Thank you, Chair. Capacity is a binding constraint for many developing countries as they seek to implement their Nationally Determined Contributions (NDCs). We are working with developing countries on NDCs as they take into account the cost and impact of various transition paths.
We have created Country Climate and Development Reports, or CCDRs, which are a robust diagnostic to help countries. These reports were a critical part of our Climate Change Action Plan (CCAP), presented at COP26 in Glasgow, which included integrating climate and development and focusing on impact. One aspect of the CCAP is to achieve actual greenhouse gas emission reduction, facilitated by global measurements of carbon dioxide output. I heard clearly Minister Le Maire’s comment on that yesterday at the Development Committee, and we are working to do that and think that’s part of the pathway forward.
The World Bank Group has taken other major steps within our Evolution process. Management, Executive Directors, and Governors have worked intensively over the last six months to consider each avenue to increase funding—including those in the G20’s Capital Adequacy Framework (CAF) review and many others. Several avenues were rejected or deferred. Some will require further work, such as hybrid capital from donors. Three were adopted: the Equity-to-Loan Ratio reduction, hybrid capital for capital markets, and expanded bilateral guarantees.
This all goes to the need for many more resources for global public goods, which include climate, pandemics, and fragility. We estimate that developing countries will need $2.4 trillion per year for the next seven years to address these global challenges, which could cost poorer countries as much as 8 percent of GDP. We’re providing direct support to help.
In addition to direct support, there’s an important role for the World Bank in managing, funding, implementing, and verifying the climate impact of projects. I want to highlight the importance of verified emission reduction as part of innovative projects that will require concessional financing. We launched SCALE at COP27 in Sharm el-Sheikh for that specific purpose—to provide middle-income countries with resources and guidance to reduce greenhouse gas emissions using global funding.
Final two points: First, the importance of private sector participation. We’re enabling that in many parts of our operations. We have a major new effort to bring the IFC’s diagnostics into the World Bank and work with countries to improve the private sector environment through the whole of the World Bank Group. And second, the importance of quality and transparent infrastructure principles that lead to standard contracts that allow risk diversification and ultimately a robust infrastructure asset class. These two steps recognize the amounts of resources needed for greenhouse gas emission reduction and development itself. It’s going to take a global asset class based on contract standardization and risk diversification. It will require verification of actual greenhouse gas emission reduction over a period of years, all of which are key activities that the World Bank Group can help achieve.
Thank you, Chair.