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Climate Change Finance at the World Bank Group

Climate Change Finance at the World Bank Group . ITU Symposium on ICT, Environment and Climate Change Cairo, November 2-3, 2010 Sergio Margulis, The World Bank. World Bank’s ICT Sector Strategy (under preparation). Three strategic themes.

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Climate Change Finance at the World Bank Group

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  1. Climate Change Financeat the World Bank Group ITU Symposium on ICT, Environment and Climate Change Cairo, November 2-3, 2010 Sergio Margulis, The World Bank

  2. World Bank’s ICT Sector Strategy (under preparation) Three strategic themes Connectivity infrastructure: Policy, sector reform, and investments Use of ICT to transform delivery of public and private services Connect Use of ICT to foster innovation and industry development across the economy

  3. ICTs larger impact lies in enabling energy efficiencies in other sectors Potential Impact - Other Sectors Potential Impact- ICT Sector ICT contribution to total Global Greenhouse Gases (GHG) ICTs impact enabling energy efficiencies in other sectors 5 x’s • 15 - 20% • E.G. • Smart grids • Smart buildings • Smart motors • Other • PCs and peripherals • Data centers • Telecoms infrastructure/devices • Other

  4. Opportunities to reduce GHG and increase energy efficiency - Mitigation

  5. Financing Needs to Deal with Climate Change Additional investment needs in developing countries, by 2030 Climate finance covers additional costs and serves to.. “Baseline” Private & Public Investment 75-100 … to catalyze sustainable investments ..enhance capacity & policy … leverage other sources of finance

  6. Sources Emission cap and trade Catalytic Auctioning of climate emissionrights finance CDM & C offset markets Carbon taxes General taxes and other taxes, special funds “Baseline” Private and public investment Climate Finance is a Catalyst Climate finance can cover additional cost to… • Facilitate policies, regulatory frameworks, institutions and markets support adaptation and mitigation • Catalyze transformational private and public investments and programs • low-carbon technologies • terrestrial carbon • climate resilience • Support research, development and deployment of new technologies

  7. Developing Countries are already taking action… CHINA: Energy efficiency, 20% reduction in energy intensity from 2005 to 2010; 15% renewable energy target by 2020; Clean technology R&D; sustainable transport BRAZIL: Reducing Amazon deforestation by 70% by 2020; biofuel program, energy efficiency ETHIOPIA: Integrating adaptation in sustainable land management, social protection, hydropower development, building capacity programs INDIA: Adaptation (drought, floods, cyclones, glacier melting), energy efficiency, hydro and new renewable energy, solar energy R&D CARIBBEAN ISLANDS: Adaptation to increasing hurricanes and storms, using catastrophic risk bonds MOROCCO: Integrated approach to tackling CC in water, agriculture, and urban sectors, Mediterranean Solar Plan Initiative

  8. Financial and Investment Flows for Climate Action in DCs

  9. A growing menu of climate finance instruments Adaptation Mitigation Global Environmental Facility (GEF) The Adaptation Fund Carbon Funds Carbon Partnership Facility Special Climate Change Fund Forest Investment Program Least Developed Country Fund Forest Carbon Partnership Facility Global Facility for Disaster Risk Reduction & Recovery Pilot Program for Climate Resilience Clean Technology Fund Scaling Up Renewable Energy for the Poor Risk Instruments (GEF)

  10. Mobilizing Finance: Climate Investment Funds Clean Technology Fund: demonstration, deployment, and transfer of low carbon technologies. Commitment: $4.5 billion Strategic Climate Fund: Programs to pilot new approaches and scale-up: Commitment: $1.9 billion Approved in July 2008, CIFs have balanced and equitable governance with equal representation from developed and developing countries

  11. Clean Technology Fund Thirteen investment plans endorsed with a total envelope of US$4.5 billion, mobilizing $36 billion (leverage ratio 1:8 with all other funding and 1:3 with private sector) • Example: Mexico • $500 million, leverages $6.2 billion • Aims to reduce 20% of national energy consumption through energy efficiency • Enables shift to efficient, low carbon bus rapid transit systems and light rail, and to retire old buses • Develop renewable energy, particularly wind power and mini-hydro installations • Colombia, Egypt, Indonesia, Kazakhstan, Mexico, Morocco Philippines, South Africa, Thailand, Turkey, Ukraine, and Vietnam • Regional Program for Concentrated Solar Power in Middle East & N. Africa

  12. Pilot Program for Climate Resilience (PPCR) First operational program under the Strategic Climate Fund: $1 billion in grants IDA-like grants Purpose Help highly vulnerable countries pilot and demonstrate ways to integrate climate risk and resilience into core development planning Participating countries: Bangladesh, Bolivia, Cambodia, Mozambique, Nepal, Niger, Tanzania, Yemen, Zambia, Regional Programs: Caribbean (Dominica, Grenada, Haiti, Jamaica, Saint Lucia, Saint Vincent and Grenadines) and South Pacific (Papua New Guinea, Samoa, Tonga) • Example: Cambodia • TA for mainstreaming climate resilience • Piloting vulnerability assessments and investments on an ecosystem basis • Data collection on climate risks • Promoting participation of the private sector and civil society

  13. FIP & SREP • Forest Investment Program launched 2009, total pledges US$587 million – pilot countries Brazil, Burkina Faso, DRC, Ghana, Indonesia, Lao PDR, Mexico, Peru • Program for Scaling up Renewable Energy in Low Income Countries launched in 2010, total pledges US$318 million – pilot countries Ethiopia, Honduras, Kenya, Maldives, Mali, Nepal

  14. Carbon Market Development • Expanding the reach and boundary of carbon markets • The WBG portfolio has more than 200 projects in 57 developing countries, spanning 23 technologies • Africa accounts for one fifth of active projects in the WBG carbon finance portfolio compared to 2-3% share of projects in the CDM pipeline 10 Carbon Funds: $2.5 billion • Supporting programmatic and sector-wide interventions • Carbon Asset Development Fund – €7 million • Carbon Fund - €100 million • 4 sellers participants, more programs in preparation Carbon Partnership Facility (CPF) • Supporting Country-readiness and piloting incentives for reducing emissions from deforestation and forest degradation - $160 million available • 37 participating developing countries • 11 Readiness grants signed Forest Carbon Partnership Facility (FCPF)

  15. Innovation in Carbon Finance: Biocarbon Fund Costa Rica: Coopeagri Forestry Project The project reimburses farmers for environmental services of biodiversity protection as a result of reforestation. Payments will be complemented with the income from the carbon sales. The project is expected to sequester around 0.56MtC02e by 2017. China: Reforestation on Degraded Lands in NW Guangxi (8,000 ha) The project is blending three types of financing from multiple sources: loans (World Bank, commercial), private equity and carbon finance. Carbon revenues (expected from 2011) serve as a stable source of income up to 2017 that contributes to the repayment of commercial bank loans in the short-term, helping to bridge the gap before revenues from timber harvesting are produced.

  16. Mobilizing Finance via Capital Markets • Example: Mongolia Index-based Livestock Insurance Project • Livestock sector represents 87 % of GDP and supports half of the population. • [999 and 2002] one-third of the national herd was lost in successive harsh seasons, showing extreme vulnerability. • This project introduces a new market-based approach that spreads the risk across herders, government, and the private sector. World Bank Green Bonds: $1.6 billion raises through 22 issuances in 15 currencies since November 2008 Cool Bonds: $31.5 million Eco Notes: $390 million Products and Advisory Services for catastrophe risk financing • MultiCat Program • Caribbean Catastrophe Reinsurance Facility (2007, 2008, 2009) • CAT DDOs • Weather hedges

  17. Example of Innovative use of ICT in Arab Countries • How: Remote optimization of Load Sharing of Boilers used for steam production in the region • Program of Activity (PoA): state of the art “Clean Development Mecanism (CDM)” • Economy of scale, scalable and replicable, unlimited potential • Production of Certified Emissions Reduction = Creation of an asset (can be sold). • Increase the IRR of the underlying project • Rated best PoA by KfW

  18. Thank you !!!  smargulis@worldbank.org

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