GEM Session 4
- 1. Yale #4 Webinar Series Multilevel Governance "Ending Poverty and Building Shared Prosperity by Tackling Climate Change"
- 2. Yale 1 1 2 Your Webinar in 2013
- 3. Yale 1 1 2 Multilevel Governance and Climate Change International Process since Rio Convention 1992 Many approaches at various levels from grass-roots to international climate agreements Complex interdependencies: subsidy schemes, political objectives, development objectives
- 4. Yale Your scholar today: Special Representative for Climate Change Office of the Vice President, SDN The World Bank Member Advisory Board GEM Initiative, Yale University DR. PATRICK VERKOOIJEN
- 5. Bold Action on Climate Change D r. P a t r i c k V e r k o o i j e n Special Representative for Climate Change April 11 th , 2013 1
- 6. Bold Action on Climate Change is Needed to End Poverty Climate change could roll back decades of development; the poorest and most vulnerable would be hardest hit. To achieve our mission we must work with others to prevent a 4°C world - and prepare our clients for a 2°C world. What will it take? A package of bold actions to help get prices right, get finance flowing, and work where it matters most. Based on While the World Bank Group increases its work with the poorest to build resilience. 2
- 7. Bold Action On Climate Change Catalyze a Support the Create Low- Deliver Globally - Removal of Carbon, Triple Wins Networked Harmful Climate of Climate Carbon Fossil Fuel Resilient Smart Market Subsidies Cities Agriculture W B G C L I M AT E C H A N G E AC T I O N P L A N 3
- 8. Climate Change Action Plan: Building Resilience and Promoting Inclusive Green Growth “With every investment we make and every action we take, We should have in mind the threat of an even warmer world And the opportunity of inclusive green growth” President Jim Kim A new WBG Climate Action Plan will: Enhance Resilience of Client Countries to Climate Change Support a Low Carbon Transition in Client Countries Scale Up Finance Flows and Instruments to Support Client Action Integrate Climate Considerations in our Operational Policies and Investments Manage our Footprint Looking through a ‘Climate Lens’, we will work by sector and region to: Develop common approaches to greenhouse gas accounting through ex-ante estimates of net GHG emissions using approaches consistent with other MFIs Address short-lived climate pollutants in Bank activities to maximize local benefits (e.g. health) while also addressing climate impacts. Integrate emissions reductions and climate risk in investment decisions to manage climate impacts and risks while enhancing the ability to deliver development benefits. Continue to develop the methodologies, tracking and tools to ensure we know the impact of what we do. 4
- 9. Catalyze a Globally-Networked Carbon Market: Getting Prices Right and Finance Flowing A robust carbon price at a global level is part of the answer to avoiding a 4°C world. THE CHALLENGE It will encourage low carbon investment and deliver emissions reductions at scale. Catalyze the development of a globally-networked carbon market with size and price signal to direct investment to low carbon paths. Catalyze increased support to countries developing carbon pricing mechanisms – encourage consistent approach on THE fundamentals (e.g. Measurement, Reporting, and Verification IDEA (MRV)) to facilitate trading. Pricing and exchange rates across various carbon asset classes Services and institutions to support a market of this scale and a strong pricing signal. 5
- 10. Catalyze a Globally -Networked Carbon Market: The Challenge Domestic cap-and-trade schemes gaining ground From 2013 onward, 36 countries and 11 sub-national jurisdictions in the US and Canada, 7 cities and provinces in China, are participating or preparing to participate in Emissions Trading Schemes China has put forward a comprehensive roadmap on design of a national Emissions Trading Scheme to be launched in 2015 or 2016 Many others considering: Brazil, Chile, Mexico, Turkey and Ukraine BUT Markets are heterogeneous and fragmented Many asset classes being created Forest carbon, Black carbon, Energy Efficiency, etc. BUT not currently exchangeable Scale and efficiency require trading across markets. 6
- 11. Catalyze the development of a carbon market with size and price signal to direct investment to low carbon paths Offsets worth ca. $30 billion through 2012 have supported additional investments of > $130 billion. Multi-trillion $ market is possible by 2025 if we have a price that supports ambitious emission reduction targets commensurate with avoiding 4°C world Building on a decade of WBG experience in carbon markets and Leveraging Partnership for Market Readiness (with 28 major economies and market players are already participating in the Partnership for Market Readiness) Next Steps: Consult, discuss and develop the concept of a globally-networked carbon market. Possible components include: Carbon asset rating system(s) International Carbon Reserve System Cross-border settlement platform Catalyze a coalition of government, private sector and other stakeholders to develop the approach and begin piloting. 7
- 12. Support the Removal of Harmful Fossil Fuel Subsidies: Efforts to Address Climate Change in a Transformational Way Will be Challenged Without also Addressing Fossil Fuel Subsidies Fossil fuel subsidy reform is complex and politically challenging; requires managing potential losers and protecting the poor. Fossil Fuel subsidies are inefficient and highly inequitable; estimated at $1.9 trillion p.a. Removing harmful subsidies has the potential to free fiscal resources for essential socio- THE economic priorities. A number of emerging economies have attempted reform but implementation is complex, CHALLENGE takes time and has high risk of being reversed. Progress on fossil fuel subsidies is critical to “getting the prices right”, leveling playing field for scaling up clean energy and resource/energy efficiency investments. WBG can play key role in facilitating, catalyzing and accelerating action on this issue Two main activities of the Task Force: Client Country Alignment & Support: Ensuring well coordinated action to accelerate fossil subsidy reform efforts of willing client countries. Bridge PREM, HD, SDN, IMF at country level, understand gaps, ensure resources available (particularly on political economy and THE communications). Doing what would otherwise take 2-3+ years in 18 months. TA/Global Fossil Fuel Subsidies Facility (ESMAP): provide funds to clients to address IDEA political economy, distributional impact, communication needs for reform programs. Advocating for Removal of Fossil Subsidies: Engagement, collaboration and partnership with key external bodies (eg: G20/G8, others) to advocate removal of harmful fossil fuel subsidies as part of WBG vision for bold action on Climate Change. 2013-2015 key period, renewed leadership and willingness to address climate issues evident among key stakeholders. *Figures from IMF report, “Energy Subsidy Reform: Lessons and Implications”, January 2013 8
- 13. Support the Removal of Harmful Fossil Fuel Subsidies: Fossil Fuel Subsidies Costly, Impede Scales-Up Clean Energy Investment Fiscal costs of fossil subsidies significant Global Pre- and Post-Tax Subsidies, 2011, Source: IMF 2013 • Reduced Growth • Strain on Balance of Payments Pre-tax subsidies Post-tax subsidies • Significant Environmental Impact $480 billion $1.90 trillion • Disproportionately benefits mid/upper income (0.7% GDP, 2.1% revenues) Adva (2.7% GDP, 8.1% revenues) S.S. nced S.S. Africa CEE- Africa Reforms challenging, implementation complex, CIS MEN A Adva due to: E.D. LAC nced • Low public trust MEN A Asia E.D. • Weak institutions, weak coalitions LAC Asia CEE- CIS • Entrenched interests • High risk of reversal; extreme political sensitivity • Requires significant time, needs to ensure safety net and other benefits not impacted Important for “Getting Prices Right” • Significant barrier for wide-scale clean energy/energy efficiency investment • Incentives for clean energy investments compete with subsidies for fossils = not level playing field WBG is uniquely positioned to accelerate efforts that address this barrier to transformational change. 9
- 14. Support the Removal of Harmful Fossil Fuel Subsidies: The Idea Better Aligned WBG Leadership: Advocating Client Country Support For Removal of FF Subsidies Context Context • Lots of work already happening across WBG • Climate change an urgent global issue, not just and IMF; unclear how well coordinated it is development issue; • PREM, HD, Treasury, ESMAP, SDN all have levels • WBG ability to address poverty & prosperity at of engagement, things to offer risk if climate change not addressed; precipitous Idea reversal in development gains possible • Current constellation of leadership on climate • Work with preliminary set of countries to “kick change best in many years start” /dramatically accelerate FFS reform efforts • Opportunity to advocate for action with many • Initial countries based on (i) willingness, (ii) different stakeholders potential impacts, (iii) potential for successful implementation Idea • Ensure cross-bank Teams well coordinated at • As part of WBG vision for bold action on country level – PREM, HD, SDN, IMF and others Climate Change, increased engagement with key • Accelerate work otherwise done in 3+ years in stakeholders, including the G20/G8, OECD, EU, much shorter timeframe (18 mo) UN GA/UNFCC, and key shareholders willing to Additional Support engage on this topic, such as US, UK, Australia, •TA/Global Fossil Fuel Subsidies Facility (ESMAP): China to reinforce need to address fossil provide funds to clients to finance gaps in subsidies analysis (eg: safety net, distributional impact, • Build Coalitions and work closely with G20 transition program strategies) , and political ESWG on fossil subsidies, strengthen part- economy and communication needs for reform nerships to build on complementary work (eg: programs IMF, OECD, IEA) to promote FF subsidy removal 10
- 15. Create Low-Carbon, Climate Resilient Cities: Financing Livable Cities As climate change and rapid urbanization coincide, the challenge is to help design and finance cities that deliver emissions reductions while addressing increasing service needs of their residents. Cities’ share Infrastructure Financing THE of global: Gap in Low- & Middle Income Countries CHALLENGE Energy CO2 Population $1 Consumption Emissions in 2050 Trillion/Year Scale up technical assistance and finance uniting currently dispersed efforts to curb city-based carbon emissions and increase resilience at a transformational scale. THE Address design, planning and financing barriers through : IDEA An innovative approach to deliver and finance city infrastructure such as green buildings, cleaner energy sources etc. Coordination and deployment of design and planning tools 11
- 16. Create Low-Carbon, Climate Resilient Cities: The Challenge The global population is urbanizing at an unprecedented rate, contributing the majority of global GHG emissions, and will be seriously impacted by climate change. → Infrastructure built now will lock-in a city’s emissions- and resiliency-profile for decades to come. Concerted action across large and fast-growing cities is required to cut emission levels without adversely affecting their competitiveness. → To do this, cities need technical assistance and direct access to finance at scale. Responding to climate change in cities must emphasize growth and job creation, improved access to and quality of services, resilience, and livability and therefore ultimately urban poverty reduction. 12
- 17. Create Low-Carbon, Climate Resilient Cities: The Idea 1. Explore Innovative Approaches to Delivering and Financing Infrastructure including design and launch of a Cities Low Carbon Infrastructure Exchange. Foster a supply of investment grade low carbon infrastructure assets across cities, i.e. an investment-grade infrastructure pipeline through standardized delivery approaches that ultimately allow pooling. Address Sovereign Wealth Funds’ and the 13 largest Pension funds’ demand for large scale, ‘real’ asset classes that can deliver steady, inflation-adjusted income streams with a low correlation to the returns of other asset classes. Engineer and deploy collective low carbon investment instruments at scale. Explore and implement innovative ways to mobilize public sector funding at sub-national, sub- sovereign / municipal level for purposes of risk-sharing in order to secure the necessary equity and debt for large-scale low carbon infrastructure investments. 2. Prepare Financing Packages and Investment Plans Work with cities to prepare financing packages and develop investment plans through a phased approach. Start working directly with 6 cities through customized TA offerings and expand +6 +8 cities over 18-24 months. Catalyze Regional Centers of Excellence provide decentralized, longer term technical assistance for cities. 13
- 18. Delivering on the Triple Win of Climate Smart Agriculture Key Messages The combination of a growing and more prosperous world population and climate change pose a multidimensional challenge: Need to increase nutritious Food Production to feed 9 billion people in 2050 Need to reduce the Volatility that is impacting poverty and prosperity by THE Building Resilience, especially given that that 75% of the world’s poor are rural CHALLENGE and most are involved in farming Need to cut emissions to avoid a 4°C World – Currently agriculture is a big part of the problem (30% of GHG emissions – including forestry and land use change), HOWEVER, it could be a big part of the solution - it is the only sector that sucks carbon from the atmosphere. To drive systemic change in management of productive landscapes and enable them to produce more, reduce vulnerability and contribute to a positive impact on climate change. To achieve this a global action network will be established that: THE Takes to scale existing pilots and drives new interventions IDEA Enables joint action by governments, private sector, science community, development institutions and NGOs/CSO in partnership with farmers Targets the scientific research needed for the productive systems of tomorrow Directs existing and future resources towards the triple win across landscapes 14
- 19. Delivering on the Triple Win of Climate Smart Agriculture: The Impacts of Climate Related Shocks are Already Being Felt China: Wheat 2011 - Drought USA: Corn, Soybeans, Wheat Russia, Kazakhstan, Ukraine: Wheat impacting 36% of 2012/2013 - Predicted to reduce the gross 2010 Drought and Heat Wave reduced winter wheat area Mexico : White Corn domestic product by 0.5-1%, equating to a loss of production by 20.2, 9.7, and 4.0 MMT in eight provinces. 2011 - Freeze reduced $75 to $150 billion and is on track to exceed a respectively, national production by 4 2011 - yields previous drought as the costliest natural disaster MMT , ca. 18 % of reduced by ca. 10 in US history. projected national MMT production) 2009 Drought reduced Colombia: Crops & corn yields by 3.85 MMT Livestock or 15.9 % relative to 2010 - ca. 380,000 ha of crop previous year. lands and pastures flooded, Brazil: Soybeans ca. 30,000 livestock died. 2008 - Drought reduced production by 3.2 MMT, ca. 5.25 % relative to previous year. Paraguay: Soybean 2008 Drought Brazil: Corn reduced production 2008 Drought reduced by 2.9 MMT ~ 42 % production by 7.6 MMT, ca. 13 % Argentina: Soybeans Southern Africa: Crop & Livestock Sri Lanka & Madagascar: Rice Australia: Wheat 2008 Drought reduced yields by 14.2 2011 - Floods in January in southern Africa 2011 - Cyclones destroyed 30% 2006 - Drought MMT, ca. 30.7 % caused significant crop and livestock losses (1 MMT) of Sri Lanka’s rice crop and reduced yields by 14.3 (Lesotho, Zambia, Zimbabwe, Mozambique). reported to have badly damaged MMT, or ca. 57 % Argentina: Corn *No reliable loss data available most of Madagascar’s rice crop 2008 Drought reduced yields by 6.52 *No reliable loss data available MMT, ca. 29.6 % MMT = Million Metric Tons | Reference: In 2010 South Africa consumed 0.5 MMT Soybean, 3 MMT wheat and 10.7 MMT Corn (Data Source: USDA) 15
- 20. Delivering on the Triple Win of Climate Smart Agriculture: What are the essential elements of action? Action Network Tools for action A Governments Food C Security + Opt-in first movers Unilateral T Reduced - (Farm Bill, EU CAP etc) I Poverty Triple win focus - O Private sector Bilateral N - (USAID, DFID etc) Common - operational matrix Multilateral A Resilience + Development - (e.g. WB, IADB) N - Sustainable Institutions Agreed results D Private sector Prosperity framework (purchasing and - investments) R Collective action at - E Academia Mechanisms scale S - (e.g. CGIAR, GAFSP) U Reduced - Small secretariat, L Emissions + Existing Initiatives Increased NGOs/CSOs streamlined (e.g. REDD+, ASAP) T governance S Carbon Sinks 16
- 21. Communicating Climate Change: Moving Beyond “Green” I. Develop and focus-test messaging US, Europe, MICs, and selected developing countries II. Identify, consult and build linkages with influencers Catalyze “War Rooms” in US (April 12) and globally in all regions Climate Action WBG Advisory Council of Global Foundation Leaders (May 17) III. Build tools to communicate messages and evidence and make them available to influencers Videos, Info-graphics, PPTs, Twitter and Facebook campaigns Data and research “Climate change is not just an environmental challenge. It is a fundamental threat to economic development and the fight against poverty.” - Jim Yong Kim 17
- 22. Yale Thank you and be there on May 7
- 23. Yale #4 Webinar Series Multilevel Governance "Ending Poverty and Building Shared Prosperity by Tackling Climate Change"