It’s been a year of catastrophic climate events. Rains of biblical proportions across South Asia brought floods that affected more than 41 million people and killed at least 1,200. Record-breaking hurricanes claimed lives and destroyed infrastructure across several island states in the Caribbean and in towns and major cities in the southern United States. Drought gripping Africa put 20 million people in Somalia, South Sudan, Nigeria, and Yemen at risk of starvation. And for the third year in a row, countries with coral reefs - from East Asia and the Pacific to northern Africa – have seen massive sections of their reef systems die due to heat stress from unsustainably high ocean temperatures.
All these events across the globe shout the same warning: and deliver on the goals of the Paris Agreement. At this year’s UN Climate COP in Bonn, Germany, the call to action has found an ideal champion in the Fiji Government, making history as the first-ever small island state to hold the Presidency and organize the negotiations.
Since the signing of the Paris Agreement in 2015, many positive steps have been made to accelerate climate action on a global scale. According to the International Energy Agency, global energy-related carbon dioxide emissions were flat for the third straight year in 2016 even as the global economy grew - evidence of a continuing decoupling of emissions from economic activity. Global markets are undergoing a significant transformation led by renewables, thanks to rapidly falling costs for solar and wind power, with batteries taking on a growing role in balancing supply and demand. And carbon pricing is gaining global momentum, with over 40 national and 25 subnational jurisdictions now putting a price on carbon pollution.
A Focus on Mobilizing Finance for Climate Action
Meeting the Paris Agreement’s climate commitments will require investments at an unprecedented speed and scale. That is why The fact is, there is abundant private financial capital available but much of it is earning low or even negative returns. For many reasons, including weak policy environments and a lack of risk-reducing instruments like guarantees, this capital is not necessarily flowing to where it’s needed most for climate action.
An approach to help unlock this capital is the recently launched Invest4Climate initiative: a new platform convened by the World Bank and the UN, designed to bring together national governments, financial institutions, investors, philanthropists, and multilateral banks to find ways to support transformational climate investments in developing countries.
Green Bonds are also part of the finance solution by raising funds from the capital markets for climate investments in developing countries. The World Bank Group, through the World Bank and IFC, has played a leading role in developing the green bond market by raising over $15 billion in green bonds since 2008 for investments in climate action around the world, and by helping develop market best practice for standards and reporting. The World Bank and IFC are working with countries to put in place frameworks for sovereign and private sector green bond issuances. Last month, with assistance from the Australian Government and the World Bank Group, Fiji became the first emerging market to issue a sovereign green bond, raising 100 million Fijian dollars, or US$50 million, to support climate change mitigation and adaption.
A key element of the Paris Agreement was the country-level commitments to action, known as Nationally Determined Contributions or NDCs. Each NDC commits countries to a range of actions aimed at reducing their emissions and build resilience to climate change impacts. For its part, the World Bank Group is supporting around 300 initiatives across 77 countries related to NDC implementation through investments in areas including energy, agriculture, and transport. And through the NDC Partnership Support Facility launched at COP22 in Morocco in 2016, over $8 million in grants is now flowing to a first set of 23 countries for NDC-related technical assistance, capacity building and project action.
And through the Climate Action Peer Exchange or CAPE – developing country finance ministries are sharing knowledge with each other on meeting the fiscal challenges of implementing NDCs. A recent CAPE workshop in Shanghai brought together finance ministry staff from 13 countries to discuss approaches to carbon taxes, applying fiscal risk assessment models and establishing climate budgeting systems.