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

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

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

Opportunities to reduce GHG and increase energy efficiency - Mitigation

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

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 Climate Finance is a Catalyst CDM & C offset markets 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 Sources

Developing Countries are already taking action… ETHIOPIA: Integrating adaptation in sustainable land management, social protection, hydropower development, building capacity programs BRAZIL: Reducing Amazon deforestation by 70% by 2020; biofuel program, energy efficiency MOROCCO: Integrated approach to tackling CC in water, agriculture, and urban sectors, Mediterranean Solar Plan Initiative CHINA: Energy efficiency, 20% reduction in energy intensity from 2005 to 2010; 15% renewable energy target by 2020; Clean technology R&D; sustainable transport 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

Financial and Investment Flows for Climate Action in DCs

Type of flow Amount ($billion/yr) climate non climate Monitoring issues Carbon markets 6.6 Multiple and confidential transactions Actual payment/investment flows ?? UNFCCC 0.4 Climate-specific concessional funds ~ 4 Consistency and double-counting Additionality ODA Co-benefits MDBs do not report yet consistently Non-DAC donor support ? ~ 7 Non exhaustive coverage Purposes unclear Philanthropia ? ~ 49 Non exhaustive coverage Purposes unclear Domestic (core budget, fiscal, and pricing reforms) ?? Very scarce information, not harmonized Underlying finance GFCF FDI ? 3, Non exhaustive coverage Purposes unclear 9

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

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

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

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

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

10 Carbon Funds: $2.5 billion 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 Carbon Partnership Facility (CPF) Supporting programmatic and sector-wide interventions Carbon Asset Development Fund – 7 million Carbon Fund million 4 sellers participants, more programs in preparation Forest Carbon Partnership Facility (FCPF) 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

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 0.56MtC0 2 e by 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.

Mobilizing Finance via Capital Markets 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 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.

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

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