International Finance Forum (IFF) 2021 Spring Meetings:
Global Governance and International Co-operation in the Post-pandemic Era
Session on the Global Sustainable Finance: Green and Low-carbon Circular Development
2:00 - 4:00 AM, May 29, 2021 (DC time)
Good afternoon. It is a great pleasure to join today’s forum. I would like to thank the International Finance Forum for inviting me back to the IFF Spring Meetings to discuss the World Bank’s approach to green and low carbon development in the post pandemic recovery.
When we met last November, most parts of the world were under lockdown, struggling to cope with the COVID-19 pandemic. Now six months later, some countries have begun to turn the corner thanks to the vaccine rollout, while others are experiencing a painful resurgence of the virus, particularly in South Asia. Clearly, the global pandemic is far from over. Moreover, there is a growing divergence between developed and developing countries in terms of accessing vaccines and jump-starting economic recovery which is of grave concern.
Looking beyond the immediate task of fighting the COVID-19 pandemic, we need to make sure we seize the crisis to work towards a green, inclusive and resilient development path. The pandemic has starkly exposed the interdependence between people, the planet and the economy. It therefore highly welcome that climate change is increasingly recognized as the defining development challenge of our time.
The science on this is unequivocal: the consequences of climate change and pandemics are severe and irreversible, and it is the developing countries that continue to bear the brunt. The global pandemic has already pushed over 100 million people into extreme poverty in 2020 and worsened inequality. Climate change risks aggravating this bleak picture: we estimate an additional 130 million people could be pushed into extreme poverty by 2030 as a result of the effects of a warming climate.
Action is therefore urgent. We are lagging behind the Paris Agreement target to limit global warming to well below 2 degrees Celsius compared to pre-industrial levels. With COP26 in Glasgow on the horizon, we have a unique opportunity as well as a duty to intensify our efforts.
I am therefore pleased to note that the World Bank Group recently adopted a new Climate Action Plan (CAP) 2021-2025. The new Action Plan aims to increase the WBG’s impact on Green House Gas (GHG) emissions and adaptation outcomes by increasing climate finance, and expanding diagnostics to prioritize climate-related actions, including direct support to client’s Nationally Determined Contributions (NDC).
We emphasize that climate action and development are intrinsically linked. Indeed, we need a ‘whole of economy’ approach to deliver growth and climate goals and embed climate priorities in country macroeconomic frameworks and financial sector regulations.
We will need transformational actions in key systems like energy, agriculture and food, cities, transport, and manufacturing, which drive the economy, account for around 90 percent of global greenhouse gas emissions and are the primary consumers and polluters of other scarce resources such as land and water.
We will also need to accelerate the move away from coal but to achieve this transition will require a range of social and labor market policies that addresses adverse impacts and safeguard the vulnerable. Without attention to a just transition, the energy transition cannot be sustained.
Significant reforms of fiscal systems will also be needed to mobilize domestic resources in a way that promotes inclusiveness. The financing needed for investment at scale far exceeds the possibilities of the public sector, requiring strong private sector involvement. Public-private partnerships, key upstream policy reforms and innovative financing can help spur private investment.
Fortunately, we have some good examples of these integrated whole of economy approaches already, including from our own work in the World Bank Group. Let me highlight a few:
In Greater Cairo in Egypt, the World Bank is supporting reducing air and climate emissions from critical sectors and increasing resilience to air pollution. The 200 million project focuses on reducing vehicle emissions, improving the management of solid waste, and developing and implementing a strong, economically feasible climate impact mitigation program.
In coastal city of Beira in Mozambique, the World Bank financed a city-wide stormwater drainage system, and flood control systems to build urban resilience to floods, the Project also showcased the effectiveness of nature-based solution for climate change adaptation, while leveraging additional resources for climate finance. The project investments improved the lives of more than 284,000 people.
In Poland, WBG technical assistance fed into the launch and continuous reform of the government’s flagship Clean Air Priority Program (CAPP), which combines subsidies, tax relief, and regulatory measures to support thermal retrofitting and boiler replacements in 3 million houses to reduce residential heating emissions. Overall WBG engagement in CAPP is estimated to contribute directly to increased energy efficiency, with savings of 1,125 billion megajoules—about one-third of Poland’s total final energy use—as well as reduced GHG emissions.
Turning to China, our partnership today is increasingly focusing on greening of China’s economy and providing global public goods. China’s recent pledge to achieve carbon neutrality by 2060 provides an important opportunity for us to further strengthen our partnership in the climate change and green development agenda.
We are starting to work with the Development Research Center (DRC) of the State Council on a Green China Flagship study to identify evidence-based policy options to accelerate China’s transition to a sustainable, carbon neutral and more resource-efficient economy.
And we are directly supporting China’s decarbonization efforts. In Shanxi, one of China’s top coal exporting provinces, we have ongoing support for policy reforms to pioneer an accelerated and just transition away from coal. A new Green and Low Carbon Investment Fund we have put together with the Ministry of Finance will catalyze private capital into private green businesses and projects, anchored on the application of international green and ESG standards. Our program in the Yellow River Basin will support eco-system restoration and nature-based solution to climate change mitigation. Our cities programs will promote low carbon mobility, planning and financing solutions. Finally, our green agriculture and rural revitalization program will target GHG emission reduction in the agriculture sector and support climate smart agriculture practices.
To conclude, countries face a historic opportunity to establish a better way forward. Despite the damage wrought by the pandemic and worsening climate change, the exceptional crisis response offers a unique opportunity for a “reset” that addresses past policy deficiencies and chronic investment gaps. China could lead by example in decarbonizing its economy and expanding green development. And we stand ready to contribute in any way that we can to the success of green and low carbon development.