MR. MARK TERCEK, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATURE CONSERVANCY: Okay. Welcome everyone, good afternoon. We're delighted to be here today at the Council on Foreign Relations where we have the opportunity to discuss with President Kim of the World Bank, the next steps for international climate action.
Dr. Jim Kim became the 12th president of the World Bank in 2012 after a career in development and medicine. He served as president of Dartmouth College, as well as a number of medical departments. And he co-founded Partners in Health which now operates on four continents. Dr. Kim's work, of course, has earned his wide recognition. He was awarded a MacArthur Genius Fellowship in 2003. U.S. News and World declared him to be one of Americas 25 best leader in 2005. Time Magazine named him one of the 100 most influential people in the world in 2005.
We're pleased to have him here today to discuss a huge challenge, climate change. So with that, Dr. Kim.
DR. KIM: Thank you. Thank you so much, and I very much apologize for the delay. We had his Royal Highness, the [Duke] of Cambridge here, and was just across the street talking about corruption hunting, and I think we had a security issue. So I really -- I apologize, but I'm very glad to be here.
First, I'd like to thank the Council on Foreign Relations for graciously hosting this event. And thank you, Mark, for your very kind introduction. The Nature Conservancy has played such an important role in climate change and also environmental preservation issues worldwide, and your very innovative leadership has taken it to even greater heights. And given the time you’ve spent in the financial world, you will know very well one of the themes of my talk today which is that economic policy is the key to mobilizing a coordinated global response to climate change.
I won’t be able to travel to Peru to attend the 20th Conference of the Parties to the UNFCCC. But I'll be watching closely as the delegates set the stage for an agreement to be reached in one year’s time in Paris that should transform the way we live for generations. At this key moment, I’m pleased to return to the Council on Foreign Relations to share our vision of what a Paris Agreement might look like.
The World Bank Group works on climate change because it is a fundamental threat to development in our lifetime. We know that if we don't confront climate change, there will be no hope of ending poverty or boosting shared prosperity. Furthermore, the longer we delay in tackling climate change, the higher the cost will be to do the right thing for our planet and for our children. Our series of Turn Down the Heat Reports, and our work on green growth and the links between development and climate, make clear that the progress of recent decades toward ending poverty is at risk.
Last month, these points were emphatically punctuated with the release of the Intergovernmental Panel on Climate Change’s 5th assessment report. This unprecedented scientific consensus concludes that, if we are to stabilize warming at 2 degrees Celsius, as the international community agreed in 2009, we must achieve zero net emissions of greenhouse gasses before 2100.
In a year’s time, the international community will have the opportunity to send a clear signal that we, as a global community, are determined to manage our economies to achieve zero net emissions before the year 2100. Every country finds itself at a different point in the development journey. Therefore, the pace and rhythm of their emissions reductions and investments in adaptation will vary. Nonetheless, we have the opportunity in Paris to make clear our collective ambition.
That ambition can be translated into long-term demand for clean growth and an increased commitment to adaptation. The higher the ambition, the greater the demand will be for programs and projects that will transform economies. Higher ambition will also send a strong message to investors, public and private, domestic and foreign, about the demand and profitability of long-term investments in clean energy and transport systems, sustainable agriculture and forestry, and new resource efficient products.
Paris must be where we make the rallying cry for effective management of local, national and global economies to fight climate change. Many observers expect an agreement in Paris to be comprised of a number of essential components. Each of those components must reflect an ambition equal to the challenge before us in order to send an even more powerful signal to economic actors around the globe. To achieve that, agreements at the 21st Conference of the Parties must include, number one, binding language that should reinforce our collective ambition and provide a clear pathway to zero net emissions before 2100.
Two, individual country contributions with policy packages that should comprehensively address how to use all available fiscal and macroeconomic policy levers to get prices right, increase efficiency, and incentivize de-carbonization, as well as address resilience.
Three, a financial package that recognizes that public development funds and climate finance should be used to catalyze innovative financing for adaptation and mitigation. Financial flows cannot reach the levels we need in the necessary timeframe without some form of networked carbon market based on the market mechanisms, taxes and enabling environments we are beginning to see introduced all around the world.
And finally, working coalitions of private enterprises, countries, cities and civil society organizations moving forward where their interests are aligned must be enhanced. Unlike treaties of the past, the Paris agreement needs to speak as loudly of economic transformation as it does of pollution or carbon emission targets.
So let me say a few words about what we consider effective management of the economy with respect to climate change, and what we hope to see in INDCs, and I'll use that, the Intended Nationally Determined Contributions, that will set out each country’s commitment for Paris and beyond.
We understand that many of our clients still face huge development challenges, and that many countries will reach their own peak emissions at different moments. Managing their economies to ensure that they can, for example, decarbonize their energy sectors over time, while at the same time having the energy they need for development, constitutes a challenge no developed country has had to face as it was industrializing.
Nevertheless, every country, no matter its stage of development, can strive to effectively manage its economy, and to decarbonize while also ending poverty and boosting shared prosperity. At a minimum, this means strong policy signals that make clear the long term goals, carbon pricing, appropriate energy prices linked to efficiency standards, and removing subsidies that are harmful, including fossil fuel subsidies.
All countries should commit to put a price on carbon. It’s a necessary if not sufficient step in any journey to zero net emissions. Effective prices on carbon can be discovered by taxes, market mechanisms, or regulation. Whichever option a country, region, or city chooses, a carbon price makes the pollution we don’t want more expensive and incentivizes efficiency and clean production.
Carbon pricing can raise revenues, and these added resources can be used to generate more economic and social benefits. We can do this by, for example, moving from “taxing the goods” to “taxing the bads”; by using carbon tax revenue to reduce labor and investment taxes and to encourage job creation and economic development or by supporting innovation and the development of green technologies through research and development subsidies.
The example of British Columbia is one of the most powerful. Its carbon price mechanism is neutral to the taxpayer. It’s not an increase in tax. The government promised households it would not impact their overall household tax rate. As a carbon tax is introduced, taxes on labor, for example, were reduced. Introduced at the height of the financial crisis in 2008, the carbon tax has risen from 10 Canadian dollars per ton to 30 Canadian dollars per ton today. During this period, the taxes reduced emissions and provided a net benefit to taxpayers of 300 million Canadian dollars in personal and business tax cuts. It’s worth noting that British Columbia’s GDP has outperformed the rest of Canada’s after introduction of the tax.
But carbon pricing alone is not enough. Other instruments need to be mobilized in parallel to redirect investments toward clean technologies and sectors.
Stepping up drivers of energy efficiency is an obvious win-win that can deliver savings to consumers and benefits from better air quality and lower emissions. Strengthened performance standards can help achieve efficiency gains in appliances, buildings, transport, and industry. Such energy efficiency measures have the potential to reduce global greenhouse gas emissions by 1.5 gigatons by 2020.
In addition, specific efforts are needed to scale up renewable energy and develop carbon capture and sequestration technology at a pace that will allow us to reach carbon neutrality by the end of the century. Investment in infrastructure will also be required. The electricity grids in many countries can, with upgrades, achieve much higher rates of efficiency -- a huge opportunity, for example, in India -- and renewables can be allowed to be grid connected. Just this year, once the appropriate regulatory reform and grid development had taken place, the private sector arm of the World Bank Group, the International Finance Corporation, financed the first grid connected solar power plant in the Philippines. Public transit investments are also urgently needed in the rapidly growing cities of the developing world to avoid locking them into inefficient and polluting patterns.
Removing harmful fossil fuel subsidies is long overdue. Today there are $500 billion in direct harmful fossil fuel subsidies that primarily benefit the better off while doing nothing to help the poor and the environment. These funds can be better used to invest in resilience, health, or education or to subsidize technologies that can reduce emissions.
Removing subsidies has sat in the “too politically difficult” basket by leaders’ desks for too long. Countries such as Brazil, the Dominican Republic, Indonesia, and Mexico are showing that phasing out fossil fuel subsidies can be successful and benefit the poor when they are combined with improved safety nets and targeted cash transfers. A policy package that includes these components would give credibility to the transition and provide the confidence and predictability that all investors and consumers need to change their choices and behaviors. Including these in INDCs -- the country commitments -- would demonstrate the commitment of every country to play its part to move toward a global carbon-free economy. It would also lay the pathway for essential work before the INDCs come into effect in 2020.
Effective management of the economy also means finding ways to invest more in resilience. The contributions of countries, then, must also address adaptation. Governments must implement the policies needed to strengthen resilience and ensure that development takes into account climate risks. A central government’s support and encouragement for cities to transform themselves into being cleaner and more livable can bring huge rewards.
Rapidly growing cities can implement urban planning that drives new development towards safe locations and in their transport planning, improve resilience and achieve competitiveness at the same time.
And finally, we would hope that the INDCs will lay out clear policy frameworks for how forestry and agriculture can achieve the needs of nutrition and food security, the support of rural livelihoods, and reduced emissions from land use.
If countries can offer such comprehensive contributions, the signal to economic actors will be strong, but for these efforts to coalesce and bring us to zero-net emissions, we will have to find sufficient financing. It is the critical component of a Paris Agreement.
There is compelling evidence suggesting that if countries use their regulatory capacity to get prices right, incentivize clean investment, and use the full range of policy instruments available to them, they will experience greater investment flows.
Morocco, for example, adapted aggressive targets for renewable energy and improvements in energy efficiency, lowered fossil fuel subsidies, and created an attractive legal framework. As a result, the country is becoming known as a solar power innovation hub. It saw its renewable energy investment grow from $297 million in 2012 to $1.8 billion in 2013. Other emerging markets, such as Chile and South Africa, are following policy-driven strategies with similar results.
The strong demand from investors for appropriately- structured green, climate-friendly investments is reflected in the speed at which investors have responded to the growing green bond market. About $35 billion in green bonds has been issued so far this year and robust, liquid, green credit market is taking shape.
But green bonds will not be the answer for the most vulnerable, especially those in the least developed and fragile and conflict-affected states. For these countries, public development funds and climate finance will always play a critical role. In the future, these funds will have to be ever more catalytic to serve the many needs that exist.
Development finance has to mainstream adaptation to ensure effectiveness. What we know now is that there is no development outside the context of climate change. Investing in terracing on the hill slopes of Saint Lucia will ensure successive investments in agricultural productivity as farmers are equipped to adapt to more intense rainfall. Ensuring schools are built to code in Nepal means that investments in educational attainment will be protected as school infrastructure is made more resilient to storms.
Investing in mangrove restoration off the coast of Vietnam may prove cheaper in protecting the coastline than concrete and reinforced steel and may boost earnings from richer fishing grounds. Each of these projects is a development project. Each would also count as a climate investment. This is where long-term development finance and climate finance come together.
The World Bank Group has taken major steps this year by introducing climate disastrous screening in our lending in IDA countries -- IDA, of course, is our fund for the poorest countries. We’ve also developed multi-sectoral adaptation plans to begin with, in 25 IDA countries. If they’re found to be helpful, we’ll expand the initiative.
It’s our hope that countries could use such adaptation planning, done under IDA, to effectively develop their pipelines for the Green Climate Fund.
We know that climate finance will flow through many channels. More than six years ago we created the Climate Investment Funds, or CIF, to pioneer investments in transformative projects for climate change and learned lessons in how to optimize climate outcomes. From grid connected wind power in Mexico to the first at-scale concentrated solar power plants in Morocco to resilience plans in Bolivia and Haiti to indigenous solar entrepreneurs in Thailand, the projects and programs of the CIF show how public climate funds can be leveraged and used by countries and the private sector.
The CIF plan is to leverage its $8.3 billion in assets to generate another $57 billion in funding for country-led investments that reduce net emissions and promote resilient development.
Just last week, the contributors and other board members decided to extend the CIF’s operations by another two years and provide further funding to ensure that we can keep meeting countries needs as other funds are established. We welcome the UN’s Green Climate Fund, or GCF, and the initial pledging of $9.9 billion that it has received to date. Its impact will be greatest if, like the Climate Investment Funds, it uses this capital to catalyze new investment in emission reduction and resilience. We look forward to leveraging GCF funds with our own to maximize impact.
A strong Paris Agreement will send immediate signals, even though its binding component will only come into force in 2020. This means that the other components must address the critical, pressing needs to increase, substantially, our investments in resilience now.
The economics of resilience are compelling. For every dollar invested in resilience we can save four dollars in the cost of relief. For every dollar invested in early warning we can save up to $30 in reconstruction. The costs of inaction are rising. Economic losses from natural hazards have risen from $50 billion each year in the 1980s to just under $200 billion a year in the last decade.
Along with economic losses, insured losses from weather events have also increased significantly. Swiss Re estimates that over the past ten years, insured losses from weather-related events are growing as a proportion of global GDP. The gap, though, between overall losses and insured losses has been widening. Again, according to SwissRe, fully 75 percent of catastrophe-related losses worldwide are still uninsured.
At the World Bank Group, we will use our track record for financial innovation to look for ways to raise a one-time injection of funds and strengthen insurance coverage to build resilience immediately and not wait until the next decade.
Just as we can’t wait to step up action to build resilience, we should also not wait to act on other fronts. In recent years we’ve witnessed a new phenomenon, what some have been calling “working coalitions.” Frustrated by the pace of negotiations and the difficulty of finding consensus among all 193 members of the UN, coalitions of stakeholders have pressed forward. On issue after issue, governments, companies, the scientific community, and civil society organizations have found that their interests in working together override the difficulties in forging binding agreements. In fact, these coalitions have paved the way for wider agreement and have picked up the pace of data, evidence building, and action.
This is what led forest nations and other stakeholders to move forward around REDD, the effort to reduce emissions from deforestation. This willingness to work in partnership has also driven the effort to remove short-lived climate pollutants from the atmosphere, the Sustainable Energy for all initiative, and the development in Africa of climate-smart agriculture that keeps emissions low, creates jobs in rural communities, and feeds the world’s growing population.
The Paris Agreement will, I hope, recognize the importance of these coalitions in driving action forward. For us at the World Bank Group, partnership in these coalitions has been fundamental in our exploration of new ways to support to clients.
Since I joined the World Bank Group two and a half years ago, in addition to evaluating all projects and every country plan financed through IDA for climate and disaster risk, we’ve begun to measure the greenhouse gas emissions of projects in key sectors, and set an internal price on carbon as a guide for project designers. We are discussing the discount rate we use that will determine how we measure economic benefits over the long term, and we’ve begun work on a resilience indicator.
We tally our use of climate finance together with other multilateral development banks and, we have, as a group of banks, developed a common way to measure mitigation achieved in our financing. We are about to agree on a common measurement for adaptation in our projects. We hope that in the near future, all the multilateral development banks and the bilateral financial institutions, gathered in the International Development Finance Club, will align themselves around common accounting.
All of these measures make up a robust toolkit for understanding the carbon exposure in our portfolio -- our carbon footprint -- and can give us important management information for project choice and design. This toolkit, we hope, will also help the international community know what mitigation and adaptation benefits come from channeling climate finance through us, and what benefits we achieve on our own accord.
In the past year, we’ve changed the way we conduct our country partnership frameworks and our country diagnostics. This will increasingly place a climate lens on our work in support of our clients, and can be a way to support countries in implementing their defined contributions to climate change.
At the World Bank Group, we need to challenge ourselves so that every regional and country strategy, and every sector strategy, is guided by our belief that our clients must succeed at reaching zero net emissions.
This will require a continuing shift in direction of our energy portfolio to support energy access for all, increased investment in renewables, and scaled-up support for energy efficiency.
It will require continued support for clean transport, more livable cities and the development of the green building market. It means shifting our agricultural portfolio towards climate-smart agriculture, ramping up support for globally networked carbon markets, and further financial innovation to crowd in investment for low emissions development.
At this critical juncture in Lima, and in the year between Lima and Paris, I intend to challenge the World Bank Group and other development financial institutions to become long-term partners of choice in this decarbonizing world. I offer our spring and annual meetings as venues to help increase our ambition with finance ministers and other economic actors. We will support German leadership of the G7 and Turkish leadership of the G20 to ensure that these fora promote a Paris Agreement that will send the strongest signal possible.
Today I'm sending a signal of my own. As Head of the World Bank Group, I will drive our Institution and all its capabilities; financial, technical and human, to support this development transition that we must support together, toward the goal of preserving our planet for all future generations. Thank you very much. (Applause)
MR. TERCEK: President Kim, thanks for those great remarks. I get to ask a few questions and then we will open it up to the group.
DR. KIM: Sure.
MR. TERCEK: I’d like to start where you ended, your personal commitment to this challenge, which of course, we really appreciate. Thank you for your leadership.
It reminds me shortly after you joined the World Bank, you said to me and other folks in the environmental movement that after thinking about all of your challenges, climate change was right at the top.
Can you share with us today your personal view of the climate change challenge, and also how is it going? You have been at this for a while now. Are you encouraged? Discouraged? How are you thinking about all this?
DR. KIM: Well, you remember, Mark, in one of our conversations, I kept asking people what’s the plan. So, we know that this problem is huge. We know there’s a very strong side to the consensus, and I have said all the time that when I saw the degree of scientific consensus, I was amazed, because I don’t think there’s anything in medicine around which there is that kind of consensus.
Yet, there was not a clear enough plan, I thought. So I think that we have made a lot of progress. I think there is a lot of coalescence around certain plans. I think, for example, for me, the fact that Christine Lagarde is so engaged with climate change and in talking about fossil fuel subsidies is new and different, and there are more actors coming on board.
I was extremely encouraged with the statement on carbon pricing that we were able to bring together for the U.N. General Assembly, and I think the agreement between the U.S. and China is really an extremely important milestone.
So, I’m much more optimistic than I was even a year ago, but my goodness, this requires so many changes, and this is why today I really wanted to bring home the point that economic management can have a huge role, because if we get this right and align the incentives, the market system will push us toward the targets we really need to hit in ways that any amount of conscience or personal conservation just won’t get us to.
MR. TERCEK: Right. Thanks. You know, speaking of market signals and economics, the price of oil has fallen about 40 percent over the last few months. Is this a plus or a minus on the climate front?
DR. KIM: I think we are all still trying to understand this. We are trying to understand the impact of the lower price of oil. Of course, we work with both net exporting countries and net importing countries.
You know, I think the jury is still out on what impact it is going to have, but for me whatever happens doesn’t take away from the very real data that we are getting. I was just reading about Antarctica and some of the new data about how quickly those glaciers are melting; is very, very concerning.
You know, if you ever want to dispel any doubt you might have about climate change, go to the Philippines and talk to the people there.
So I think whatever happens with the price of oil, we have to just keep laser focused on what we need to do to get the right pieces in place.
Again, if we can establish a price on carbon, if we can start removing some of the fossil fuel subsidies, if we can do the other things as part of our plan, you know, cleaner, more livable cities, climate smart agriculture, and better funding for renewable energy and greater energy efficiency, if we can just keep our eye on those five things.
I think the fuel subsidies are difficult but doable, the carbon pricing is going to be controversial, but the others, cleaner, more livable cities, climate smart agriculture, and renewable energy and efficiency, these things are no brainers. We should do this no matter what the price of oil and no matter what is happening in the outside world.
So we will keep pushing while at the same time watching carefully the impact that these prices are going to have on the various countries we deal with.
MR. TERCEK: I agree there is a reason to be encouraged in recent events, but still sometimes living here in Washington, D.C., I find the politics of climate change in the U.S. pretty discouraging.
You have a global perspective, a global job. How does the discussion in the U.S. line up with other parts of the world? And should we be encouraged or discouraged on that front?
DR. KIM: Well, I mean I think that there are enough very strong advocates for taking action on climate change, and I think when President Xi Jinping and President Obama got together and made this statement, that really had enormous impact.
I was just at the G20 leaders’ meeting. We did have a discussion, and a serious one, on issues related to climate change.
So I think the fact they are leading makes it very important, and I have to tell you, the discussions are different in every single country in the world.
Even when I started in July of 2012, the discussion in China, for example, has shifted dramatically. So, I think that things can change pretty quickly over time, and I hope they do here as well.
MR. TERCEK: Same here. Let’s talk about finances for a minute. The numbers are staggering sometimes when you think about it. The World Bank estimates for needed funds for adaptation are mind boggling really, they are so big, and then I gather the U.N. has said no, you guys were low in your estimates.
How do we catalyze the funding? You talked about CIF, $10 billion leveraging up to 50. How does that work? How do those catalyzing initiatives really play out in the real world?
DR. KIM: Well, you know, we are looking at -- when I came to the World Bank Group, one of the first questions was well, you know, you guys are relatively small players. I mean we are $65 billion a year, but given that infrastructure needs in the world right now, additional infrastructure needs that are not being financed, it is probably $1 to $1.5 trillion. We were very small.
We began thinking, and always in trying to do this, to see how we can leverage funding. One of the specific things we are doing now is something we are calling the Global Infrastructure Facility. We realize that the World Bank has a lot of skills, a lot of experience that others don’t have.
For example, can we build infrastructure that increases renewable energy, for example, in a developing country. Well, we don’t have enough money to do it, but what if we were able to structure a deal that normally a sovereign wealth fund or a pension fund might think of as too risky, but if we do all the work and we build in safeguards all along the way, can we with a relatively small initial investment crowd in other investors to invest in the kind of infrastructure we need.
Well, we just out of the G20 leaders’ meeting, we just got very strong endorsement for this Global Infrastructure Facility, and that is just one example of how we are going to try to use our -- you know, project preparation is a huge issue, for example.
There are new development banks that are opening up, but one of the things that they are going to face is that they don’t have people with the collective decades and decades of experience in putting these projects together, and we often find that is the key, that putting the projects together is one of the most difficult parts of it and then once you do that then you can actually leverage the other funds. So we're doing that with CIF, we're doing it with the Global Infrastructure Facility.
And I think that's the wave of the future, even for sustainable development goals. One of the things that the Secretary General has asked to us, by "us" I mean myself, Christine Lagarde at the International Monetary Fund, and the other multilateral development banks is he's asked us to put together a much more robust picture for financing for development.
So the sustainable development goals won't be financed in the way that the Millennium Development Goals were. Millennium Development Goals were sort of just declared. And I think it was a brilliant move. Secretary-General Kofi Annan just said we need to focus and this is what it's going to be, and then the first financing conference happened two years later. So what we're doing now is working intensively so that we can put together a plan to fund the Sustainable Development Goals, but a lot of it -- you know, this is not going to be a case where we just think about how to divide up official development assistance. That's really what the MDGs are for, you know, as sort of a let's focus ODA so that it gets at these critical issues. Now we've got so many things, 17 goals, 169 targets, we've got so many things on the table that we're going to have to be much more creative.
And private sector financing is going to be a huge part of it going forward. So we're in the middle of doing that right now, trying to think about well, you know -- to give you an example we're going to say okay, so in the poorest countries support for healthcare probably should be in the form of a grant. But should it be fully in the form of a grant? Should we not also ask these countries to be better at resource mobilization, at, you know, getting their tax systems in place. We're going to look at all these different things together so that the financing strategy will actually give us a shot at achieving all of these things that are in the goals. And that will require, you know, us to be as innovative as we can possibly be.
MR. TERCEK: Thanks, that's exciting. Let's hear from the audience. We have microphones and we're on the record and you have to stand up and tell us who you are and who you are affiliated with. Yes, ma'am.
QUESTION: I'm Mitzi Wertheim with the Naval Postgraduate school. This is very exciting to hear what's going on. What's your public relations or communication plan to get everybody feeling as excited as you do and I assume everybody in this room now feels? So we're all behind you. And I take this all the way down to children's books. Kind of we changed smoking in this country be getting kids to tell their parents not to smoke, so that's just a thought.
DR. KIM: Well, Mitzi, it's a great point. And, you know, one of the things that we realized in the social sector is that we've not been nearly as good as say the advertising industry in getting our messages across. But there are great examples. I mean I used to be a professor at the Harvard School of Public Health and it was a very specific effort to get designated drivers into sitcoms that led to that become part of the discourse.
And, you know, it was Jay Winsten and he was a friend of mine; he very much focused on it, getting smoking out of television for example and sending messages. And there are also a history of messages that have failed miserably. You know, this is your brain, this is your brain on drugs; failed miserably. But what the advertising industry can do is they keep throwing things up and then if it sticks they keep going with it.
But for us, you know, we don't have that same mentality, so I think we have to really work on many fronts at the same time, to make thinking about climate change, to make thinking about conservation in the way that Mark's organization has focused. These things have to become cool, and they're not quite yet. They're a little bit too sort of crunchy, you know, counter culture, you know, if you will. It has to be right at the core of the way we breathe, the way we live.
Now I think a big boost to that will be to get the market signals right so that companies are aggressively moving in the same direction. And I have to tell you I am extremely impressed with the private sector's embrace of these issues. You know, Wal-Mart needs food in order to be able to continue to sell its products, you know, Coca Cola needs water in order to continue to sell its products.
So the way that many private sector companies have come on board to support these efforts have been encouraging. What we haven't gotten yet though is their great, great skill at sending messages out about, you know, Diet Coke or whatever else they do. So I think this has to be at the top of our agenda. I think we have to be ready also for when the next disaster hits. I think what happens is, you know, after Hurricane Sandy everyone kind of turned and looked at the environmental community and said okay, we get it, what's the plan?
And actually we didn't have a plan at that time, we didn't say here's the plan, one, two, three, four, five. We have to be ready for those moments and we have to continue to -- I mean what we're talking about is not a less prosperous way of life, but a fundamentally different way of life that will be less carbon intensive but I think just as full of promise and joy as one that would be fully carbonized.
MR. TERCEK: Yes, back there.
QUESTION: Thank you. Will Davis with United Nations Development Program. First and foremost, happy birthday, President Kim.
DR. KIM: Thank you. (Laughter)
QUESTION: And second, perhaps equally as important, certainly in the SDG process you're hearing a lot of countries bringing a lot of different perspectives to the t able and my new favorite acronym or perhaps least favorite is CBDR, common but differentiated responsibility. Are you starting to see countries coalescing about thinking on approaching climate change, reaching some common ground?
DR. KIM: Well, I mean I think that that language, common but differentiated, is still there and it has to be. And I outlined it in my speech as well. I mean, you know, I've talked about situations of energy apartheid.
I mean I have to tell you I'm just back from Liberia, Guinea, and Sierra Leone, and I have to tell you that our failure to provide sufficient energy in those three countries is part of the problem. We did not have functioning healthcare systems, we did not have access to grids or even micro and mini grids. They did not have that. And so getting information from the regions where Ebola broke out -- I mean I think you can look at Ebola as an example of what it means when we don't take seriously our development responsibilities.
You know, now it's in a situation -- you know, I've spent my life fighting, you know, problems like HIV and drug-resistant TB and I've never seen anything as bad as the Ebola outbreak right now. I mean, we have, you know, and ironically it's the same problem. We have to get to zero cases for Ebola in every single country while we're talking about zero net emissions.
You know, for me tackling these development challenges is not just about doing the right thing as nice people. For Ebola, not having a structure in place that would have allowed us to immediately respond to this or any other outbreak now represents a real downside risk to not just the local economy but to the regional, to the African and maybe even to the global economy if we can't get to zero.
Climate change, I think, is another area where it represents a real downside risk to the global economy that's not yet really understood. So that's one of the things we're doing. We're trying to say, look, we talk a lot about, you know, looking at a bank's assets. We're doing these studies of the European banking system, for example, because those we know are real downside risks to the global economy but so is Ebola and so is climate change.
So this is what we're trying to do right now is to make sure that poor countries have energy. And, you know, and we need to make sure that they do because it's connected to things like Ebola. But at the same time, I think we can push all developing countries and this is what we hear. This is what I'm hearing from African leaders. They don't want to be on the side of the question just saying, no, no, no, it's not our responsibility. I hear also a very different attitude. And again, I think leadership from the U.S. and China has had a big impact.
They know that even though we respect their need for energy, we have to. If we start saying you're going to have to wait for energy because of climate change, then I think we're going to have real problems. But if we say you, of course, deserve to have access to energy. Let's make it a renewable as possible but let's make sure that you can develop just like all the other countries have and then, let's also talk about your contribution to the battle against climate change. That's a conversation that's started and I think that's the conversation that has to grow in intensity between now and Paris.
MR. TERCEK: Yes, ma'am? Sherry?
QUESTION: Thank you, President Kim, very much for your remarks. Sherry Goodman at the Center for Naval Analysis. Suppose instead of next you -- instead of the marvelous Mark Tercek sitting next to you, you had the Coke Brothers and a US Congressional climate skeptic, what would you say to those people to invoke their self-interest and the commitment you've shown to climate change?
DR. KIM: Well, you know, I try on this particular issue to say the same thing to everybody. And what I start with is that you've really got to look at the science, right? And the science is pretty astounding and the science is one that you just, you really have to embrace it. And then, after the science, I would invite them to travel with me to places that have been impacted by what we know is the number and intensity of extreme weather events is going up.
So I would invite them to visit, for instance, Tacloban where I visited just a while ago. And then, I'd put in the same way that David Cameron has put it. What he said was, look, the science is pretty convincing to me but even if you don't think that this is real and you think that the chances of the terrible events that we predict are not real, even if you think there's only a 10 percent chance that this is real, wouldn’t you buy insurance against it? Isn't that what we do with insurance policies?
Even if we don’t know for sure that it's going to happen, isn't it the smart thing to do to protect ourselves in case it does? That's how he put it, right?
So you know, I've been very clear about where we want to go at the World Bank Group because, for me, the science is absolutely compelling. But I know that there are people who don't share that view. I would make those arguments and then, we'd see where it goes.
MR. TERCEK: Yes, ma'am?
QUESTION: Edith Brown, Weiss Georgetown Law School. President Kim, the safeguard policies on resettlement, environment, culture and other things have been redone. That as you know, 300 NGOs walked out of the consultation with the World Bank and there's a stinging critique on the blog at Brookings Institution today. Could you comment on how you see this new development in light of the impact on potentially neglected, very poor, neglected communities and people for REDD plus, for infrastructure development and for the other climate projects that you've identified?
DR. KIM: So that's a great question and first of all, let me just make clear. The safeguards are not yet done. We've just put out a draft and we're in the middle of very intensive negotiations. And I've extended the consultation process into March. So we take this very, very seriously and let me just say that we have a role, the management of the World Bank Group, has a role in putting some of the information together. But the final decision as to what these look like is part of a negotiation that happens with our board and our board is 188, the member countries of the World Bank Group.
So I've made a commitment to not dilute the safeguards. We want to make them, in fact, better and stronger. Let me just give you an example of how complex this is.
So communities from Latin America are absolutely convinced that even stronger language on indigenous communities is important. Countries in Africa are saying, are you kidding me? When we begin to ask questions of indigenous people, we have problems like the ones we had in Rwanda where indigenousness, if you will, is extremely complicated and difficult.
Now, I don’t know how we're going to resolve that issue frankly. I don't know how we're going to bring extremely strong opinions that come from different parts of the world with different frames together. But that's the job, not just of me, but of the board.
So this is why multilateralism is so extremely difficult because you have powerful forces on our board that are arguing about these things all the time. I will do my best to come to an agreement that protects marginalized people; that protects the environment. We will do everything we can to get there, but because we have 188 member countries, and a group of governors, we have to do it in the context with them. And I hope that you'll continue and that others will continue to be engaged in the discussion of this process as we go forward.
MR. TERCEK: Yes, ma'am.
QUESTION: Carmen (inaudible), CWI and PMA. I'd like to ask particularly in the sustainable development standards, why the Bank has not included in the draft document that was discussed recently, mandatory gender standards. I think without the women of the world, the world is not going to move forward and the Bank has been such a sustainer of women's advancement. Why is that not included in the draft?
DR. KIM: Which draft?
QUESTION: The sustainable environmental and social framework.
DR. KIM: I don't know the answer to the question other than to say that we have been extremely committed to gender equality. We have now a new cross-cutting solutions area that spans the entire organization. We have been trying to lead as much as possible. Actually, I don't know the answer to that question. Rachel, do you know the answer to that question?
MR. TERCEK: Here, we have a mike for you Rachel.
MS. RACHEL KYTE, WORLD BANK GROUP VICE PRESIDENT AND SPECIAL ENVOY FOR CLIMATE CHANGE: Well, I mean, just to answer, sorry, my name's Rachel Kyte, I work for Jim. One of the ‑‑ as Jim said, first of all, we're in consultation, so this is all part of the consultation. I think the question in the safeguard's team and there's a lot of discussion around this is, how do you put a gender lens on all of the safeguards? So that would start from the way in which you work with women in the process of an environment and social impact assessment.
And you know, from my own professional experience, you walk into a forest community and you ask, men what they think about development within the forested area and you ask women what they think about development in the forested area ‑‑ you may actually get two very different answers, as you would do in the village I come from, and I'm sure you would do if you talked to people in Bethesda or McLean.
So we're aware of that dynamic, so how do you mainstream that as a lens in your impact assessment. And how do you deal with the specific issues related to gender and some of the other issues with indigenous people in resettlement, et cetera.
So I think the question is, do you put a gender lens across everything, or do you have to have a standalone policy on gender. I think there's a real feeling that the standalone policy on gender needs to be upstream.
The safeguards are very much an end of pipe process to make sure that you're doing no harm in your projects. They have to be accompanied by strategic documents and strategies of the Bank and in fact, one of the things that Jim has to do next year is take a new gender strategy to the board. So, but let's talk after this meeting.
DR. KIM: If you were talking about safeguards, this is just an ongoing argument that's happening between people who are commenting on the documents, the civil society organizations, and also our board; because there's many many ‑‑ you can imagine the number of new standalone safeguards that are being requested.
And the discussion going on with the board, which is really the 188 member countries, is where do you get the greatest impact ‑‑ from standalone safeguards or from some way of ensuring that at the end of the day, we remain accountable for outcomes around gender equality. This is an ongoing discussion and it won't be resolved for at least ‑‑ we'll present a final version to the board sometime in the summer of 2015. And then the final approval will be probably in about a year.
MR. TERCEK: How about in the back of the room, and let's try to revert back to today’s topic ‑‑ climate change and financial matters.
DR. KIM: That would be great.
MR. TERCEK: Yes sir.
QUESTION: Dr. Kim, could you comment on what appears to me to be the special problem of India with its great development needs and its use of coal and so forth.
DR. KIM: Right. Well, I've had now quite a few meetings with Prime Minister Modi, and Prime Minister Modi has told me that he has worked a lot in terms of increasing solar energy, so he's a great advocate of solar energy and he did that when he was in Gujarat.
He has an enormous problem in the sense that he has to find ways of providing energy for still 400 million people in India who live on less than $1.25 a day, while at the same time, having a positive impact. Now I, in my discussions with him, he has been clear that he's very open to having these discussions. But of course, the first thing that he'll say is, we need a chance to industrialize. We need a chance to create jobs. We need energy.
So I'm hopeful in the sense that the leadership of China and the U.S., I think was unexpected. And even at the G20 meeting, every single one of the leaders there knew that there was a reckoning coming, that they would have to state what they were going to do. And so, we continue to work with them very closely. We're going to do everything we can to help India down a cleaner path.
For example, if we could build more bus rapid transit systems in India, if we could do many more thousands of kilometers of bus rapid transit systems, that would have a huge impact. And they've already gone to natural gas, and run buses that are much cleaner. So there are lots of things we can do.
What Prime Minister Modi is looking for, and this is our responsibility to him ‑‑ he said to me specifically, you can find cleaner ways of accomplishing what I have to accomplish, and that is creating jobs for all these young people, all these people that are exiting schools and looking for work. If you can find that, I will choose it. So I remain hopeful, but I think that the overall discussion is a very complicated one for a hundred million people living on less than $1.25 a day. That is also his responsibility.
MR. TERCEK: Okay, we have time for one or two more questions, on the topic of climate change, yes.
QUESTION: Thank you, Fred Jepsen, Institute of Peace. Let me offer a dissenting critique on your presentation.
You're one of the ‑‑ have one of the few positions in the world that gives you kind of a bully pulpit to frame these issues in a way that people take heart. And what I'm finding is that, whereas you're talking about 2100 objectives, unless we do something in the next 20 years, there's no prospect of meeting those objectives.
And all politicians will think they can postpone the problem. So what I look for in the presentation is what are you saying that would cause a mainstream politician to develop the political will to take very hard choices within the next 10, 15 years, not 50 years.
And I don't see it. What I hear is a sort of wonky summation of things that countries can do, they should to, you know, we have all these people at the Bank that can help you and understand these things, but there’s the urgency and the certainty, frankly, that the consequences are dire within the next 20 years, not in the timeframes that 2100 would suggest.
So, you don’t have to agree with me, but I wonder what your reaction is. In a world of $70 oil, which, frankly, it’s not complicated as to what that means for this issue, it means it postpones tremendously people’s incentives to get off of oil. In fact, there’s a rush to the resource.
DR. KIM: Well, first of all, I think my mother would thank you for calling me wonky. I’ve been in a political position for so long now that I welcome the moniker, but let me put it -- first of all, I don’t think we know what’s going to happen to oil prices. There are equal numbers of people, even in the World Bank, that say that prices are going to go back up to ones who say it’s going to go down to $40 a barrel. We don’t really know what’s going to happen.
And if you read our documents, you know, we have put out a lot of documents, at an unprecedented level, to be frank. If you read our “Turn Down the Heat” documents, they are very specific about what’s going to happen in Asia, about what’s going to happen in Latin America. We have been very specific about the short-term impact.
And our approach to the problem has been that we’re not going to limit our activity just to giving the doomsday scenarios because, you know, in my view, getting a politician to change his or her mind is an extremely important task, but in the meantime, there are all these other very specific tasks.
For example, how do we increase financing for renewable energy? This is something that we can actually do something on, we’re working like crazy to do it.
Climate smart agriculture is such a no-brainer. It increases productivity, it makes the crops more resilient, it feeds poor people, and it’s good for the environment. It is such a no-brainer and it is not being done at anywhere near the level that it should be done. That’s very clear.
So, you know, I hope you guys are successful along with us, reading our documents, convincing the politicians to change their mind. In the meantime, what about building cleaner, more livable cities? Cities are being built every day and they’re being built in ways that are not cleaner, they’re not more livable. And so we’re aggressively moving forward and saying, look, 70 percent of emissions happens in cities. If you can make them cleaner and more livable, denser, with the bus rapid transit, with all the other things that have been proven to lower the carbon footprint of cities, then it’s something that we should do right now.
And this is, in fact, what’s really changed about the World Bank Group, that we’re not straddling the fence anymore, we’re saying this is a real problem and instead of just engaging in political arguments -- because, see, people, the thing I worried about is that everyone would put everything on a binding political agreement for COP 21. That might not happen. I hope it does, but it might not happen. Where we want to be is that by that meeting, we will have worked out how we’re going to finance both mitigation and adaptation activities for the years forward for the poorest countries, that we will have worked out a plan for building cleaner and more livable cities that’s much more robust and that can have an impact on carbon emissions, that climate smart agriculture would have taken off, that funding for renewable energy -- in other words, we cannot wait for the politicians to change their mind to do the things we know today are going to make a difference.
That’s our approach and I urge you to read our “Turn Down the Heat” documents. They’re pretty frightening.
MR. TERCEK: Let’s close on that strong answer. Listen, President Kim, thank you very much for your great remarks today. Thanks for your leadership. Thanks for bringing to this tough challenge a long-term view, but as this challenge as well, a short-term view, a practical one, one that wants to harness markets, harness partnerships with the private sector and NGOs. Your leadership is needed and we appreciate it and thank you very much.
DR. KIM: Thank you very much. (Applause)