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Towards a Strategic Framework on Climate Change and Development for the World Bank Group www.worldbank.org/climateconsult June 4, 2008 Washington D.C. Climate Change is a Development Issue Developing countries are already being affected

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Towards a Strategic Framework on Climate Change and Development for the World Bank Group www.worldbank.org/climateconsult

June 4, 2008

Washington D.C.


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Climate Change is a Development Issue Development

  • Developing countries are already being affected

  • The poorest countries and communities stand to suffer the earliest and the most

  • Development gains and achievement of the Millennium Development Goals are at risk

  • Lower carbon and climate resilient growth offers opportunities for sustainable development with multiple benefits


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Developing Countries Most At Risk: Development 6 Climate Threats

Low Income

Source: World Bank

Middle Income


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Adaptation Challenges Over Time Will Depend on Mitigation Progress

Likely change already “baked in”

Likely change with successful mitigation action

Likely change without significant action on mitigation

Risk of catastrophic events increases with temperature


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Potential Impact on A Progressgriculture — Projected Percentage Change in Agricultural Productivity in 2080

Note: Scenario: SRES A2.

Source: Cline 2007.



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Regional Impacts energy and land use changeAfrica

  • Food security and risk associated with agricultural production

  • Lack of access to safe water and increased water stress

  • Low adaptive capacity and high vulnerability to climate variability and natural disasters such as droughts and floods

  • Negative health impacts, especially increased risk of malaria

  • Sea-level rise and its impact on low-lying coastal areas

*Source: Concept Paper Annex 1


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Regional Impacts energy and land use changeEast Asia and Pacific

  • Decreased freshwater availability

  • Endemic morbidity and mortality due to diarrhoeal disease associated with floods and droughts

  • Degradation of marine and coastal ecosystems by sea-level rise and temperature increases

  • Sea-level rise potential results in displacement of millions of people

  • Damage to aquaculture industry by sea water intrusion

  • Increased threats to the ecological stability of wetlands, mangroves and coral reefs

*Source: Concept Paper Annex 1


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Regional Impacts energy and land use changeEurope and Central Asia

  • Increased climate-related hazards including prolonged droughts, more frequent storms and floods, and fire risk

  • Coastal Floods and erosion due to sea-level rise

  • Increased health risks due to more frequent heatwaves, flooding and greater exposure to vector- and food-borne diseases

  • High water stress

  • Decline of forest productivity

*Source: Concept Paper Annex 1


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Regional Impacts energy and land use changeLatin America and the Caribbean

  • Decreased water availability in many water scarce regions and impact on high mountain ecosystems

  • Reduction in agricultural productivity

  • Distortion of the functioning of ecosystems, including coral reefs, wetlands and mangrove, and forests

  • Large-scale displacement of populations due to increased extreme events and sea-level rise

  • Health impacts e.g., heat stress mortality and greater exposure to vector-borne diseases

*Source: Concept Paper Annex 1


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Regional Impacts energy and land use changeMiddle East and North Africa

  • Increased occurrence of droughts and water scarcity

  • Greater fluctuation of agricultural yields, especially in rain-fed areas

  • Worsening of public health due to heat waves, decreasing water and air quality, and ground ozone formation

  • Sea-level rise and its impacts on agricultural, low-lying coastal areas and wetlands

*Source: Concept Paper Annex 1


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Regional Impacts energy and land use changeSouth Asia

  • Increased intensity and frequency of storm surges, cyclones, floods and droughts

  • Negative impact on agricultural yields particularly in arid zones and flood-affected areas

  • Decrease in river flows in the Himalayan countries, unreliable supplies of fresh water and the need for management of shared transboundary systems

  • Sea-level rise and its impact on coastal livelihood through flood, damage to groundwater aquifers, loss of wetlands and ecosystems

  • Lack of scientific information on the consequences of Himalayan snow melt and associated risks and climate change impact on biodiversity and ecosystems

*Source: Concept Paper Annex 1


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Climate Change is not new for the World Bank energy and land use change

  • 1993 – Began implementing / leveraging GEF funding for climate change

  • 1999 – Pioneered Carbon Finance through $180 million Prototype Carbon Fund

  • 1999 – ”Fuel for Thought” Environment Strategy for the Energy Sector

  • 2001 – Adopted Environment Strategy with climate change pillar

  • 2006-08 – Clean Energy Investment Framework (CEIF):

    • (i) increased access to energy, especially in Sub-Saharan Africa; (ii) accelerated transition to a low carbon energy economy; and (iii) adaptation to climate variability and change.

  • 2007 – IDA and Climate Change Paper


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    Recent progress in climate change energy and land use change

    • Share of support for low-carbon energy projects up from 28% in FY03–05 to 40% in Fy06-08, with an overall increase in energy lending from $6 billion to $11 billion

      • GEF and Carbon Finance (CF) contributed US$546 million, or 13 %, with significant leveraging

    • RE and EE lending exceeded Bonn commitment 1.5 years ahead of schedule

    • CF business grown to $2 billion, with two new facilities - CPF and FCPF- approved in September 2007

    • Low carbon growth and adaptation studies

    • Pilot program to begin measuring GHG emissions of the WBG lending portfolio is underway.

    • Strengthened partnership with MDBs


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    Access and Low Carbon Energy energy and land use change

    Providing Energy Services for A Better Quality of Life.

    Worldwide, nearly 2.4 billion people use traditional biomass fuels—wood, agricultural residues, and dung—for cooking and heating

    Nearly 1.6 billion do not have access to electricity.

    Four out of five people without access to electricity live in rural areas

    Without access to modern and sustainable energy services, poor people are deprived of opportunities for economic development and improved living standards.

    15


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    GEF and WBG Synergies energy and land use change

    • GEF grant funding to pilot innovative approaches and capacity building for mitigation

    • GEF funding is necessary to proceed with adaptation mainstreaming in development and to build knowledge base

      • GEF Trust Fund Strategic Priority on Adaptation $50 million (committed)

      • Voluntary Funds: Special Climate Change Fund ($90 million) & Least Developed Countries Fund ($180 million)

    • Adaptation Fund (GEF-administered): $500- 800 mlln by 2012

    • GEF helped leverage progress with WBG low carbon investments


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    Key message: Scaling up! energy and land use change

    • Huge financing gap for developing countries, much beyond current funding under UNFCCC

      • mitigation: up to US$ 100 blln per year by 2030

      • adaptation: up to US$ 30-70 blln per year 2030

      • private sector to account for 80% at least of financial and investment flows

    • The challenges ahead in mobilizing financing at scale

    • Massive technology, capacity and knowledge needs


    How we will develop a comprehensive strategic framework on climate change and development sfccd l.jpg
    How we will develop a comprehensive Strategic Framework on Climate Change and Development (SFCCD)

    • Neutrality to UNFCCC Negotiations

    • Flexibility to accommodate new developments

    • Working with Multiple Partners

    • Inclusive and Consultative Process


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    Neutrality to UNFCCC Negotiations Climate Change and Development (SFCCD)

    • Neutral to any party position

    • Helping countries understand the impacts Piloting innovative instruments and approaches that help inform the development of a future regime (e.g. IDA15 as a platform for mainstreaming adaptation, Carbon Finance, Climate Investment Funds)

    • Advocacy and capacity building


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    The Strategic Framework will evolve as international negotiations and scientific knowledge and experience on the ground evolve

    It will pilot and test new approaches and benefit from learning and on-going consultations with various stakeholders

    Flexibility to Accommodate New Developments


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    Working With Multiple Partners negotiations and scientific knowledge and experience on the ground evolve

    • UN agencies, UNFCCC Secretariat, Global Environment Facility (GEF)

      • A common UN-system approach to Climate Change

      • Building blocks: mitigation, adaptation, technology, finance

    • Multilateral Development Banks

      • Have worked closely on Clean Energy Investment Framework

    • Bi-lateral donors

    • Initiatives by countries, sub-national (city) governments, private sector, Non-Governmental Organizations

    • Scaling up World Bank Group engagement based on its specific comparative advantages


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    Sources of GHG Emissions in Developing Countries negotiations and scientific knowledge and experience on the ground evolve

    World Bank lending is in sectors with largest opportunities for both adaptation and mitigation


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    … similar situation in IFC & MIGA portfolios negotiations and scientific knowledge and experience on the ground evolve

    IFC investment by Sector ($ mln), FY07

    MIGA Guarantees by Sector ($ mln), FY07


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    Climate change: Role of the WBG negotiations and scientific knowledge and experience on the ground evolve

    SFCCD is about development in the context of climate change

    • Priority of growth, poverty reduction and MDGs

    • Importance of meeting energy needs of developing countries

    • Development imperative of helping to adapt to climate risks

    • Resource mobilization in addition to the current ODA levels


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    6 Action Pillars negotiations and scientific knowledge and experience on the ground evolve

    • Make effective climate action – both adaptation and mitigation – part of core development efforts

    • Address the resource gap through existing and innovative instruments for concessional finance

    • Facilitate the development of innovative market mechanisms

    • Create enabling environment for and leveraging private sector finance

    • Accelerate the deployment of existing and development of new climate-friendly technologies

    • Step-up policy research, knowledge management and capacity building


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    Integrating climate action in development negotiations and scientific knowledge and experience on the ground evolve

    • Country-driven approach

      • Customized to adaptation needs and low carbon growth opportunities in a country-specific context

    • Multi-sector engagement based on demand

    • Tailor to the needs of both public sector (WB) and private sector (IFC) clients

    • Focus on multiple benefits and development opportunities of climate action

    • Attention to social dimensions: understanding the needs of vulnerable groups, indigenous communities, e.g. support for recognition of ownership rights

    • Support to local institutions


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    Pillar 1 negotiations and scientific knowledge and experience on the ground evolve

    • Make effective climate action – both adaptation and mitigation - part of core development efforts

    • Country-driven

      • Customized country-level approach balancing adaptation needs and low carbon growth opportunities

    • Multi-sector engagement based on demand

    • Tailor to the needs of both public sector (WB) and private sector (IFC) clients

    • Focus on multiple benefits and development opportunities of climate action

    • Understand and address social dimensions

    • Strengthen local institutions


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    Pillar 2 negotiations and scientific knowledge and experience on the ground evolve

    2. Address the resource gap through existing and innovative instruments for concessional finance

    • GEF

    • Adaptation Fund

    • IDA as a platform for maintreaming adaptation

    • Carbon Finance

      • Carbon Partnership Facility

      • Forest Carbon Parnership Facility

    • Facilities by other MDBs, UN agencies, bi-laterals

    • Proposed Climate Investment Funds


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    Available Resources negotiations and scientific knowledge and experience on the ground evolve

    Carbon Market:

    CDM&JI

    < $ 8 billion

    for FY09

    mitigation

    GEF

    $ 0.25 blln

    for FY09

    World Bank

    Group

    (IBRD/IDA/

    IFC/MIGA)

    $1.9 billion

    for FY09

    both

    GEF

    $ 0.25 blln

    Climate Investment

    Funds by MDBs

    $ 5 – 10 billion

    for 3 years

    Main Resourcesto addressClimate Change

    Adaptation

    Fund

    $ 0.5-0.8 blln

    (2008-12)

    UNDP

    $ 0.19 blln

    for adaptation

    Other MDBs$3 billionfor FY09

    EUGlobal ClimateChange Alliance€ 0. 3 blln

    GFDRR $ 0.07 blln

    adaptation

    FY09 estimates are projections

    Sustainable Development @ The World Bank


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    Pillar 3 negotiations and scientific knowledge and experience on the ground evolve

    3. Facilitate the development of innovative market mechanisms

    • Further engagament in carbon market

    • MIGA –carbon credit delivery guarantee

    • IFC- Structured financing packages blending CF with loans and guarantees

    • Support to markets for energy efficiency services, green products, etc.

    • WB Treasury - bonds at reduced rates to advance to projects with climate benefits

    • Climate Risk Insurance products customized to different needs


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    Pillar 4 negotiations and scientific knowledge and experience on the ground evolve

    4. Create enabling environment for and leveraging private sector finance

    • MIGA guarantees; IFC leveraging

    • Partnering with private sector on sustainable energy products

    • Advising private sector on climate mitigation and adaptation

    • Regulatory frameworks conducive to climate friendly investments

    • Mobilizing donor funding for innovative investments – working with GEF and others


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    Pillar 5 negotiations and scientific knowledge and experience on the ground evolve

    5. Accelerate the deployment of existing and development of new climate-friendly technologies

    • Continue to accelerate technology deployment:

      • IFC clean production programs

      • Proposed CIF envisages clean technology window

    • Explore possible role in technology R&D:

      • Assessment of models from other sectors

    • Working with GEF and other partners

    CO2 Emissions from Energy under Different Scenarios


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    Pillar 6 negotiations and scientific knowledge and experience on the ground evolve

    6. Step-up policy research, knowledge management and capacity building

    • Growing regional and country programs – low-carbon growth studies in six countries; adaptation studies

    • World Development Report 2010 on climate change

    • Global study on economics of adaptation

    • Social impacts of climate change

    • Economic and fiscal policy analyses

    • Diagnostic tools to support operations

      • User-friendly software to screen for climate risks

      • Methodologies for carbon foot-printing of development projects (starting with energy, transport, and forestry sectors FY08-09)

      • Guidance for economic analysis: discount rates, carbon pricing


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    Consultations negotiations and scientific knowledge and experience on the ground evolve

    • SFCCD requested at Annual Meetings 2007 as evolution of CEIF

    • Through March 2008: Concept and issues development, early, informal consultations

    • April – July 2008: Global consultations on Draft Concept and Issues paper

    • Summer 2008: Consultations on full document tba

    • October 2008 ~ beyond: SFCCD will remain flexible to accommodate:

      • Additional feedback

      • New developments related to climate change regime and financial architecture

      • Most recent knowledge and lessons learned


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    www.worldbank.org/climateconsult negotiations and scientific knowledge and experience on the ground evolve

    • What should the World Bank Group’s role on climate change be within the international development community?

    • The Concept and Issues Paper states that both mitigation and adaptation must be integrated into development efforts, where do you see the key areas of focus for the World Bank Group?

    • What role can the World Bank Group play to accelerate the development and deployment at scale of climate friendly technologies for energy, transport, agriculture and other sectors in developing countries?

    • Building capacity within countries, regions and institutions will be crucial to address climate change issues. How can the World Bank Group contribute?

    • What should be the role of the World Bank Group in mobilizing additional concessional financing and private sector investments to respond to climate change?

    • Other Comments?


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    Your Feedback negotiations and scientific knowledge and experience on the ground evolve

    www.worldbank.org/climateconsult


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    We Are Listening negotiations and scientific knowledge and experience on the ground evolve

    www.worldbank.org/climateconsult


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