vulnerable, and the policies required to support a just transition, for instance through sustained consultations and adequate budget and planning to mitigate economic impacts to affected groups.

Thinking long-term does not come easy: it requires us at the World Bank to think beyond our projects’ 3-5 year time horizons as well. But if countries only focus on short- or medium-term targets, they will make decarbonization costlier, slower, and more difficult. That is why long-term climate strategies are needed now: providing a foundation for climate-smart development that will help our clients shift to a more resilient low-carbon development path, for the benefit of current and future generations.

This post is part of a series featuring the World Bank Group’s climate-related work in the Equitable Growth, Finance and Institutions practice group including the following Global Practices: Governance; Finance, Competitiveness and Innovation; and Macroeconomics, Trade and Investment.

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Jovan Tesic
May 04, 2021

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