Climate Action Drives Development Results – Lessons from The World Bank Group’s First Climate Change Action Plan

Challenge

The threat of climate change remains critical – forcing people to evacuate homes, grapple with food insecurity, or the impacts of deforestation and biodiversity loss – even as they must also deal with the health and economic impacts of COVID-19.

If no action is taken, climate change could push an additional 100 million people into extreme poverty by 2030.

In South Asia, alone, 800 million people are at risk to see their standards of living and incomes decline as rising temperatures and more erratic rainfall reduce crop yields, make water more scarce, and push more people away from their homes to seek safer places.

By 2050, without concrete climate and development action, over 143 million people in just three regions (Latin America, South Asia and Sub-Saharan Africa) could be forced to move within their own countries to escape the slow-onset impacts of climate change.

Damage caused by natural disasters has risen by more than 600% since the 1980s. And, 2017 and 2018 were the costliest years on record, with more than half a trillion dollars in losses globally. As reported in the Bank’s 2019 report Lifelines : The Resilient Infrastructure Opportunity, natural disasters cost about $18 billion a year in low- and middle-income countries through damage to power generation and transport infrastructure alone. They also trigger wider disruptions for households and firms costing at least $390 billion a year.

Approach

Just after the world came together for the landmark 2015 Paris Agreement on climate change, the Bank Group unveiled its Climate Change Action Plan (Plan) committing to increase climate finance from 20 percent  of lending in 2016 to 28 percent by 2020 to help countries achieve their climate goals. This target was exceeded in each of the last three years of the action plan. Under the Plan, climate change considerations were taken into account at every stage of project design and integrated into 100 percent of the Bank’s multi-year development strategies with developing country partners. Critically, the Bank’s support branched out beyond sectors traditionally identified with climate action, such as energy, agriculture and environment, expanding the range of climate-smart development to projects that include enhancing digital development and climate resilience together in Bangladesh, integrating climate into macro fiscal budgeting and planning in the Philippines and improving energy and water efficiency into Egypt’s healthcare system.

Results

1. Integrating climate change into development

The Bank Group supported over 30 countries to implement or enhance their Nationally Determined Contributions (NDCs) under the Paris Agreement, and supported over 35 national or sub-national governments in their efforts to put a price on carbon.

With climate change putting sustainable economic growth and good development outcomes at risk, the Bank made a significant effort to accelerate climate action and to mainstream climate into operations and country engagement. For example:

• By designing programs to help countries meet and exceed their commitments under the Paris Agreement.
• By screening 100 percent of WBG operations for climate risk; and using a shadow price on carbon to guide our investments.

2. Restoring landscapes and improving land use practices

 Climate finance for climate change adaptation rose from 40 percent in 2016 to 52 percent  in 2020. An increasing share of agriculture projects were “climate-smart”: increasing productivity and resilience while reducing greenhouse gas emissions. And solutions have been deployed at a large scale, bringing benefits to millions: in Maharashtra, India, 7 million farmers are being trained in soil fertility and water resources management; varietal crop selection and seed quality; and low-cost organic practices.

3. Protecting the vulnerable from climate shocks

Through the Action Plan, the Bank Group ensured that 120 million people in over 50 countries (such as Nigeria Cote d’Ivoire to Pakistan, Indonesia, and St. Lucia) gained access to hydro-meteorological data and early warning systems crucial to saving lives. The Bank Group helped countries reduce disaster risk through a combination of measures to build resilience in people, infrastructure, and economies – these are vital as climate impacts mount and can significantly reduce the number of deaths that occur. Preparedness in India and Bangladesh, for instance, ensured that millions were moved to safety before Super Cyclone Amphan arrived on their coasts in May.

In the Pacific islands, Tuvalu and Vanuatu quickly accessed emergency funds through a new instrument known as a Catastrophe Deferred Drawdown Option after being hit by cyclones earlier in 2020.

4. Encouraging the shift to low-carbon energy while expanding access

The Bank Group prioritized investments in renewable energy and energy efficiency as key to helping clients reduce emissions. It backed some of the world’s biggest solar projects, joining the Climate Investment Funds to support the Noor concentrated solar plant in Morocco, one of the few in the world to use this pioneering technology to store solar energy. The Group also supported the BenBan solar park in Egypt, and the Ultra Mega Solar Park in India, which helps power the Delhi Metro roughly 800 kilometers away.

Overall, the Action Plan added 18 Gigawatts (GW) of variable renewable energy into grids and 16 GW of renewable energy generation capacity, for a total of 34 GW of renewable energy to help communities, businesses, and economies thrive.

5. Shifting to lower-carbon transportation

With transport responsible for a quarter of energy-related greenhouse gas emissions globally, the Bank supported clients to invest in public transit systems, shifting freight from roads to railways and, where possible, to waterways, which have the lowest emissions per ton kilometer of transport.

Partners

The Climate Change Group engages with several partners to support countries to address climate challenges. A few partnerships are highlighted below.

NDC Partnership: The WBG supports this partnership of 137 countries and institutions, helping mobilize technical and financial support towards achieving countries’ NDCs.

Coalition of Finance Ministers for Climate Action: During the 2019 WBG and International Monetary Fund (IMF)  Spring Meetings, Finance Ministers from over twenty countries launched a coalition aimed at driving stronger collective action on climate change and its impacts. This support is channeled primarily through the Climate Action Peer Exchange, hosted by the WBG.

Climate Investment Funds (CIF): The $8.2 billion CIF is the largest multilateral climate finance institution driving investments in clean energy, sustainable forest management and climate resilience through five partner Multilateral Development Banks (MDBs), including the WBG. To date, more than $ 3.7 billion in CIF financing has supported WBG efforts to advance clean technology, sustainable forestry, energy access, and climate resilience.

Global Facility for Disaster Reduction and Recovery (GFDRR): GFDRR is a Multi-Donor Trust Fund supporting developing countries to better understand, manage, and ultimately reduce vulnerabilities to disaster and climate risks.

Carbon Pricing Leadership Coalition (CPLC): CPLC is a unique initiative that brings together leaders across national and sub-national governments, the private sector, academia, and civil society with the goal of putting in place effective carbon pricing policies that maintain competitiveness, create jobs, encourage innovation, and deliver meaningful emissions reductions.

Multilateral Development Banks (MDBs): The WBG continues to partner with the MDBs on common approaches to monitor and track their climate finance flows to client countries as they increase their climate financing in mitigation and adaptation. In 2019, MDB climate finance accounted for $41.5 billion for emerging and developing economies, boosting projects that help developing countries cut emissions and address climate risks.

Moving Forward

Looking ahead, the next Climate Change Action Plan (2021-2025), already underway, aims to boost support for countries to take ambitious climate action by increasing financing for adaptation and supporting increased systemic climate action at the country level.

Implementing this as countries also grapple with the economic consequences of COVID-19 means looking at interventions that can deliver short term objectives – such as jobs and economic growth – as well as longer terms ones like decarbonization and boosting adaptation and resilience, helping our clients shape a sustainable recovery.

Drawing from technical expertise, operational know-how and financial resources – including by successfully delivering our first ever Climate Change Action Plan and the second plan (2021-2025) now underway – we will expand our efforts, for instance going beyond traditional climate sectors and making sure that climate prior actions are core parts of the economic recovery from the pandemic. This is how we can deliver the critical systemic, economy-wide change for our clients and help set development pathways today that can unlock low-carbon, resilient benefits for decades to come.