Your Excellency Premier Li Keqiang,
Party Secretary Lin,
And distinguished guests:
It is a great pleasure for me to address you today on behalf of the World Bank Group.
In recent years, we have witnessed the dramatic impact of climate change, including an increasing frequency and severity of natural disasters and extreme weather events that have caused loss of life and destruction of assets globally. Among these are the recent devastating floods in central China, as well as unprecedented forest fires in many parts of the world.
The vulnerability of countries and economies to climate change is forcing people to evacuate their homes, increasing food insecurity, and resulting in deforestation and biodiversity loss. These serious repercussions are further exacerbated by the health and economic impacts of the ongoing global COVID-19 pandemic, where over the last year, nearly 100 million people have been forced into extreme poverty.
The most recent IPCC report warns us that unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, our goal of limiting global warming to 1.5°C or even 2°C will be beyond reach.
We need to work quickly and work together to ensure that there are renewed commitments and a renewed global consensus at COP26 in Glasgow this November.
The World Bank Group has been working closely with all its member countries to address the impacts of climate change. Through our first Climate Change Action Plan, which ran from 2016 through 2020, the World Bank Group delivered over US$83 billion in climate finance to help countries mitigate or adapt to climate change.
We have stepped up our climate commitments further.
In our new Climate Change action plan, we are committing 35 percent of our financing towards climate action, up from 28% in the previous plan. We are aligning all of our new operations with the objectives of the Paris Agreement by the middle of 2023, with IFC and MIGA operations following by mid-2025.
To ensure that World Bank Group climate financing is well targeted, we have also introduced a new diagnostic assessment tool – called the Country Climate and Development Report – which will help identify national climate action priorities and support in preparing and implementing long-term climate strategies and essential programs, complementing the Nationally Determined Contributions.
Our support will include transformative investments in key sectors such as energy, agriculture, transport, forestry and manufacturing – which are central to mitigating and adapting to potential climate impacts.
China has made tremendous progress towards eliminating extreme poverty in the past forty years. It now faces the equally daunting economic and social challenge of reducing greenhouse gas emissions and effectively adapting to the impacts of climate change.
In September 2020, President Xi announced that China would achieve peak carbon emissions before 2030 and carbon neutrality by 2060. This is a very welcome commitment. Achieving these goals is critical not just for China, but for the world to keep the global temperature increase to below 2 degrees centigrade.
China’s commitment will require major systemic shifts in virtually all sectors of the economy. China has shown that it is capable of working towards and achieving ambitious economic and social transformations. The transition towards a zero-carbon economy may be the most ambitious transformation yet. It will require a large-scale reallocation of capital and employment, and have major distributional implications across sectors and locations.
But just as in previous systemic changes in China, from a largely rural and agrarian economy to an industrial powerhouse, from a closed economy to the world’s largest trading nation, this transformation also brings enormous opportunities.
China can lead the green transition across emerging markets and set an important example, building on its roles as a global leader in renewable energy development and scale-up, as well as the strides it has made in improving energy efficiency and the associated reduction in energy intensity of the Chinese economy.
The World Bank is proud to be a trusted partner with China in supporting this green transition.
We have worked with our Chinese partners in a number of different areas, such as:
- developing and defining standards for solar photovoltaic equipment;
- piloting the development of large-scale wind farms to the highest environmental and social standards, and
- adapting and implementing new business models such as energy service companies and performance contracting.
We now hope to see the same leadership from China in reducing and shifting away from coal for power, heating, and industrial processes, which is central to achieving the targets set by the Paris Agreement. Coal is the largest source of greenhouse gas emissions in China – and also globally. Given the weight of coal in China’s emissions and size of economy, shifting from and reducing coal usage is central to ensuring that our planet can support an economically and socially stable existence for humankind.
China’s experience in making this shift – through technological leadership, policy shifts, incentive and financing mechanisms – will be watched closely by the developed and developing world.
This shift will not be easy. It will require careful attention to and management of competing priorities, including meeting the country’s growing energy demand at a reasonable cost, while mitigating the adverse economic, social and environmental impacts of reduced coal use on workers, communities and businesses.
But we believe it can be done, with a combination of sector-specific targets and investments, which China has ample experience with, and market-based instruments, which China is now piloting with the Emissions Trading System in the power sector, and which we think could be expanded further.
Other market-based signals that China has been considering, such as the economic dispatch of power plants rather than annual operating quotas for coal generators would also lead to more energy/electricity being produced from energy China’s immense and growing renewable energy capacity. Such measures would ensure that wind turbines and solar PV plants would not have to be curtailed to meet generation quotas for coal power plants.
I sincerely hope that this Taiyuan Energy Low Carbon Development Forum will provide an opportunity for all to benefit from the contributions and knowledge exchange of national and international leaders, agencies and experts who have come together to support clean energy transition in China.
We very much look forward to continuing the strong partnership with China, and we wish you a very fruitful discussion.