Transitions at the Heart of the Climate Challenge

Imagine a world where farms grow nutritious food and raise healthy livestock without harming the environment. Where every village, town and city are powered by clean energy and cities have safe, affordable, and non-polluting transit systems. Where people have jobs that drive the sustainable growth story of the future. This world is within our reach, but only if we confront the challenges we face today.

Over the past year, COVID-19 devastated communities, slowed economies and pushed millions of people into poverty. Meanwhile, the climate crisis continued unabated, with 2020 among the hottest years on record.

The World Bank Group is increasing its financing to help countries address the pandemic and climate change -- because a sustainable future depends on the decisions countries make today.

"Good development is good for climate and climate action can unlock better development outcomes”, said World Bank Climate Change Global Director Bernice von Bronkhorst.  

A forthcoming five-year Climate Change Action Plan will support transformative investments in key sectors that contribute the most to global greenhouse gas emissions.  Low-carbon transitions in energy, transport, cities, manufacturing and food are expected to generate trillions of dollars of investment  and  millions of new jobs over the next decade.

And expanding basic services like water, sanitation, energy and digital connectivity would improve the health, education and skills of millions of people, help them cope with climate change – and enable countries to emerge stronger from COVID-19.

“We can achieve a massive transformation to a low-carbon economy, and at the same time continue to grow and create jobs, by mobilizing the innovation and capital of the private sector,” said Vivek Pathak, Director of Climate Business at IFC, the World Bank Group’s private sector arm.

Ramesh Dudiwadia, a salt pan worker, cleans his solar panels as the sun rises in Little Rann Off Kutch, India. Photo © Dominic Chavez/International Finance Corporation

Powering a Clean Energy Transition

In just a few years, solar and onshore wind have become the cheapest ways of generating new electricity in most countries. Some countries are already producing most of their daily energy needs from renewables. And despite the COVID-19 pandemic, more than 260 GW of renewable energy capacity was added globally in 2020, beating the previous record by almost 50%.

Jobs in the renewable energy sector reached 11.5 million globally in 2019, and a shift to low-carbon, resilient economies could create over 200 million net new jobs by 2030 in 24 major emerging market economies if they focus on green investments this decade.

But to clean up energy systems, it will be important to drive action on multiple fronts simultaneously:

• Decarbonizing the power sector by expanding support for renewables
• Making power more reliable in a world where outages cost $185 billion per year in low- and middle-income countries
• Supporting countries with a just transition from coal
• Scaling up energy efficiency
• Eliminating fossil fuel subsidies, while expanding energy access.

“Decarbonizing the power sector is going to happen,” said Rohit Khanna, Manager of the Energy Sector Management Assistance Program (ESMAP). “It's not happening fast enough, for sure, but the direction of travel is very clear that there will be zero carbon electricity in our lifetimes.”

In the last five years, the World Bank Group supported the generation or integration of 47.5 GW of renewable power and invested $13 billion in energy efficiency – and it intends to go further and faster.

In India, for example, the Bank Group backed the 750 megawatt (MW) Rewa Ultra Mega Solar Park, one of the largest in the world, kickstarted a rooftop solar market and supported the Energy Efficiency Scale-Up Program deploying millions of LED bulbs, tube lights, energy efficient ceiling fans and LED streetlights. The energy efficiency program expects to avoid nearly 100 million tons of CO2 emissions over its lifetime.

With the Bank Group’s support, Zambia’s first large-scale solar plants are powering 30,000 households and businesses and diversifying the country’s energy mix. The same program that helped Zambia is being rolled out in other African countries and in Uzbekistan.

Transforming Transport

Today, transport accounts for a quarter of the world’s energy GHG emissions, and the trend is not encouraging. By 2030, annual passenger traffic will exceed 80 trillion passenger-kilometers—a 50% increase compared to 2015; global freight volumes will grow by 70% and 1.2 billion more cars will be on the road—double today’s total.

Transforming transportation is an urgent priority to enable people to move, breathe and be productive, and reduce the cost of transport disruptions, which amount to $107 billion a year in low- and middle-income countries.

This transformation will require a range of solutions including:

• Climate-resilient public transport
• Reforming policies and regulations
• Shifting freight to lower carbon options
• Investing in energy-efficient equipment
• Supporting the transition to e-mobility (electric-powered vehicles and fleets).

The potential is significant. In 2010, only about 17,000 electric cars were on the world’s roads. By 2019, that number had swelled to 7.2 million. Several large automakers have recently announced plans to manufacture electric vehicles and some aspire to produce only electric vehicles after 2030.

“One big factor of change is the revolution in battery technology – the fact that batteries have become cheaper and lighter, that they have higher energy density, and that their reliability and the number of times you can recharge them has gone up,” said Franz R. Drees-Gross, Infrastructure Director for the Bank’s Latin America and Caribbean region.

The World Bank Group is supporting public transport systems, such as bus rapid transit and metros, electric vehicles and buses, non-motorized options such as walking and bicycles, and the greening of government fleets.

“A cocktail of technology, investment, and scale in electric buses and other high-use intra-city electric vehicles will soon reach a point where reliability and cost advantages create the death spiral for internal combustion engines,” said John Graham, Principal Industry Specialist, Global Transport at IFC.

Modernizing freight transport also offers big wins. for instance, powering ships with fuels such as ammonia and hydrogen rather than fossil fuels would not only reduce emissions but could help many countries break into the zero carbon fuel market while modernizing energy and industrial infrastructure.

Bangladesh is shifting cargo to inland waterways to reduce pollution and transaction costs, as well as improve the reliability and efficiency of freight transport in the country.

And the Turkey Rail Logistics Improvement Project will move freight that otherwise would have been transported by truck to revitalized railways connecting industrial areas to ports, with the goal of reducing both transport costs and GHG emissions.

Creating Sustainable Cities

A more sustainable world will need more sustainable cities. Today, cities are home to half of the world’s population. By 2050, over 70% of people on this planet will call cities home.

Shaping a low-carbon, resilient urban transition will entail:

• Transit-oriented development
• Better water supply and sanitation services
• Clean energy
• Circular economies that recycle waste
• Improved energy efficiency through higher construction standards or retrofitting existing buildings
• Enhancing resilience

“We are looking at ways to use nature-based solutions like mangroves for flood risk management and to build resilience in cities. All these things are important for our future climate, but also for quality of life in urban areas,” said Anna Wellenstein, Sustainable Development Director for Latin America and the Caribbean.

In Mozambique, the Cities and Climate Change Project includes a stormwater drainage system with 11 kilometers of canals and flood control systems to prevent flooding, strengthening resilience to weather-related hazards and helped the port city of Beira recover quickly from the devastating cyclones Idai and Kenneth.

In rapidly urbanizing Vietnam, the Vietnam Urban Upgrading Project  improved water and sewage connections, roads, sewers, lakes, canals and bridges, benefiting 7.5 million urban poor.

IFC’s internationally recognized green building certification system, EDGE, certified over 16 million square meters of floor area around the globe by the end of 2020.

The Bank will also help cities and towns access more financing, along with tools and support to integrate risk in urban planning and land use.

Manufacturing

Manufacturing, especially the production of base materials such as chemicals, steel and cement, will require new technologies to rapidly and affordably transition to low-carbon development.

Electrification of industry would increase energy efficiency, and if powered by renewables or green hydrogen, would reduce GHG emissions significantly and play an important role in the energy transition.

The Bank Group is supporting eco-industrial parks in several countries including Bangladesh, where the Private Investment and Digital Entrepreneurship Project expects to create 150,000 new jobs, attract $3.7 billion in private sector investment, include 150 companies using green and resilient services and facilities, and avoid 30,000 tonnes/year of GHG emissions.

The first-ever blue loan -- to promote sustainable use of ocean resources – will help a global plastic resin manufacturer recycle 50 billion plastic bottles annually by 2025 in four Asian countries and one Latin American country.

The World Bank will help countries develop policies that promote low-carbon and resilient growth while making them more competitive. IFC and MIGA will apply low-carbon principles to investments in heavy manufacturing and assess climate-related drivers in projects without financing any new coal-fired power plants.

Person using GPS-enabled sensor to track performance of machinery in rice paddy in Pakistan. Photo credit: Flore de Preneuf/World Bank.

A Green Transition for Agriculture, Food and Land Use

A healthy planet and a thriving food system will be needed to feed a projected 9.7 billion people by 2050. But today’s unsustainable agricultural production practices cause high GHG emissions, forest and biodiversity loss, land degradation, water depletion, pollution and disease.

To tackle food insecurity and protect forests, climate-smart agriculture and nature-based solutions will need to be scaled up.

“New technologies play a key role, and they need to receive more support because R&D in agriculture is small compared with the importance of the topic,” said World Bank Climate Change Lead Economist Stephane Hallegatte. “There is no silver bullet and much more that needs to happen, including healthier and more sustainable diets, better land-use management, well-enforced protection of natural areas, lower food waste and better food logistics.”

“One of the things we're pushing very hard is what we call the ‘triple win’ in agriculture, and that is to look for investments that would be climate resilient, reduce emissions and increase productivity simultaneously,” said John Roome, Director of Sustainable Development for the World Bank’s South Asia region.

In Colombia, for example, farmers are using a silvopastoral system combining grasses, small plants and herbs with shrubs and trees for animal nutrition and complementary uses. The practice has raised incomes by up to $523 per hectare per year and boosted milk productivity by an average of 36.2%.

To leverage technological solutions for the issue of food waste, in 2020, IFC invested in Apeel Sciences, which has developed a plant-derived coating to help growers, suppliers and retailers significantly extend the shelf life of fresh fruits and vegetables, reducing losses and the need for refrigeration.

The Bank Group will support countries to transform agriculture and food systems while moving toward food security as an urgent global priority. Preserving forests and natural capital more generally is a key aspect of this transition.

“There is little disagreement over the need to enable a recovery that is fairer, safer, and more sustainable,” said Richard Damania, World Bank Chief Economist for Sustainable Development. “The choices governments make today on how they restart their economies will have long-term consequences that will shape their development for decades”.

To find out more about how these low-carbon transitions are taking place, as well as other transformative policies, innovations and markets that are delivering low-carbon, resilient solutions, tune in to Innovate4Climate (May 25-27, 2021), the World Bank Group’s flagship annual climate event. Attendance is free but registration is required.