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Financing Climate Resilient Development Financing Climate Resilient Development A World Bank Perspective Marjory-Anne Bromhead The World Bank.

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Presentation on theme: "Financing Climate Resilient Development Financing Climate Resilient Development A World Bank Perspective Marjory-Anne Bromhead The World Bank."— Presentation transcript:

1 Financing Climate Resilient Development Financing Climate Resilient Development A World Bank Perspective Marjory-Anne Bromhead The World Bank

2 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

3 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

4 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)

5 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

6 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

7 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

8 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

9 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

10 * As per November 2008 trustee report Scaling-up Renewable Energy Program for Low-Income Countries (SREP) Target: $250Million Mitigation Pilot Program under preparation Climate Funds

11 Mobilizing, Delivering and Leveraging Climate Finance CDM & carbon offset markets, sector crediting Carbon taxes Auctioning of emission rights Emission cap and trade General taxes and other taxes, special funds Baseline Private and public investment Catalytic climate finance Possible sources US$ 4,620 bln p.a. (2008) Median: $400 billion Current (2009) funding ~ $10 billion Mitigation (2030) $140-657 billion Adaptation (2030) $30-90 billion Median: $75 billion Mitigation ~ US$9+bln p.a. Adaptation ~ US$1+bln p.a. A huge gap: estimated needs vs. current resources

12 World Bank Carbon Funds & Facilities 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. $65 million. Multi-shareholder. Multi-purpose. Managed with EIB. Total funds pledged = US$ 2.1 billion (16 governments, 67 firms)

13 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

14 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)

15 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

16 Scaling up Renewable Energy The aim is to pilot new approaches to renewable energy in low income countries Fund-raising and design still ongoing

17 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)

18 Carbon Partnership Facility Aim is to support strategic programs that move to low carbon investments Target US$ 350 million No African countries yet!

19 Disaster Risk Reduction Facility Supports disaster preparedness and disaster recovery Grants in CAR, Ethiopia, Ghana, Ethiopia, Mozambique, Madagascar, Namibia, Burkina, Seychelles

20 Year CashFlowwCashFloww (-) (+) Grant Funds CF CTF CF: Carbon Finance; CTF: Clean Technology Fund Grant funds for initial breakthrough Blending of Climate Financing Instruments Necessary

21 Blending of Financial Sources and Policy Instruments Necessary Lighting switch Industry: EE in cement Power generation from landfill gas Grassland management Reforestation Wind Solar Policies and Regulations; Incentives for Barrier Removal Technical Assistance; Capacity Development Carbon finance Support for R&D Private investments Public financing 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 Development Financing

22 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!

23 Thank you!

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