World Bank Group Climate Change Action Plan
1. Climate change is a threat to the core mission of the World Bank Group (WBG). Current weather extremes already affect millions of people, putting food and water security at risk, and threatening agricultural supply chains and many coastal cities. Without further action to reduce extreme poverty, provide access to basic services, and strengthen resilience, climate impacts could push an additional 100 million people into poverty by 2030.
2. Climate change presents enormous challenges and opportunities for development, making it essential that climate and development be tackled in an integrated way. The world needs to feed 9 billion people by 2050, provide affordable energy access to all, and extend housing and services to 2 billion new urban dwellers—and to do so while minimizing emissions and boosting resilience.
3. Recent global developments favor bold climate action by the WBG. At COP21, 140 World Bank client countries committed to implement their Nationally Determined Contributions (NDCs) as part of an agreement to limit global warming to less than 2°C by 2100, and make best efforts to limit warming to 1.5°C. At the same time, public and private actors have renewed their global commitments to increase investments and R&D, boost carbon pricing, and end wasteful energy subsidies.
4. This Climate Change Action Plan (CCAP) demonstrates how the WBG intends to meet these challenges and opportunities, by scaling up climate action, integrating climate change across its operations, and working more closely with others. It is driven by client demand, focused on activities that support the WBG’s core mission, and builds on the WBG’s comparative advantage.
5. Countries start from different points and have different emission levels, and therefore need differentiated actions and support. These differences translate into different climate commitments in the NDCs, and into different needs in terms of support that the WBG can and will provide.
6. To get impact at scale, the Action Plan is focused on helping to shape national investment plans and policies and leveraging the private sector. Financing needs for resilient, low-carbon growth are much larger than available public resources, and WBG resources are small relative to these needs. Policy and institutional support for national investment plans and for facilitating private sector initiatives will be critical to having impact at scale.
7. The Action Plan reconfirms the WBG’s commitment to increase the climate-related share of its portfolio from 21 to 28 percent by 2020 in response to client demand, with total financing (including leveraged co-financing) of potentially $29 billion per year by 2020. Meeting these targets is conditional on sustained aggregate WBG lending volumes, access to concessional finance, and client demand.
8. The Action Plan is underpinned by five strategic shifts for the WBG’s climate work: (i) Implementation: The WBG focus will accelerate support for countries and companies to implement the plans they have developed. (ii) Convergence: The WBG climate and development agendas will be fully integrated into strategies and operations, and global and country level action will be aligned. (iii) Maximizing impact: The WBG will increase its focus on impact at scale, including shaping national investment policies and programs and mobilizing private finance. (iv) Resilience: The WBG climate portfolio will be rebalanced—putting a greater focus on adaptation and resilience. (v) Transformation: Achieving global climate commitments will require a shift from business as usual. The Action Plan will focus on facilitating transformational impacts.
9. The Action Plan is based on comprehensive joint preparation between the Climate Change Cross-Cutting Solutions Area (CCSA), Regions, Global Practices (GPs) and other CCSAs, the International Finance Corporation (IFC), and Multilateral Investment Guarantee Agency (MIGA).Regions and GPs, as well as the IFC, have prepared a background analysis and developed complementary and detailed contributions. The Action Plan also includes the IFC Climate Change Implementation Plan (which is attached) and the Africa Climate Business Plan.
10. WBG activities under the Climate Change Action Plan are organized along four top-level priorities: (i) Support Transformational Policies and Institutions; (ii) Leverage Resources; (iii) Scale up Climate Action; and (iv) Align Internal Processes and Work with Others.
Support Transformational Policies and Institutions
11. The WBG will support countries in translating their NDCs into climate policies and investment plans into actions, and in mainstreaming climate considerations into policies and budgets, through advisory services, public expenditure reviews, and development policy operations. The objective is to help client countries strengthen their resilience and adaptive capacity, and deliver affordable and efficient services (especially energy) in a low-carbon manner and in a way that is consistent with their NDCs and global climate commitments. The WBG will work to ensure that the vulnerable are protected and will help build country capacity in this regard.
12. The WBG will scale up country-level support and global advocacy work to “get prices right,” by helping clients to reform fossil fuel subsidies, putting a price on carbon, deepening market-based instruments, and reforming other distorting subsidies. Carbon pricing work will be extended to widen, deepen, and connect markets.
13. The IFC will crowd in private sector finance by significantly scaling up its own investments— from $2.3 billion to about $3.5 billion in 5 years. By 2020, it will have mobilized at least $13 billion per year in external private sector investments through its operations.
14. To “green” the financial sector, the WBG will work with regulators, create green banking champions, provide climate credit lines, and promote continued growth and development of the green bond market.
15. The WBG will scale up financial leverage in operations for resilience and mitigation through improving the preparation, structuring, and aggregation of projects and de-risking private investments and scaling up support for a climate smart focus in project preparation facilities. Cross-WBG “deal teams” will focus on delivering bankable/investable projects, including through use of blended concessional finance, for high-impact sectors—such as energy infrastructure, rooftop solar, distributed energy service companies, and resilient urban infrastructure.
16. IDA has a strong record of supporting climate change activities, and the WBG has a strong record of using blended non-IDA concessional finance, but existing funding is limited. There is an ongoing need for concessional finance, both IDA and non-IDA, to accelerate the transition from fossil fuels to renewable energy, build climate resilience, and meet climate targets. The WBG is counting on a strong IDA18 replenishment and significant non-IDA concessional financial support to meet the targets in this Action Plan. The WBG will in the coming months develop an integrated approach to the mobilization and management of these different sources of funding in the context of the Forward Look.
17. The WBG will focus on enhancing the effectiveness of, and help countries access to, concessional climate finance. Concessional climate finance will be concentrated on the incremental cost of climate action, to redirect investment flows and maximize impact. The WBG will work to ensure that policy options, institutional practices, and reforms are deployed to minimize the required level of concessional finance.
Scale Up Climate Action
18. By 2020, the WBG will have significantly scaled up its activities with climate co-benefits in multiple sectors and increased its impact in countries through direct investments, advisory services, and through the shaping of new and innovative solutions. In particular, the WBG will deepen and scale up its action in six high-impact areas that are presented below, with indicative targets that represent current expectations regarding future demand. Achievement of these targets will be dependent as always on client demand; these targets are not commitments and will be adjusted over time.
19. Renewable Energy and Energy Efficiency. The World Bank (WB) will use multiple instruments to de-risk renewable energy investments, with a cumulative target of adding 20 GW in renewable energy generation over 5 years, that is, a doubling of current WB additions. The WB will “green” grids with the aim to enable the addition of 10 GW of variable renewable energy over the same period, and ensure that all energy investments are adapted to climate change. The IFC and MIGA will support grid-connected clean energy by focusing on large hydropower, wind, and solar, continuing to open new markets with “first-of” investments, and help industrial and commercial clients expand the use of low-carbon captive power. The WBG will increase its share of energy efficiency operations and aim to invest $1 billion to promote energy efficiency and resilient building in urban areas. The WB will aim to mobilize $25 billion of commercial funding for clean energy over the next five years.
20. Sustainable Mobility. The WBG will help countries develop sustainable mobility alternatives and implement transport adaptation options. It will increase the share of its transport portfolio that contributes to climate mitigation and resilience. It will pursue urban mobility and low-carbon, multimodal transport operations in all regions and aim for $2 billion in lending for adaptation over the years FY16–20 (four times the level in the previous 5-year period), with a strong focus on enhancing the resilience of the road portfolio. It will also focus on improving the competitiveness and fuel efficiency of the trucking sectors, promote green freight, and lead a global coalition to develop a framework for sustainable mobility.
21. Sustainable and Resilient Cities. The WBG will further integrate climate into urban planning, among others, by developing tools and knowledge products through the Global Platform for Sustainable Cities and aim to roll these out in at least 30 cities by 2020. It will develop and aim to pilot in 15 cities by 2020 a city-based resilience approach that integrates infrastructure development, land use planning, disaster risk management (DRM), institutions/governance, social components, and infrastructure investment. It will incorporate principles of integrated urban water management in its urban operations. By 2020, transitoriented development solution packages will be piloted in at least five cities. The IFC and MIGA will increase investments in municipal transport.
22. Climate-Smart Land Use, Water, and Food Security. Climate-smart agriculture profiles and investment plans will be developed by 2020 for at least 40 countries, and climate-smart agriculture programs will be delivered at scale, with a focus on hybrid seeds and carbon capture practices; high- efficiency/low-energy use irrigation programs; livestock productivity; energy solutions for agribusiness; and mainstreaming of risk management. Under the Forest Action Plan, the WBG aims to support REDD+ strategies in more than 50 countries, and develop/implement in 10 countries a large-scale, multisectoral program promoting “forest-smart” development and mobilizing IBRD/IDA/REDD+ financing. The WBG will work with partners to improve the effectiveness of the various forest climate funds. The WBG will develop a series of area-based operations in climate-sensitive locations using ecosystem-based adaptation, land restoration, integrated water management, and biodiversity conservation, to maximize development benefits and the use of carbon sinks. It will implement large-scale national and transboundary programs to promote water efficiency across sectors, and improved water management. Analytical work will be further developed on the energy-water-food nexus.
23. Green Competitiveness. By 2020, the WBG aims to have assisted 20 countries in enhancing their capacity to innovate in climate sectors and increase industrial competitiveness in response to climate change, including through greening global value chains and trade practices, developing eco-industrial zones, and introducing best practices for standards and labeling. The IFC will intensify its work with entrepreneurs, through incubators and private equity investments, to increase its impact and grow the market in climate-smart innovation.
24. Leave No One Behind. By 2020, the WBG will aim to (i) help bring access to high-quality hydrometeorological data and early warning systems to another 100 million people in 15 developing countries; (ii) help bring adaptive social protection to an additional 50 million people; (iii) provide 5 more countries coverage with integrated sovereign disaster risk financing instruments, including insurance, risk pools, and contingent finance. The Small Island States Resilience Initiative (SISRI) will build capacity, better use existing, fragmented funds, and mobilize increased financing for small island states. The WBG will produce a flagship report on climate change and migration/conflict. The WBG will also strengthen action on climate and health, increase its capacity to respond to the 32 IBRD and 40 IDA-eligible countries that have included health in their NDCs, and integrate climate considerations within its support for Universal Health Care.
Align Internal Processes and Work with Others
25. With selected partners, the WBG will create, share, pilot, and implement new and innovative solution packages that answer client countries’ demands, especially those linked to their NDCs, and continue contributing to the global debate on climate and development. The WBG’s internal capacity to respond will also increase. WBG country strategies will take into account climate goals and opportunities, and climate risks. The WB will screen all projects for climate risks and account for the social cost of carbon emissions in project evaluations; the WBG will move toward accounting for climate and carbon risks in its operations. Additionally, the impact of WBG operations on greenhouse gas (GHG) emissions will be calculated and reported.
26. The WBG will work with others to benefit from what they do best, end ensure synergies across actors active in the field. The WBG will continue to strengthen alignment and cooperation with MDBs and bilaterals on strategies and work programs; work on mainstreaming principles and reporting with MDBs and the International Development Finance Agencies; strengthen collaboration with leading think tanks, research groups, NGOs, and business alliance groups, including on coordinated analytical work and country support; and build on work already started to increase collaboration with the IMF on fossil fuel subsidies, carbon pricing, and the fiscal implications of climate change, especially for small island states.
27. Global advocacy will be stepped up on selected issues where the WBG has an established voice – carbon pricing, mainstreaming climate action, protecting the poor and vulnerable – with a focus on “how” to deliver rather than “why”.
28. The WBG will align internal processes, metrics, and incentives to support the implementation of the Action Plan. Systematic Country Diagnostics (SCDs) and Country Partnership Frameworks (CPFs) will consider the risks and opportunities created by climate change and countries’ climate priorities. Risk screening will be extended to IBRD operations in early 2017, after a review of existing tools and the lessons drawn from application to IDA countries, and will integrate gender considerations in the screening tools. IFC will start screening some sectors after having tested and validated its climate impact risk screening tool; this is expected to be done by September 2016 and to lay the basis for the IFC’s path forward. The WBG will continue to roll out GHG accounting and account for carbon emissions, and resulting risk, in its project evaluation. The WB will account for the social cost of carbon emissions in its project evaluation, and the IFC will evaluate such an approach later this year.
29. Over the next 18 months, the WBG will continue to develop and mainstream metrics and indicators to measure the outcomes of WBG operations, and move monitoring and evaluation from inputs to outcomes, to incentivize a greater focus on leverage.
30. Easily accessible, consolidated “one stop shop” data will be made available to all staff on climate impacts, NDCs, climate finance, analytic tools and methodologies. Learning modules on climate will be expanded and mainstreamed into the Bank’s core curriculum and support to the Community of Practice of climate change practitioners across the Bank will be strengthened.
31. The WBG organization is now aligned to deliver on this Action Plan. All WBG units have put in place structures to mainstream climate change into their activities and operations. The IFC has developed a Climate Business Network that includes one Climate Anchor from each industry department and from each region, advisory, and operational unit. The Climate Change CCSA works with all WBG units to provide targeted, cross-cutting climate support.
- Publication date : 7th April, 2016
- Publisher: World Bank Group Download