A Small Island Country Steps Forward to Unite the World Behind Climate Action

It’s been a year of catastrophic climate events. Rains of biblical proportions across South Asia brought floods that affected more than 41 million people and killed at least 1,200. Record-breaking hurricanes claimed lives and destroyed infrastructure across several island states in the Caribbean and in towns and major cities in the southern United States. Drought gripping Africa put 20 million people in Somalia, South Sudan, Nigeria, and Yemen at risk of starvation. And for the third year in a row, countries with coral reefs - from East Asia and the Pacific to northern Africa – have seen massive sections of their reef systems die due to heat stress from unsustainably high ocean temperatures.

All these events across the globe shout the same warning: and deliver on the goals of the Paris Agreement. At this year’s UN Climate COP in Bonn, Germany, the call to action has found an ideal champion in the Fiji Government, making history as the first-ever small island state to hold the Presidency and organize the negotiations.

Since the signing of the Paris Agreement in 2015, many positive steps have been made to accelerate climate action on a global scale. According to the International Energy Agency, global energy-related carbon dioxide emissions were flat for the third straight year in 2016 even as the global economy grew - evidence of a continuing decoupling of emissions from economic activity. Global markets are undergoing a significant transformation led by renewables, thanks to rapidly falling costs for solar and wind power, with batteries taking on a growing role in balancing supply and demand. And carbon pricing is gaining global momentum, with over 40 national and 25 subnational jurisdictions now putting a price on carbon pollution.

A Focus on Mobilizing Finance for Climate Action

Meeting the Paris Agreement’s climate commitments will require investments at an unprecedented speed and scale. That is why The fact is, there is abundant private financial capital available but much of it is earning low or even negative returns. For many reasons, including weak policy environments and a lack of risk-reducing instruments like guarantees, this capital is not necessarily flowing to where it’s needed most for climate action.

An approach to help unlock this capital is the recently launched Invest4Climate initiative: a new platform convened by the World Bank and the UN, designed to bring together national governments, financial institutions, investors, philanthropists, and multilateral banks to find ways to support transformational climate investments in developing countries.  

Green Bonds are also part of the finance solution by raising funds from the capital markets for climate investments in developing countries. The World Bank Group, through the World Bank and IFC, has played a leading role in developing the green bond market by raising over $15 billion in green bonds since 2008 for investments in climate action around the world, and by helping develop market best practice for standards and reporting. The World Bank and IFC are working with countries to put in place frameworks for sovereign and private sector green bond issuances. Last month, with assistance from the Australian Government and the World Bank Group, Fiji became the first emerging market to issue a sovereign green bond, raising 100 million Fijian dollars, or US$50 million, to support climate change mitigation and adaption.

A key element of the Paris Agreement was the country-level commitments to action, known as Nationally Determined Contributions or NDCs. Each NDC commits countries to a range of actions aimed at reducing their emissions and build resilience to climate change impacts. For its part, the World Bank Group is supporting around 300 initiatives across 77 countries related to NDC implementation through investments in areas including energy, agriculture, and transport. And through the NDC Partnership Support Facility launched at COP22 in Morocco in 2016, over $8 million in grants is now flowing to a first set of 23 countries for NDC-related technical assistance, capacity building and project action.

And through the Climate Action Peer Exchange or CAPE – developing country finance ministries are sharing knowledge with each other on meeting the fiscal challenges of implementing NDCs. A recent CAPE workshop in Shanghai brought together finance ministry staff from 13 countries to discuss approaches to carbon taxes, applying fiscal risk assessment models and establishing climate budgeting systems.

Protecting the Most Vulnerable

Ahead of its COP23 Presidency, Fijian Prime Minister Voreqe Bainimarama underlined the importance of bringing the perspective of Pacific Islanders and other SIDS and low-lying areas to global attention given their vulnerability to sea level rise and more frequent violent weather. Following the two major hurricanes that hit the Caribbean in September,  the Caribbean Catastrophe Risk Insurance Facility, which was set up under technical leadership of the World Bank, made rapid payouts to 10 Caribbean countries totaling $55 million.

Securing access to financial resources before a disaster strikes is also important. This includes instruments such as emergency funds, insurance mechanisms and contingency lines of credit such as the Catastrophe Deferred Drawdown Option, or Cat DDO. In September, the World Bank board approved a US$150 million Cat DDO to the Dominican Republic to provide immediate financing for emergency relief in case of a natural disaster.

Disaster preparedness and building resilience to the impacts of climate change, especially in the most vulnerable countries, is a key part of the World Bank Group’s Climate Change Action Plan. This includes ambitious resilience targets including: putting in place early warning systems and hydro-meteorological data for 100 million people; developing climate-smart agriculture investment plans for at least 40 countries; increasing adaptive social protection for an additional 50 million poor people by 2020; quadrupling funding for resilient transport; and piloting a new urban resilience development approaches in 15 cities.

A good example comes from Africa where a total investment of $600 million under the Africa Hydromet Program, will deliver modern hydro-meteorological services and improved early warning and response systems in 15 countries. This multi-partner program is expected to assist 100 million people in an eight-year time frame.

And in coastal West Africa, which is under intense pressure from sea level rise and coastal erosion, the planned West Africa Coastal Areas (WACA) Resilience Investment Project, aims to give countries access to expertise and finance to sustainably manage their coastal areas. This responds to countries’ need for solutions and finance to help save the social and economic assets of their coastal areas.

In FY2017, the WBG provided over $12 billion in financing for climate-related projects.

Some results from our work include:

Clean Energy:

• In India, the World Bank has provided $1 billion in lending for India’s solar projects, helping to support the national mission to increase solar generation to 100 GW by 2022 and bring climate-friendly electricity to millions in India.

• In Fiji, the Sustainable Energy Finance Project, a $5.2 million risk-sharing facility supported by the World Bank and the Global Environment Facility, has mobilized more than $40 million in renewable energy and energy efficiency investments in the Pacific island nation. The facility has allowed local financial institutions to extend loans for the supply and purchase of solar systems, small biofuel units, and other equipment to small businesses and low-income consumers who would otherwise not have access to financing.  In the process, the project has helped spread the use of these technologies in Fiji and demonstrated how government, local institutions and the private sector can combine to support commercial lending to borrowers perceived as less creditworthy and catalyze investments at low cost.  In all, 40,000 households have benefited from the project.  

Cities:

• In Vietnam, the World Bank has assisted the city of Can Tho to become more climate resilient and promote sustainable urbanization and transport corridors. An investment of US$ 250 million from the Bank and US$ 10 million from the Swiss Development Agency (SECO) is implemented across six development sectors to increase the city’s physical, financial and social resilience to adverse events. One of the activities involves combining a transport link and an embankment, which has multiple benefits including reducing water displacement and flooding in the Mekong Delta.

Transport:

• In Tanzania, with World Bank support, Dar es Salaam launched the Rapid Transit (DART) system, the first true Bus Rapid Transit system (BRT) in East Africa. The removal of the informal Dala dala minibuses along the BRT corridor is significantly reducing emissions. In addition, the project includes high quality cycle tracks, footpaths, and pedestrian crossings, and will save the Tanzanian economy billions of shillings lost daily in the jams and provide relief to at least 300,000 commuters.

Water:

• In Morocco, the Bank Group is supporting the government’s National Irrigation Savings Program, with a new $150 million commitment, which builds on $500 million of prior commitments. It will help poor and vulnerable farmers with more efficient irrigation technologies so they can cope with variability in water supply.
  
  
• In The Philippines, the Bank Group is providing a $208 million commitment to improve flood management in selected areas of Metro Manila through constructing new and modernizing existing pumping stations, and improving solid waste management.

Forests:

• In Mozambique, earlier this year, the World Bank approved a $47-million project aimed in investing in the livelihoods of thousands of small and medium landholders, improving the sustainability of activities that can impact forests, including the production of timber, charcoal and agricultural crops.
  
  
• In Ethiopia, the World Bank recently approved $18 million grant to support a sustainable landscape program that spans Ethiopia’s Oromia region with a population over 30 million people. This funding will go towards improving sustainable forestry and land use planning at the state and local levels, increased work on forest-smart policies, technical training and a state-wide information campaign on how land is used.

• In China, the Shandong Ecological Afforestation Project planted trees on 66,915 hectares of barren mountainous slopes and saline coastal areas, increasing forest cover, reducing soil erosion, and improving the environment and biodiversity. The project contributed to the sequestration of the equivalent of 12 million metric tons of CO² over the project’s six-year lifetime.

Climate-Smart Agriculture:

• In Uruguay, the Sustainable Management of Natural Resources and Climate Change (DACC) project is supporting sustainable intensification through a number of initiatives including the establishment of an Agricultural Information and Decision Support System (SNIA) and the preparation of soil management plans. Since 2014, climate-smart agriculture has been adopted on 2,946,000 hectares, providing for a carbon sequestration potential of up to 9 million tons CO2 annually.

• In Niger, the Climate-Smart Agriculture (CSA) Support project aims to benefit 500,000 farmers and agro pastoralists in 44 communes. It will increase distribution and use of improved, drought-tolerant seeds, and increase the number of farmers using irrigation.

Carbon Pricing:

• Convened by the Carbon Pricing Leadership Coalition (CPLC) at COP 22 in Marrakesh and supported by the Government of France and the World Bank Group, the High-Level Commission on Carbon Prices brought together 13 leading economists to identify the range of carbon prices which would help deliver on the core goal of the Paris Agreement: keeping the rise in global temperatures to below 2 degrees Celsius. The Commission, led by Nobel Laureate Joseph Stiglitz and Lord Nicholas Stern concluded that a carbon price of $40-$80 per ton of CO2 equivalent by 2020, rising to $50-$100 per ton by 2030, when combined with supportive policies, would allow for achievement of the Paris goal.

• In Mexico, the Partnership for Market Readiness (PRM), which supports countries to assess, prepare, and implement carbon pricing instruments to scale up greenhouse gas mitigation, is helping the country to launch an emissions trading system (ETS) next year.  The PMR is supporting an ETS simulation with over 90 companies (94) are participating voluntarily, representing 67% of Mexico’s total emissions.

• Last October, Chile completed its PMR proposal which included activities that significantly contributed to the implementation of their carbon tax. Among other things, the program included analyzing the impact of the existing carbon tax scheme in the country's energy matrix; assessing how the current carbon tax scheme could evolve, be enhanced and complemented; training of more than 650 representatives from the public and private sectors in carbon pricing instruments and use of systems to monitor, report and verify (MRV).

• This year, the World Bank contributed to advancing carbon pricing intelligence by launching two interactive platforms: The Carbon Pricing Dashboard an online tool with the latest data on carbon pricing; and the Mitigation Action Assessment Protocol (MAAP) online interface, a tool that establishes a transparent and independent framework to help governments, project developers, investors and other relevant stakeholders to design, assess and compare the relative risks and performance of mitigation efforts across the globe.

Global Outreach:

• Through creative education, informed training, public engagement and multi-media communication, the Connect4Climate program is engaging a global youth audience to position the climate challenge as the greatest opportunity for this generation. Join the #Uniting4Climate campaign launched in the lead up to and through COP23 to support the Fijian Presidency and the German hosts to highlight global unity in support of climate solutions.