Tackling climate change will require a huge pipeline of impactful projects and a coordinated effort to fund them and implement them over a period of years. We have to do this without punishing the poor.
To be successful, we need to integrate climate and development; identify and implement priority projects; and combine large new structures and sources of financing. Debt relief is one key source for low and middle income countries, and I want to thank you, President Biden, for your leadership on debt transparency and sustainability.
There are concrete decisions today that can meaningfully reduce GHG: for example, decommissioning the super-polluters of the existing coal power plant fleet. Investing more in stopping methane leaks can also yield meaningful benefits. It’s technologically simple, generally low cost, and can have a meaningful impact.
In the agriculture sector, incentives need to change to stop deforestation.
In the transportation sector, we need better regulations for high emitting second-hand vehicles; and regulations that disincentivize exportation of older and highly polluting vehicles from rich to poor countries. These are low hanging fruit in terms of reducing GHG.
Addressing the climate challenge is complex in terms of financing, projects, and adaptation. It will need to build on solid diagnostics, new uses of technology, better incentive structures, and ambitious prioritization.
There will need to be the combined efforts of many partners, as President Biden stated. I delivered the joint MDB statement yesterday. MDBs coordinate through country platforms and co-financings. We have a wide range of working groups that imbed coordination and partnership, including with the private sector, other organizations and stakeholders, to pursue climate and development. As Mark mentioned, these country platforms can be enhanced to help bring together financing with projects.
Private sector investment will be vital, including to increase the energy supply and baseload electricity capacity in a much cleaner way. There needs to be a complete break from past energy practices.
Private foundations and contributions from private corporations, including in exchange for high quality carbon credits, can provide a major source of capital; and the more advanced countries will need to increase their bilateral support and engagement.
Blending these different pools of capital – commercial, concessional, and grants – to the appropriate component of each project is a complex challenge.
The World Bank Group can play a leading role by bringing together all parties; helping design the transitions; quantify the costs and benefits;drawing in private sector investment to the bankable portions of projects; and providing key portions of the funding, including IDA’s grant and zero-rate financing for the poorest countries. IDA has been a main source of funding and preparedness for vulnerable countries and explicitly supports climate action.
Including IDA, the World Bank Group provides a quarter of all the public climate financing for developing countries, over half the multilateral financing, and two-thirds of the adaptation financing. In the next five years, we will provide $125 billion in climate financing, and we are committed to Paris Alignment.
We look forward to continuing to work with all of you on these complex undertakings.