- The world’s poor will suffer first and most from climate change. That’s why we’re involved.
- We are one of many partners involved in climate finance.
- To act effectively on climate change, many sources of financing are needed.
- Providing financing for adaptation is a priority for us.
- Developing countries want us to work with them on climate change. Our approach is changing rapidly to keep up with demand.
- Our financing for renewable energy and energy efficiency has hit record levels.
1. Climate change is core to our mission. Development and poverty reduction will be severely impacted by climate change. Our mandate is to act.
- Developing countries will bear the brunt of climate change and its costs. The poor will suffer the earliest and the most from its effects.
- Developing country partners are seeking assistance to counter what is expected: a highly variable climate leading to more frequent and severe heat waves, droughts, storms, and floods.
- Limiting climate change by limiting the global mean temperature rise to 2°C by 2030 is expensive. For developing countries, it could cost an estimated $140-175 billion per year.
- Adapting to the impacts of climate change in developing countries is equally expensive. It will cost an estimated $70-$100 billion per yearthrough 2050.
- Resources that have been committed so far to address mitigation and adaptation in developing countries cover just a fraction of these needs.
2. A major global partnership has come together to make climate action happen on the ground. We are a part of that.
- The Climate Investment Funds(CIFs) were set up in 2008 following calls from the international community to do more. They are designed specifically to support developing countries in efforts towards low-emission and climate-resilient development. Fourteen donor countries pledged $7.2 billion for two funds—the Clean Technology Fundand the Strategic Climate Fund.
- Some 48 developing countries are now implementing transformations in clean technology, sustainable management of forests, increased energy through renewable energy, and climate-resilient development.
- At this point, all of the $7.2 billion in pledges have been allocated. The demand for CIF assistance outweighs current funding. As the implementation moves forward, there is a need for additional financing—at least to cover the gap between now and the time that the Green Climate Fund gets fully operational.
- Every US$1 from the Clean Technology Fund is expected to leverage US$8 from other sources and through the initiatives the Fund supports in 18 countries it will help reduce approximately 1.6 billion tons of CO2—roughly the same as a third of the annual emissions of the European Union.
- Developing countries are in the driver’s seat. All CIF climate action plans have been built, owned, and led by the developing countries themselves.
- We are one multilateral partner in the Climate Investment Funds—others are the African Development Bank, Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank. These five partners jointly implement CIF-funded projects.
- None of the multilateral banks makes financing decisions on its own. Each fund is governed by Trust Fund Committees with equitable representation from donor and recipient countries. These Committees decide on program priorities, approve financing for projects, and oversee progress.
- The multilateral development banks are observers to the process, as are non-government organizations and community groups, among others.
3. We are innovating in developing new financing.
- The World Bank has supported carbon markets through its carbon funds and readiness facilities since 1999. To date, $3.0 billion has been raised as a result of 13 carbon funds and facilities operating in 90 countries. Nearly 158 active projects undergoing implementation that are expected to reduce emissions of greenhouse gases by an estimated 220 million metric tons of carbon dioxide equivalent. This is as much as the annual emissions of The Netherlands.
- We introduced green bondsspecifically to finance climate mitigation and adaptation work in developing countries. Since the inaugural issue in 2008, the World Bank has issued over US$ 3.3 billion in Green Bonds through 51 transactions and 17 currencies.
- Our MultiCat (pdf) program is a catastrophe bond issuance platform. It enables governments from developing countries to access affordable insurance coverage through the capital markets. Mexico used the platform to issue a $290 million series of notes in October 2009 to insure against earthquake and hurricane risks.
- We helped 16 Caribbean countries establish the Caribbean Catastrophe Risk Insurance Facility(CCRIF). It offers insurance against major hurricanes and earthquakes. Similarly, we worked to develop a Central American Weather Risk Management Program in Honduras, Guatemala, and Nicaragua to help farmers hedge against weather risk. It is estimated that since 2003 about 1 million farmers and herders benefitted from similar schemes supported in some sort by the World Bank Group.
- Our Treasury monetizes Certified Emission Reduction certificatesfor the UN Adaptation Fund, with 11.8 million CERs sold, raising nearly $178 million to finance adaptation projects in developing countries (as of May 31, 2012)
- The International Finance Corporation (our private sector arm) worked with Standard & Poors to develop the first Global Emerging Market Carbon Efficiency Index. Launched in December 2009, it gives carbon-efficient companies access to long-term investors.
- The IFC Asset Management Corporation, raised up to $500 million from institutional investors through the Climate Catalyst Fund.
4. Providing financing for adaptation is a priority for us.
- Our lending that contributes to adaptation reached almost $4.6 billion in 2012, or twice the 2011 amount. This represents a significant increase in the share of climate-resilient lending in total commitments (whose share rose 2.6-fold in 2012 to 13% of World Bank lending commitments).
- The WBG’s International Development Association (IDA) leads the world in building resilience and adaptive capacity in the poorest developing countries. IDA lending commitments with potential adaptation co-benefits grew to $2.3 billion in FY12 (up 61 percent from FY11).
- We are the world’s largest source of finance for disaster risk reduction and reconstruction. Its disaster portfolio has steadily grown. Since 2007, the Bank has lent $9.2 billion through 215 post-disaster recovery projects.
- In FY09-11, close to two-thirds of all GFDRR-financed technical assistance initiatives support climate adaptation co-benefits, providing more than $63 million in over 50 disaster-prone low- and middle-income countries across all Bank Regions. This support leveraged an additional $153 million in co-financing from development partners.
5. Developing countries want us to work with them on climate change. Our approach is changing rapidly to keep up with demand.
- Four out of five countries we work with have now made climate change among their top priorities.
- In 2011, 100% of the new country assistance strategies or country partnership strategies prioritized climate change (compared to 63% in 2009).
- Development Policy Operations are increasingly supporting reforms to establish broad policy and institutional platforms for climate actions. Over the last two years, we committed close to $2.9 billion for low-emissions development policy operations in and more than $1.5 billion for climate-resilience development policy operations.
- The Climate Finance Options web platform launched in Cancun provides developing countries with access to the latest information on available funding for mitigation and adaptation.
6. Our financing for renewable energy and energy efficiency has hit record levels.
- In FY12, Bank Group approved a total of $3.6 billion in financing for RE, a record 44% share of its annual energy lending of $8.2 billion. Looking only at power generation projects approved in 2012, renewables accounted for an even larger share - 84%.
- Over the six-year period since 2007, the Bank Group has provided a total of $12.5 billion for renewable energy projects and programs.