Financing Climate Resilient Development A World Bank Perspective

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Financing Climate Resilient Development A World
Bank Perspective

• Marjory-Anne Bromhead
• The World Bank

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Some Guiding Principles from African Leaders

• Implement climate change programs to achieve
  sustainable development
• Food security and poverty alleviation are
  overriding
• Richer countries have financial obligations to
  help others achieve resilient growth

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World Bank Strategy for Climate Resilient
Development in Sub-Saharan Africa

• Adaptation and disaster risk reduction are an
  integrated agenda
• Climate variability creates annual losses of 1-2
  of GDP, increasing floods and droughts,
  adaptation could cost 5-10 of GDP
• There are mitigation and adaptation synergies
• Better land, water forest management are key to
  adaptation but deforestation and land degradation
  are 65 of Africas CO2 emissions
• Mitigation presents opportunities but increasing
  energy access is key
• Only 8 of hydro potential realized , ample
  solar, cleaner coal is part of the solution, wood
  fuels and biomass are key
• Knowledge, capacity building new technologies
  are key
• Improved climate knowledge, analysis
• strategy risk insurance, new technologies
• for energy, agriculture ..
• Scaled up finance is necessary
• Urgent action is necessary

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Development Reduces Vulnerability

• Diversified economies, strong institutions, sound
  land and water management and urban planning, as
  well as educated, healthy people reduce country
  vulnerability

Relative change in length of growing period (LGP)
by 2050 compared to present Source Thornton et
al. (2006)
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World Bank Climate Finance Guiding Principles

• Primacy of UNFCCC process in design of climate
  finance models
• Supports governance reform to increase developing
  countries voice
• Our role help developing countries access and
  lend development/private sector finance and new
  climate finance for sustainable development with
  adaptation and mitigation benefits
• Our collaboration is through country-led programs

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Sources of Finance

• IDA 15 was scaled up in part to help address
  climate change
• Disbursements in agriculture, water supply, flood
  management health were 17 higher 2008 than
  2005-2007
• New instruments complement development private
  sector finance

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Climate-Resilient Development with IDA/IBRD

• Agricultural development policy loan in Ghana
  (2008) supports integration of climate
  risk/adaptation into development agenda
• Himachal Pradesh DPL in N. India supports
  renewable energy adaptation strategies for
  glacier melt
• Credit to improve transmission of energy from
  Inga in DRC is ongoing (more than US 200 m)
• Support to sustainable land management,
  irrigation, safety net/improved watershed
  management in Ethiopia (over US 300 m)
• Arid lands, flood management natural resource
  management programs in Kenya
• Drought risk insurance in Malawi

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Financing New Instruments

• WB/MDB Supported Instruments
• Climate investment funds (CIFs)
• Carbon Funds
• Gas-flaring Reduction Initiative
• Global Fund for Disaster Risk Reduction (GFDRR)

• Others
• Adaptation Fund (2 tax on CDM voluntary
  contributions)
• Bi-laterals donors
• UN agencies (e.g., UNDP 90M Africa adaptation
  Program)
• African-Union/AfDB/EU (ClimDev Africa)
• Norwegian Funding for Avoided Deforestation

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Climate Funds

• Overall aim to pilot new financing instruments
  and help prepare countries to take advantage of
  post 2012 financial architecture, country-driven,
  cooperation between MDBs and development
  partners, learning is key

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Climate Funds
Scaling-up Renewable Energy Program for
Low-Income Countries (SREP) Target
250Million Mitigation Pilot Program under
preparation
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Mobilizing, Delivering and Leveraging Climate
Finance
A huge gap estimatedneeds vs. current resources
Mitigation US9bln p.a.
Adaptation US1bln p.a.
US 4,620bln p.a.(2008)
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World Bank Carbon Funds Facilities
Total funds pledged US 2.1 billion (16
governments, 67 firms)

• Prototype Carbon Fund. 180 million (closed).
  Multi-shareholder. Multi-purpose.
• Netherlands Clean Development Mechanism
  Facility. (closed). Netherlands Ministry of
  Environment. CDM energy, infrastructure and
  industry projects.
• Community Development Carbon Fund. 128.6
  million (closed). Multi-shareholder. Small-scale
  CDM energy projects.
• BioCarbon Fund. 91.9 million (Tranche 1 and 2
  closed). Multi-shareholder. Mainly CDM LULUCF
  projects some REDD and soil carbon.
• Italian Carbon Fund. 155.6 million (closed).
  Multi-shareholder (from Italy only).
  Multipurpose.
• Netherlands European Carbon Facility. (closed).
  Netherlands Ministry of Economic affairs. JI
  projects.
• Spanish Carbon Fund. 282.4 million (closed).
  Multi-shareholder (from Spain only).
  Multipurpose.
• Danish Carbon Fund. 69.4 million (closed).
  Multi-shareholder (from Denmark only).
  Multipurpose.
• Umbrella Carbon Facility. 737.6 million
  (Tranche 1 closed 2 HFC-23 destruction projects
  in China).
• Carbon Fund for Europe. 65 million.
  Multi-shareholder. Multi-purpose. Managed with
  EIB.

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Clean Technology Fund

• Aim is to help high emitting countries transform
  to lower carbon growth US 5 billion raised so
  far
• Programs of about US 0.5 billion each approved
  for Turkey, Egypt, Mexico under preparation for
  Nigeria and South Africa
• Part of broad-based energy transformation
  programs
• Focus on energy efficiency, renewables, transport
  shifts, urban planning

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Pilot Program for Climate Resilience

• Aim is to help vulnerable countries mainstream
  climate resilience into development planning US
  0.5 billion raised
• 9 countries 2 sub-regions selected by
  independent panel
• Niger, Zambia and Mozambique each country to get
  US 40 to US 70 million, with preparation grants
  of US 1-2 million depending on readiness.
• Likely to focus initially on key priority sectors
  (e.g. agriculture, coastal/urban flooding,
  watershed management, capacity building)
• Programs still under early preparation (early
  lessons learnt session in late October)

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Forest Investment Program

• Aim is to catalyze practical measures and funding
  for Reduction of Deforestation and forest
  Degradation (REDD), and promote sustainable
  forest management
• US 260 million raised so far
• Country selection process has not yet started
  will include range of forest systems biomes and
  willingness to participate in REDD
• Operational in 2010

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Scaling up Renewable Energy

• The aim is to pilot new approaches to renewable
  energy in low income countries
• Fund-raising and design still ongoing

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Forest Carbon Partnership Facility

• Aim is to build capacity and prepare countries to
  access large-scale REDD post 2012 US 107
  million raised so far (UNDP and bank have
  complementary programs)
• Countries prepare readiness plan idea notes then
• Readiness plans with grants of US 1-3 million
  (ethiopia, kenya, uganda, cameroon, gabon, Congo,
  DRC, CAR, Ghana, Madagascar, Liberia)

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Carbon Partnership Facility

• Aim is to support strategic programs that move to
  low carbon investments
• Target US 350 million
• No African countries yet!

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Disaster Risk Reduction Facility

• Supports disaster preparedness and disaster
  recovery
• Grants in CAR, Ethiopia, Ghana, Ethiopia,
  Mozambique, Madagascar, Namibia, Burkina,
  Seychelles

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Blending of Climate Financing Instruments
Necessary
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Blending of Financial Sources and Policy
Instruments Necessary
Lighting switch
Industry EE in cement
Power generation from landfill gas
Grassland management
Development Financing
Reforestation
Wind
Solar
Project/program needs to be financially solid to
be able to deliver real, measurable and long-term
benefits related to the mitigation of climate
change
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Mainstreaming Climate Resilience into CAS

• Ongoing process Ethiopia, Malawi, beginning in
  Senegal, Nigeria, Cameroon, Kenya, Namibia

• Climate resilient development and long term
  sustainable development are one and the same!

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• Thank you!