The case for climate action has never been stronger. Current weather extremes, such as storms, floods and drought, are becoming more frequent and intense, affecting millions of people across the world. Climate change is threatening global water and food security, agricultural supply chains, and many coastal cities.
The poor are uniquely vulnerable to the impacts of climate change, and the need for action is urgent. According to the recently released World Bank report, Shock Waves: Managing the Impact of Climate Change on Poverty, without rapid action, climate change could push an additional 100 million people into poverty by 2030.
To address this, the World Bank Group (WBG) is integrating climate change across its work, in the recognition that climate change and development are inextricably linked, and that bold actions are required to set the world on the path of low carbon and resilient growth.
From Agreement to Action
On December 12, 2015, 195 nations reached a historic agreement at COP21 in Paris: to keep global warming to well below 2 degrees Celsius – the threshold scientists estimate would result in irreversible planetary alteration – by 2100.
As part of the Paris process, more than 180 countries submitted their pledges – the Nationally Determined Contributions, or NDCs – laying out the actions they will take to reduce emissions and increase resilience to climate change impacts. Of these countries, 140 are working with the WBG.
Investment needs embedded in the NDCs amount to more than $1 trillion per year over the next 15 years. The WBG is stepping up to help countries meet their immediate challenges and to deliver on their NDCs. Plans are currently being discussed which would help countries to meet specific demands, determine in which areas they would like support from the WBG, and to integrate these into partnership frameworks.
Since 2011, the WBG has committed $52 billion to more than 900 climate-related projects, an average of $10.3 billion per year. In FY2015 alone, the WBG made 188 climate-change related investments in 59 countries, ranging from helping farmers adapt to a changing climate with heat resistant seeds to new investments in renewable energy.
Funding Boost for Climate Action
In October 2015, President Kim announced that WBG climate financing could increase from the current 21 percent of the Institution’s portfolio to 28 percent by 2020, in response to client demand. At current levels of co-financing, that would mean a potential $29 billion a year for climate projects by 2020.
At the same time, the WBG recognizes that the financing required for the transition to a low-carbon, climate-resilient global economy is counted in the trillions, not billions. While public and international concessional finance has a critical catalytic role to play, this transition will ultimately be financed by the private sector.
The WBG’s private-sector arm, the International Finance Corporation (IFC), mobilized a record $2.2 billion from other investors in FY2015 – demonstrating that there is strong global demand for investments in clean energy, resource efficiency, and climate adaptation. Since starting to track the climate-smart components of its investments and advisory services in 2005, IFC has provided more than $13 billion in long-term financing for renewable power, energy efficiency, sustainable agriculture, green buildings and private sector adaptation to climate change.
Setting a Price on Carbon Pollution
The transition to a low carbon global economy will also mean getting prices right, ending wasteful fossil fuel subsidies and putting a price on carbon pollution.
In this regard, to bolster the case for putting a price on carbon pollution, the WBG, in conjunction with national and sub-national governments, businesses, and civil society organizations, officially launched the Carbon Pricing Leadership Coalition during the Paris climate talks.
More and more companies are realizing that creating a low-carbon business strategy can be beneficial for their bottom-line. For this reason, more than 400 businesses have set an internal price on carbon, and over 1000 companies – including from the oil and gas industry – are calling for widespread carbon pricing.
There has never been a global movement to put a price on carbon on this scale and with this degree of unanimity. In 2015, WBG President Jim Yong Kim and the International Monetary Fund’s Managing Director Christine Lagarde set up a high-level Carbon Pricing Panel composed of Heads of State, city and state leaders that was launched at Paris COP21.
Last Updated: Mar 29, 2016