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FT-IFC Investing in Climate Business Forum

Laura Tuck

Opening Gala Dinner Ceremony

Istanbul, Turkey

October 31, 2013

Transcript

Good evening Ladies and Gentlemen. I am pleased to be at this remarkable event today and have the opportunity to hear the perspectives of the participants representing so many different countries from Europe, Central Asia, the Middle East and North Africa. As the Vice President for Europe and Central Asia, I would like to focus my remarks on this part of the EMENA region.

We all know that climate change is a threat to sustainable economic development. We also know that without bold action now the warming planet will put prosperity out of the reach of millions of people. This forum is intended to inspire all of us to take bold action now.

The Potsdam Institute of Germany has recently prepared a report called Turn Down the Heat, which gives a snapshot of the latest climate science. The report warns that we are on a path to a much warmer world by the end of this century – warmer by an average of 4 degrees Celsius, if current levels of greenhouse gas emissions continue. The report gives a clear picture of the devastating effects on agriculture, water resources, ecosystems, and human health. Throughout the world, those least able to adapt, the poor and vulnerable will be hit the hardest.

We have also seen that climate change already threatens the prosperity of the Europe and Central Asia region. In 2010, a heat wave caused over 50,000 deaths in Russia. In 2012, droughts destroyed more than half of all crops in Kazakhstan, a quarter in Russia, and a fifth in Ukraine. The Danube floods of June 2013 forced thousands of people to flee their homes and caused damage worth billions of dollars in several countries in Central Europe. Such weather events linked to climate change are expected to occur more frequently in the future. With its long coastline, Turkey is also vulnerable to another impact of climate change -- coastal erosion due rising sea levels.

Climate action is a big challenge for Europe and Central Asia, which remains the most energy-intensive region in the world. Over the past two decades, the region has reduced its energy intensity by a third. Still the economies of Europe and Central Asia use 50 percent more energy per unit of output than the global average; and fossil fuels account for 88% of the region’s energy supply. Coal remains the leading fuel for power generation in several EU countries. Turkey has a lower carbon footprint compared to other emerging middle-income economies in the region, but its emissions are rising fast.

The World Bank believes that a 4-degree warmer world can and must be avoided. To do this, we need urgent global action to slow down the growth of greenhouse gas emissions. At the same time, countries will need to adapt to changes that are already underway and prepare themselves for a 2-degree warmer world.

For this reason the World Bank Group has made climate action a top priority and we have stepped up our work on mitigation, adaptation, and disaster risk management. President Kim has called for a global response equal to the scale of the climate challenge and for bold ideas that will make the biggest difference.

We see three priority areas for action at the global level:

  1. The first is to build low carbon, climate-resilient cities. We need to focus on fast-growing cities to avoid locking in carbon-intensive infrastructure. This is especially important in fast-urbanizing countries like Turkey.
  2. The second is to accelerate improvements in energy efficiency, which is a win-win, and invest in clean renewables and other modern energy technologies.
  3. The third is to develop climate-smart agriculture which can bring a triple win: improving crop resilience to climate shocks, increasing yields, and sequestering carbon in the soil – thereby reducing emissions.

In the ECA region, improving energy efficiency and developing renewable energy sources will be key. If ECA economies brought their energy intensity to OECD levels, they would cut energy consumption by 42%. For Turkey, energy efficiency and diversification of energy sources away from fossil fuel imports are also important objectives from the point of view of energy security.

A study of energy efficiency success stories, which was produced by the World Bank’s ECA region, finds that the quickest wins are in manufacturing. Empirical evidence shows that well-designed environmental regulations and incentives can stimulate innovation by firms. By adopting new technologies, the manufacturing industry in the ECA region could cut energy consumption by half. Turkey’s iron and steel industry is a good example; thanks to technological modernization, the industry is now cleaner than in other emerging markets.

Turkey has achieved impressive results in improving energy security through successful privatizations. It has introduced cost-based pricing, increased private investment in electricity generation, transmission, and distribution. As a result, Turkey has increased its power transmission and peak capacity by almost 80% in the past ten years. Turkey has also made a strong start in developing its renewable energy assets. In the past decade, electricity produced from renewable sources has nearly doubled.

For its part, the World Bank supports client countries’ efforts at climate action with flexible financing instruments, and comprehensive policy advice based on global experience. We are currently working with the Government of Turkey to support its goal of approximating the EU environmental acquis, for example in waste and waste water management, where Turkey has made much progress.

As Dimitris has noted, the private sector has a huge role to play in climate action and the transition to green growth. Our work with the Turkish private sector already includes many good projects that support climate action. I will mention just a few examples of how we can work together.

The World Bank Group has provided credit lines through Turkish banks to finance investments in privately owned energy generation from renewable sources; and also investments in energy efficiency by SMEs.

We are also working with Turkey’s Ministry of Energy and Natural Resources and the General Directory for Renewable Energy (with EU support) to share technical knowledge on energy efficiency and renewables with firms, including energy companies and commercial banks. Our technical assistance for the private sector includes industrial benchmarking and energy audits. Our recent report on Green Growth in Turkey also offers specific recommendations for each of the major sectors of Turkish industry.

Climate action is a challenge that we can successfully face only if the public and private sectors work together. In the World Bank Group we firmly believe that climate action is not only an essential condition for sustainable growth, but also a driver of economic growth in its own right. Investing in energy efficiency, renewable energy, and climate-smart agriculture is more than a moral imperative to preserve a livable planet for future generations; it is also smart economics and smart business. More efficient use of natural resources will be key to ECA countries’ efforts to become globally competitive economies and reach shared prosperity for their populations for decades to come.

Thank you for your attention.