Two years ago, more than 180 countries gathered in Paris to sign a landmark climate agreement to keep global temperature rise well below 2 degrees Celsius.
Tomorrow, on December 12, 2017, exactly two years after the signing of the historic Paris Agreement, the government of France will be hosting the One Planet Summit in Paris to reaffirm the world’s commitment to the fight against climate change.
At the summit, mayors from cities around the world, big and small, will take center stage with heads of state, private sector CEOs, philanthropists, and civil society leaders to discuss how to mobilize the financing needed to accelerate climate action and meet the Paris Agreement goals.
Climate change is a global challenge that threatens the prosperity and wellbeing of future generations. Transport plays a significant role in that phenomenon. In 2013, the sector accounted for 23% of energy-related carbon emissions… that amounts to some 7.3 GT of CO2, 3 GT of which originate from developing countries. Without any action, transport emissions from the developing world will almost triple to reach just under 9 GT of CO2 by 2050.
Just ask the investors: businesses in emerging markets can no longer afford to ignore the risks posed by the changing climate to their bottom lines. Ranging from increasingly frequent and severe weather events to new regulations and changing consumer preferences, climate change is fundamentally transforming the way we do business. Increasingly, companies and their investors are seeking opportunities to transition to and invest in climate-smart portfolios.
When the world united around the historic Paris climate agreement, in 2015, the message was clear: It’s unfair to pass the burden of climate change to future generations.
We now need to put words into action. This week, leaders from 20 of the largest economies are meeting in Hamburg to find solutions to global challenges. Climate change will be front and center.
As the co-chairs of the Carbon Pricing Leadership Coalition (CPLC), we want to accelerate climate action and reaffirm our commitment to carbon pricing. The discussions in Germany are a great opportunity to keep the momentum going.
Launched during the Paris climate talks, the CPLC now consists of 30 governments and over 140 businesses, all fighting for a common cause: to advocate for the pricing of carbon emissions across the world. We are calling for bold leadership from everyone – governments, companies, academia and civil society. The CPLC provides a forum for these groups to show collaborative leadership on carbon pricing.
A few years ago, this would have seemed a strange question, as debt management and climate policy have traditionally been regarded as unrelated fields. But at a workshop at the annual Debt Management Forum in Vienna on May 22, 2017, debt managers from 50 developing countries discussed the role of emerging debt instruments such as green bonds and blue bonds, in raising capital for climate-friendly projects that range from reforestation to renewable energy.
While green and blue bonds resemble more traditional debt instruments in terms of structure and returns, they represent a novel approach to climate finance. Created just ten years ago, the total value of green bonds has grown at a spectacular pace, reaching US$82.6 billion in 2016. By the end of 2017, the total value of green bonds will likely exceed US$100 billion.
Following the Paris deal on international climate change, governments are beginning to explore new financing mechanisms for investing in the growing low carbon economy. Over the next decade sovereign wealth funds (SWFs) could become an important game changer in green investing. Recognizing the untapped potential of SWFs, two key questions emerge: how can SWFs increase their exposure to green asset classes? And what are the constraints?
Investors and financial institutions are becoming increasingly aware of the risks associated with fossil fuel projects and are showing growing interest in green bonds and other financing tools that facilitate investment in low-carbon energy solutions.
Being patient investors, with longer term investment horizons than many others in the financial services sector, SWFs could become catalysts for implementing the December 2015 Paris Climate Agreement. In the November 2016 annual meeting of the International Forum of Sovereign Wealth Funds in Auckland, participants highlighted that SWFs are particularly well-positioned to become trailblazers in green investment. The majority of members are oil-based SWFs which are looking to economic diversification of their finite carbon wealth into industries and sectors that would yield broader societal, economic and financial benefits.
If ever there was a year to make significant progress on forest conservation and climate change, it was 2016. Coming on the heels of the historic COP21 Paris Agreement, 2016 was a year to demonstrate the commitment the World Bank Group has to support countries as they take forward their nationally determined contributions to address our global climate change challenge. It’s gratifying to look back on 2016 and feel that we contributed to harnessing this momentum and sense of urgency; especially in showing how sustainable land use, including sustainable forest management, is critical to achieving the ambitious targets set out in the Paris Agreement.
Presently, the average annual loss from natural disasters in cities is estimated by the UN at over $250 billion. If cities fail to build their resilience to disasters, shocks, and ongoing stresses, this figure will rise to $314 billion by 2030, and 77 million more city dwellers will fall into poverty, according to a new World Bank/GFDRR report presented at COP22.
The good news is that we have a window of opportunity to make cities and the urban poor more resilient. Over 60% of the land projected to become urban by 2030 is yet to be developed. Additionally, cities will need to build nearly one billion new housing units by 2060 to house a growing urban population. Building climate-smart, disaster-resilient cities and housing is thus an immediate priority, especially in the developing world.
To seize that opportunity, countries will need significant financing for infrastructure—over $4 trillion annually—and making this infrastructure low carbon and climate resilient will cost an additional $0.4 to $1.1 trillion, according to a CCFLA report.
Mobilizing private capital is the best bet for helping to close this financing gap.
Natural disasters—such as droughts, floods, landslides, and storms—are a regular occurrence, but climate change is increasing the frequency and intensity of such weather-related hazards. Since 1970, Africa has experienced more than 2,000 natural disasters, with just under half taking place in the last decade. During this time, natural disasters have affected over 460 million people and resulted in more than 880,000 casualties. In addition, it is estimated that by 2030, up to 118 million extremely poor people (living below $1.25/day) will be exposed to drought, floods, and extreme heat in Africa. In areas of recurrent disasters, this hampers growth and makes it harder for the poor to escape poverty.
Morocco, the host of COP22 happening this week and next in Marrakech, is an example of a country that is working closely with the World Bank and other organizations to shift its economy onto a low carbon development path.
It just submitted its official climate plan, or nationally determined contribution, NDC, where it pledges a 42% reduction below business-as-usual emissions by 2030. This is 10 percentage points more ambitious than it previously laid out, ahead of Paris, and we see the plan affecting a growing number of sectors in the economy. Morocco plans a $13 billion expansion of wind, solar and hydroelectric power generation capacity and associated infrastructure that should see the country get 42% of its electricity from renewable sources by 2020, ramping up to 52% by 2030.