55689 DevelopmeNT AND ClimATe CHANGe: Stepping up Support to Developing Countries RepoRt on pRogReSS by the WoRlD bank gRoup June 2010 D e v e l o p m e n t a n D C l i m at e C h a n g e notes: all dollars are in US$ unless otherwise indicated; the World Bank group's fiscal year runs from July 1 to June 30; all photos in the report are from the World Bank, the United nations, or Shutterstock images llC unless otherwise indicated. Development anD Climate Change: Stepping up Support to Developing Countries RepoRt on pRogReSS by the WoRlD bank gRoup June 2010 © 2010 the international Bank for Reconstruction and Development / the World Bank 1818 h Street, nW Washington, DC 20433 telephone: 202-473-1000 internet: www.worldbank.org e-mail: feedback@worldbank.org all rights reserved. this volume is a product of the staff of the World Bank group. the findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the World Bank group or the governments they represent. the World Bank group does not guarantee the accuracy of the data included in this work. the boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgement on the part of the World Bank group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. RightS anD peRmiSSionS the material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. the international Bank for Reconstruction and Development / the World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center inc., 222 Rosewood Drive, Danvers, ma 01923, USa; telephone 978-750-8400; fax 978-750-4470; internet: www.copyright.com. Development anD Climate Change: Stepping Up SUppoRt to Developing CoUntRieS ContentS Executive summary 1 1.IntRoDuCtIon 11 2.Implementation progress: Supporting Country-led Climate actions 17 3. Implementation progress: Mobilizing Finance and Markets 35 4. Implementation progress: Fostering Innovation, knowledge, and Capacity 53 5. Implementation progress: global Impact through Strategic partnerships 63 6. Institutional arrangements and Results 69 7. emerging lessons and Directions 75 Annexes annex 1. Implementation progress for key actions and Deliverables 85 annex 2. IFC Climate-positive Investments and Innovation 93 annex 3. addressing Climate Change­Related programs in the World bank Regions 96 annex 4. Climate Investment Funds 111 annex 5. Main Climate Finance Instruments used by the Wbg 113 Boxes box 1. Several Cop-15 outcomes are Important for the Wbg's Development Mandate 14 box 2. Wbg's Strategic approaches to Climate Change: global problem, Diverse Clients 18 box 3. Climate Issues in Country assistance/partnership Strategies 19 box 4. Scaling up adaptation efforts across Sectors and Regions --highlights from Fy2009 22 box 5. Disaster Response Management and the Climate Change adaptation nexus 23 box 6. programmatic approaches to addressing Climate Change in agriculture and Rural Development 25 box 7. promoting urban energy-efficient programs and Sustainable energy planning 27 box 8. energy Sector Strategy 28 box 9. Scaling up Renewable energy Markets 29 ii D e v e l o p m e n t a n D C l i m at e C h a n g e box 10. World bank group experience Financing energy efficiency 30 box 11. energy access for Sustainable Development 31 box 12. Flared gas Reduction for energy access in africa 32 box 13. Multistakeholder partnership for the urban transport transformation project (uttp) in Mexico 33 box 14. CtF: thirteen Investment plans endorsed with an overall Funding envelope of $4.4 billion leveraging additional $36 billion 37 box 15. piloting Climate Resilience 39 box 16. IDa as a platform for Climate-Smart Development 41 box 17. Carbon Finance: building on experience and looking Forward 43 box 18. progress in Implementing the new Carbon partnerships 44 box 19. Innovation in Catastrophe Weather-Risk Financing 45 box 20. Risk-Mitigation Instruments at Work for low-Carbon growth in africa 48 box 21. building on Synergies between geF, Montreal protocol Funding, and Carbon Finance to Scale up Climate action 49 box 22. policy and Institutional Reforms help Scale up the Impact of Climate Finance Instruments 51 box 23. new Investment under the Sun: IFC pushing Solar 54 box 24. Wbg Regional Studies on Climate Impacts and Strategies 57 box 25. low-Carbon growth Country Studies program 58 box 26. an Integrated Investment-advisory platform for tackling Climate Change in eCa 61 box 27. kathmandu to Copenhagen: a Regional Climate Change Dialogue 64 box 28. global Development Marketplace 2009: 100 Ideas to Save the planet 66 Figure Figure 1. the CIF Venture: Scaling up partnerships for Climate action 36 Stepping Up SUppoRt to Developing CoUntRieS 1 eXeCutIVe SuMMaRy the Strategic Framework on Development and Climate Change was endorsed by the Development Committee on october 12, 2008, providing a road map for the World Bank group's climate action for fiscal years 2009­2011. this interim progress report summarizes the implementation progress since its endorsement and outlines directions for the remaining period. Developed through extensive global (COP) of the UN Framework Convention on consultations, the Strategic Framework for Climate Change (UNFCCC): Development and Climate Change (SFDCC) guides various entities and institutions of the 1. Support climate actions in country-led World Bank Group (WBG), including the development processes International Finance Corporation (IFC), the Multilateral Development Guarantee Agency 2. Mobilize additional concessional and (MIGA), and the World Bank (WB), toward innovative finance achieving the twin objectives of: (i) effectively 3. Facilitate the development of market-based supporting sustainable development and poverty financing mechanisms reduction in developing countries as climate risks and climate-related economic opportunities arise 4. Leverage private sector resources and (ii) facilitating global action and interactions 5. Support accelerated development and among all countries. Given evolving knowledge deployment of new technologies and global climate policy, the WBG's focus, especially at the initial stage, has been on learning 6. Step up policy research, knowledge, and and capacity building for scaling up demand- capacity building. driven support to development investments, The Framework's implementation has been programs, and policies with adaptation and influenced by the 2008 global financial crisis and mitigation co-benefits. The SFDCC six action accelerated global climate change dialogue in the areas are aligned with the Bali Action Plan run-up to the Copenhagen COP-15. Having adopted by the 13th Conference of the Parties originated in developed countries, the financial crisis 2 D e v e l o p m e n t a n D C l i m at e C h a n g e quickly transformed into a global economic crisis no operational target. A regional climate change that affected developing countries with dwindling strategy for Sub-Saharan Africa, Making capital flows, large withdrawals of capital that led to Development Climate Resilient, outlined a losses in equity markets, and skyrocketing interest comprehensive and ambitious agenda to help rates. While temporarily shifting the attention of address specific needs and priorities of African national leaders away from the climate change countries that have become increasingly vocal and agenda, the global response to the financial crisis united in the global climate discussions. A new underscored potential complementarities between and growing generation of Development Policy the immediate paths to recovery and future Operations (DPOs) is a testimony to developing economic resilience. In parallel, the world has countries' efforts to integrate climate-related witnessed a concerted effort by the international considerations into the broader economic growth community toward concluding a new agreement on and poverty reduction agenda. Fiscal year (FY) enhancing UNFCCC implementation. While 2009 marked an all-time record in WBG reinforcing the primacy of the UNFCCC process, renewable energy (RE) and energy efficiency several other processes and forums, such as the (EE) financing, at $3.3 billion, along with Heads of State initiative by the UN Secretary stepped-up support for energy access and reliable General, the Africa Union conference, and the G20, supply, and an 88 percent increase in new RE/EE have given further weight and support for strong commitments, compared with the SFDCC target global climate action. of average annual increase of 30 percent over FY2009­2011. These developments placed multifaceted and rapidly changing demands on the WBG. Overall, In response to the rapidly expanding client they contributed to the increased awareness of demand, the WBG has stepped up its work across WBG clients, including at the highest decision- various entities and areas of expertise, building making level, of the climate change challenge. upon the Clean Energy Investment Framework Preparation of the 2010 World Development Report and the long-term partnership with the Global (WDR): Development and Climate Change further Environment Facility (GEF), continued innovation elevated the status of the issue--inside and outside in carbon finance, and other prior initiatives. New the WBG--as a development priority. Even as the project and program finance instruments and financial crisis prompted a massive increase in opportunities--created by the establishment of the WBG financing, particularly International Bank Climate Investment Funds (CIF) through for Reconstruction and Development (IBRD) collaborative effort among the African lending, leading to a review of the long-term Development Bank, the Asian Development Bank, adequacy of its capital resources, it has highlighted the European Bank for Reconstruction and WBG potential to mobilize and leverage resources, Development, the Inter-American Development increase efficiency, and manage multiple objectives. Bank, and the WBG; the Forest Carbon Partnership Facility (FCPF) and the Carbon There has been an increased demand for the Partnership Facility (CPF) played a critical role in WBG to support multiple constituencies to facilitating progress. Innovative governance address development and climate change as arrangements under the CIF and the FCPF, interlinked challenges. Expanding engagement featuring equitable and balanced representation as with developing countries is evidenced by the well as inclusive processes of engagement with a impressive uptake of climate-related issues in wide range of stakeholders, are contributing to Country Assistance/Partnership Strategies, with global dialogue. A significant emphasis in WBG Stepping Up SUppoRt to Developing CoUntRieS 3 work has been to produce just-in-time knowledge variety of financial instruments and their that can inform the UNFCCC negotiations, with a combinations. While driven by economic and social focus on the needs and on-the-ground realities of objectives, such as food security, these projects give developing countries, and to respond quickly to heightened attention to current and future climate new requests from WBG clients and partners for risks as critical factors for effectiveness and collaboration and support to understand and sustainability. Examples range from agriculture and manage the risks, trade-offs, and business rural development projects considering adaptation opportunities related to the climate change agenda. to increasing climate variability, such as floods and Yet the mainstay of work programs based on droughts, in Ethiopia, Malawi, and Nicaragua to longer-term vision and commitments made under natural resources and water resource management the SFDCC have sustained its progress. programs dealing with the impact of rapid glacier retreat in the tropical Andes or current and future Overall, the first phase of SFDCC irrigation water deficits in Morocco. Add to this implementation solidified climate change work improving coastal and marine biodiversity to across the WBG, with useful lessons for moving increase resilience in India, the Maldives, and the forward. Tangible impacts have been seen Gulf of Mexico; strengthening hydromet capacity particularly on knowledge, capacity, the uptake of in Central Asia; supporting adaptation of human country and sector dialogue, the development of settlements in Thailand, Vanuatu, and Vietnam; and innovative pipelines, and collaboration with the addressing the impact of extreme climate events on United Nations and multilateral development the health of young children in Sub-Saharan Africa. banks (MDBs), as well as within the Bank In parallel, the Global Facility for Disaster Group. The creation of "climate change beams" Reduction and Recovery provides enabling led by climate change coordinators in the financing to reduce present and future climate- Regions and the WBG-wide multisectoral related disaster risks, enhance regional cooperation, Climate Change Management Group and provide post-disaster recovery facilities. strengthened coordination and knowledge sharing across sectors and regions and between IDA-15 has emerged as a solid development the World Bank and the IFC. The WBG has platform to anchor the rapidly evolving met or is on track to meet most of the key financing landscape for climate-resilient action. indicators it has committed to under the SFDCC IDA-15 financial flows to climate­affected sectors (see Box Page 5). At the same time, several such as agriculture, flood protection, water supply, indicators and milestones require reassessment in and health reached $3.3 billion in FY2009, view of the lessons from implementation representing a 17 percent increase over IDA-14's experience, including a better reflection of the average annual engagement in these sectors ($2.9 WBG's comparative advantage in country-wide billion) and underscoring the urgency of enabling policy dialogue and global convening power. these development investments to deliver the intended benefits in changing climate conditions. The WBG has intensified its efforts to support IDA operations leveraged additional adaptation climate risk management in core operations, financing from all available sources (such as GEF increasingly linking immediate priorities of dealing and UNFCCC funds and bilateral resources), but with climate variability and natural disasters with the total remained well short of the need. The measures to adapt to longer-term impacts. Projects Pilot Program for Climate Resilience (PPCR) that address climate risks span a range of under the CIF's Strategic Climate Fund initiated interventions across all client countries and use a activities in nine IDA countries, three of which are 4 D e v e l o p m e n t a n D C l i m at e C h a n g e in Africa and four are in fragile states. Major focus lever of new and additional climate financing, the was given to making Clean Development IBRD is supporting the depth of strategic Mechanism (CDM) flows accessible to Africa: the planning and reform agenda needed to region accounts for one-fifth of active projects in operationalize such financing in real time. the World Bank's carbon finance portfolios, compared with a 2­3 percent share in the overall Some of the notable developments include the CDM pipeline. The FCPF is piloting approaches following: aiming to open financial flows for activities related to forest and land management that are currently · Growing client demand is positioning DPOs as a outside the scope of the CDM but that have a potential integrating platform for climate finance large potential in African and other IDA countries. instruments. In FY2009 alone, a new generation To further help IDA countries gain access to of DPOs addressing climate change additional financing for priority development considerations amounted to more than $4.2 projects, such as energy services, the CIF's billion, including support for an enabling policy Scaling-up Renewable Energy Program (SREP) environment that increases leveraging of CTF for low-income countries was designed and resources (Turkey) or carbon finance (Morocco) declared operational in December 2009. or support for weather risk management using a Catastrophe Deferred Drawdown Option The WBG has expanded support to climate- (Colombia, Costa Rica, and Guatemala). resilient and low-carbon investments by · Among various instruments, technical assistance is packaging and leveraging a suite of financing emerging as a critical tool. Demand is increasing instruments, technical assistance, and policy for advice on policy and regulatory reforms advice. The WBG has a long tradition of blending that facilitate "climate-smart" growth, GEF resources with IBRD/IDA or combining including the issues of pricing, taxation, and them with IFC regular instruments to support subsidy. Engagement with middle-income climate actions. More innovation in packaging countries, particularly upper middle-income, "core" financial products with specialized climate includes Reimbursable Technical Assistance and carbon finance resources has taken place over (RTA), which is now called to support the past few years as the menu of instruments and climate-related issues. For example, the new client needs grew, while climate finance remained Country Partnership Strategy for Algeria scarce and development finance was squeezed by includes combining RTA with climate change the financial crisis. The Latin America and instruments in the solid waste sector. The Caribbean Region alone developed a portfolio of Middle East and North Africa Region is also 183 activities in adaptation and mitigation that exploring ways of combining other available total $7.3 billion, spanning the entire spectrum of instruments, such as the GEF, with RTA. Bank Group instruments and led by strong Several RTA programs will address adaptation analytical work. The IFC has strengthened its needs, including for oil-producing countries. engagement with the private sector through advisory services and support for clean production · Climate change-related challenges support an and technology innovation, achieving a leveraging increasing focus on regional programs and ratio of private sector resources of 5 to 1. The CIF regional coordination. Issues such as melting Clean Technology Fund (CTF) has endorsed 13 glaciers facilitated greater regional dialogue investment plans with an overall envelope of $4.4 and cooperation in Latin America and Asia. billion, leveraging over $36 billion. An important The WBG engaged in designing an African Stepping Up SUppoRt to Developing CoUntRieS 5 WBg highlightS ­ SFDCC implementation Country-led climate actions in development processes · over 63 percent of all new Country assistance or partnership Strategies addressed climate-related issues, particularly adaptation, in FY2009, with a positive trend in the first three quarters of FY2010 · Scaled-up support to adaptation in core development programs in water, agriculture, and natural resource management projects, using a combination of instruments and funds · 88 percent annual increase in new Re/ee financing between FY2008­2009, with iFC new renewable energy commitments increasing fivefold · $6 billion in Dpos addressing climate change considerations over the period of FY2009 and first half of FY2010 Partnerships with UN, MDBs, and civil society · Development of the Climate Finance Knowledge platform with the Un Development programme, as part of a coordinated Un-wide response · Joint implementation of the Climate investment Funds by the mDBs · enhanced communications and outreach, including new web site and blog Financing · Climate investment Funds rolled out, stimulating new low-carbon or climate-resilient programming in over 20 countries · Clean technology Fund endorsed $4.4 billion in investment plans, leveraging some $36 billion in public and private investment · Wider coverage and range of catastrophic risk financing products to deal with climate risks · FCpF involves 37 participating countries; 11 readiness grants signed · CpF was launched in December 2009 and became operational in may 2010; Carbon Development Fund operational and supporting project preparation · engaging the private sector for more sustainable investment, with a leverage ratio of 5 to 1 by the iFC · eighteen issues of climate bonds by the World Bank treasury since november 2008, raising $1.5 billion · the iFC and World Bank mobilized additional grant financing to catalyze introduction and transfer of emerging clean energy technologies, including solar power and capacity building for carbon capture and storage Knowledge and Capacity · WDR 2010: Development and Climate Change launched in September 2009, complemented by the Economics of Adaptation to Climate Change global report and several flagship regional, sectoral, and country reports · Climate Change Portal and a series of Guidance Notes delivered to support WBg operations and provide global public knowledge goods · the Climate Change for Development Professionals training program offered over 4,000 participant-hours to over 850 participants in FY2008­2010; the Sustainable Development leadership program reached over 300 managers, senior staff, and external participants · the Climate Change Management Group brings together the full array of WBg units to coordinate and facilitate climate-related activities within a common vision · the WBg has reduced office-related emissions from its headquarters and committed to become 100 percent carbon-neutral, including facilities, meetings, and travel in all regions 6 D e v e l o p m e n t a n D C l i m at e C h a n g e regional forum on agriculture, climate programs which are closely aligned with change, and food security in partnership MDB processes, and will be given significant with the Food and Agriculture Organization attention in the future. Experience with new of the United Nations, the International initiatives, such as the FCPF, further Fund for Agricultural Development, and the highlighted technical and capacity challenges World Food Programme, while the PPCR is that require a major effort to support supporting two regional programs targeting developing country readiness to take small island states in the Pacific and the advantage of these resources. Caribbean. Regional approaches are equally · Despite a long-term trend towards increasing important for enabling countries to meet investment in RE and EE, the results for their energy needs through lower-carbon FY2010 will reflect the impact of the global options, such as expanding the concentrated financial crisis manifested in a lower share of solar power initiative in the Mediterranean RE/EE financing. This is in large part due to or realizing hydropower potential in Africa. the impact of the crisis on the ability of Progress to date underscored some challenges, as African countries to finance their well as areas for further assessment, including: conventional energy development programs, necessitating WBG support to coal power · Additional financial resources and instruments projects in Botswana and South Africa. provided by the GEF, carbon finance, and the Looking forward, we expect that the demand CIF have been important drivers of progress for WBG engagement in coal power while also increasing the operational complexity generation will be limited while the demand of dealing with multiple instruments. Reducing for RE, EE and clean energy finance will the transaction costs of accessing several continue to grow. The application of the six sources of finance, maximizing SFDCC criteria, within which lending to complementarities, and helping clients new coal-based generation can be provided, navigate an evolving financial landscape have is resulting in greater selectivity. The process been an important focus of WBG work, has been strengthened by issuing an particularly in the context of the CIF operational guidance note to staff and Stepping Up SUppoRt to Developing CoUntRieS 7 instituting a review of conformity with the · In-depth work on initiating climate-risk criteria by an external panel of experts. Such screening for water investments with a long a panel was first formed for the Eskom life span points to the need for a sector-wide power sector project in South Africa decision-making approach for dealing with (approved on April 8, 2010) and will be the uncertainties of long-term projections that convened for each relevant project. A review would complement project-level screening. of the mid-term pipeline of "greenfield" (new · Similarly, while project-level energy capacity) coal power generation projects, as efficiency screening expands in the IFC, the screened to meet the six SFDCC criteria, focus on sector-wide policy and regulatory shows no such projects for middle-income reforms is often more effective for the World countries in the pipeline, and potential IDA Bank. A comprehensive approach to projects in the coming years are very few. promoting energy efficiency in World Bank · Experience with technology commercialization calls operations is being developed that recognizes for further clarifying WBG comparative different country contexts and different levels advantages and the role of partnerships. In of energy sector dialogue. agriculture, the WBG has been supporting all · Measures of future progress will need to technology stages, including location-specific recognize new initiatives and experiences, research. With respect to novel energy beyond the agreed key indicators. Among technologies that are much more expensive and these are a successful dialogue with city serve the global market, the WBG advantage mayors on urban poverty and climate change; remains with scaling up and in deployment an increased focus on "green infrastructure," stage, with the CTF and the SREP providing a growing engagement with institutional new opportunities. Specific partnerships, such investors; and a series of demand-driven as the GEF/IFC Earth Fund or a new bilateral activities developed by the regions, such as Trust Fund for Carbon Capture and Storage, supporting the Africa Union or facilitating will be further explored. regional cooperation on adaptation in South · Matching demand with capacity. WBG Asia. knowledge, skills, and capacity have Moving forward, a three-pronged approach is increased visibly--thanks to the WDR 2010, essential for effectively supporting developing other analytical work, the new Global Expert countries as they tackle poverty in a changing Team for Climate Change Adaptation, climate: strong IDA-16 replenishment; IBRD dedicated training, and learning by doing. capital increase; and predictable, reliable, and But more structured effort is needed to equip adequate flows of additional climate finance. operational staff with the needed knowledge Both development finance and climate finance and tools, particularly in country offices. must be adequate and must complement--not Realism should be built into future efforts, substitute for--each other to ensure sustained both in terms of the time needed to achieve progress toward the Millennium Development results that matter for clients and the internal Goals (MDGs), including MDG-7 for resources to make it happen. environmental sustainability. The Copenhagen Initial implementation experience suggested the COP-15 underscored the urgent need to make need to adjust certain approaches, goals, and additional financing for adaptation and respective indicators, consistent with the learning mitigation available to developing countries, and flexible nature of the SFDCC. For example: while the Copenhagen Accord sent an important 8 D e v e l o p m e n t a n D C l i m at e C h a n g e political signal that developed countries are · Helping countries capture the full range of prepared to mobilize $30 billion in "new and benefits from sustainable development additional" funding by 2012 for developing programs, including global environmental countries, with a view to increasing resources to co-benefits, will grow in importance. WDR $100 billion per year by 2020. With continued 2010 and other evidence indicate that the most uncertainty about future climate policy and effective contribution to climate action in financing mechanisms, including uncertainty developing countries is sustainable development about carbon markets, a successful GEF-5 strategies that are driven by local benefits and replenishment and other immediate steps to business opportunities. The new WBG make these additional resources a reality will Environment Strategy, under preparation, will shape the scale and speed of climate action in emphasize the importance of seeking synergies developing countries. between local and global co-benefits, as this approach is increasingly embraced and The Framework was designed to account for articulated in sectoral applications. As an evolving global knowledge, policy, and finance. immediate priority for contributing to the post While its guiding principles and broad priorities COP-15 discussions, the WBG will actively proved robust, implementation experience and share experience with the FCPF, as well as new developments suggest a sharper focus on broader experience in reducing emissions from select activities and outcomes within the agreed deforestation and forest degradation and operational priorities: sustainable forest management (REDD-Plus) while improving livelihoods and development · Strengthening resilience of communities opportunities for local communities. The and economies to climate risk would remain process of mutual learning with partners and a top priority. Within this area, the WBG stakeholders through the FCPF has will step up efforts to emphasize the strengthened the basis for such engagement, imperative of complementing development including the design of a dedicated financing assistance through instruments such as IDA window or mechanism for REDD-Plus. with specialized grant-based resources to Within the CIF, the Forest Investment address additional climate risks. In parallel to Program (FIP), which cooperates closely with advocating strong replenishment of IDA-16 the FCPF and the UN-REDD Programme, for core development needs, the WBG will offers another learning opportunity on how explore options for IDA-supported programs additional grant support for investments can to have access to substantial and predictable complement capacity-building grants and complementary adaptation funding. Further performance-based incentives to enable attention will be given to helping clients and transformational programs. Work will also partners understand and manage the continue with exploring agricultural adaptation-development linkages in different opportunities for reducing "soil carbon" contexts, particularly through learning by emissions while enhancing food production, doing from the PPCR, sharing lessons from with a view to including this issue in a future other adaptation-related programs, and climate agreement. accelerating the work on methodologies for · The WBG will move to a more strategic vulnerability assessments and climate risk engagement with private and public sector screening. clients to take advantage of expanding low- carbon growth opportunities. By January 31, 2010, 55 countries, developed and developing, Stepping Up SUppoRt to Developing CoUntRieS 9 Energy Strategy in particular will articulate how energy sector assistance will take into account low-carbon options and opportunities. To support these priority actions and outcomes, the WBG will need to make substantive efforts in the following cross-cutting themes: · Become a premier provider of a wide range of financial solutions and expertise to help achieve "climate-smart" development. This is a long-term objective that supports post-crisis directions articulated in the paper A New World, A New World Bank Group, while recognizing the essential role of other MDBs, international financial institutions, UN agencies, and private sector groups. In parallel to advocating the submitted information within the UNFCCC imperative of substantial additional climate- about economy-wide emission reduction targets related financing, the immediate priority is to for 2020 and Nationally Appropriate concentrate on delivering resources to the Mitigation Actions (NAMAs) respectively, and recipients for specific projects through newly the number of submissions has been growing. established instruments and programs--the As developing countries prepare and implement FCPF and the CPF under the carbon finance their NAMAs, the WBG can assist with umbrella, and the PPCR, CTF, SREP, and FIP various aspects of this process, building on a under the CIF umbrella. This experience will solid analytical base through supporting some provide a major opportunity to all participants of the first low-carbon-growth studies; for experimenting, learning by doing, and extensive policy, institutional development and exploring how these instruments can be more investment support in relevant sectors; and directly linked to UNFCCC discussions and expertise in a wide range of financial directions. Also important is to help developing instruments. These experiences can be put countries make informed choices as they seek together to engage with interested developing more direct access to climate funding by countries on such initiatives as South-South assessing how different financing programs can knowledge exchange based on toolkits and complement each other at the country level at a knowledge from the low-carbon-growth reasonable transaction cost and how they studies; technical assistance with enabling perform in terms of efficiency and quick regulatory frameworks; demonstrations of how disbursement in support of recipient country IDA, IBRD, IFC, and MIGA instruments priorities. Developing guidelines on how together with a growing menu of climate dedicated climate resources can be used to finance instruments like the GEF, CTF, CPF, effectively leverage private sector investment will and existing and emerging carbon market be another priority area, as will enhancing mechanisms can support NAMAs; and help to technical expertise on the use and packaging of establish transparent monitoring and reporting the entire menu of instruments that are available. procedures for the achieved emission reductions, differentiated between domestically · Expand the reach of knowledge through and internationally funded reductions. The new targeted analytical and capacity-building 10 D e v e l o p m e n t a n D C l i m at e C h a n g e services and South-South exchange. As the of experiences and lessons. It will work to bring WBG continues to increase know-how on the together diverse stakeholders at the global, development and climate linkages, we will be regional, national, and sub-national levels to shifting to interactive two-way learning and facilitate integration of different perspectives. capacity building with developing country SFDCC experience has demonstrated the WBG's counterparts in which comparative advantages capacity to deliver and respond to multiple and partnerships are key. Greater emphasis will demands, but a stronger enabling environment be given to joint efforts with clients and other will accelerate progress. While increasingly partners to develop customized knowledge and prominent, many activities still remain at a pilot or technical assistance products that can quickly relatively modest scale compared to overall WBG translate into climate action. In line with the operations. Increased access by developing countries Transforming the Bank's Knowledge Agenda to dedicated climate-related resources for paper, significant focus will be on sharing adaptation and mitigation will be necessary to global knowledge, with particular attention to further scale up WBG support to its clients, South-South cooperation. Interest in South- including through helping leverage the IDA and South knowledge exchanges is particularly IBRD platforms, IFC instruments, and significant strong in the climate change area, where private sector resources. But as the knowledge base developed country experience has a limited grows and client demand increases, even making value complicated by political considerations, the most of the currently available instruments will while significant innovation is happening in require fuller integration of climate-related developing countries. There is a need for more development work into regular processes and emphasis, instruments and incentives for performance indicators, along with investments in supporting this exchange. institutional knowledge and skills. The World Bank · Strengthen dialogue and outreach. The WBG Group has mobilized and will continue harnessing will deepen its dialogue with client countries its capabilities to deliver effective support to through stronger engagement by country offices developing countries and to help the global and country teams and through mutual sharing community tackle the challenges of the 21st century. Stepping Up SUppoRt to Developing CoUntRieS 11 1. IntRoDuCtIon · endorsed by the Development Committee on october 12, 2008, the Strategic Framework for Development and Climate Change articulates objectives, guiding principles, areas of focus, and major initiatives to guide the World Bank group's operational response for the next three years · this interim report summarizes progress made since the Framework's endorsement, and it updates directions and milestones, taking account of the evolving global context · a completion report will be prepared for annual meetings 2011 Developed through extensive global consultations, the Strategic Framework for Development and Adhering to the principles, Climate Change (SFDCC) guides various entities policies, And directions of and institutions of the World Bank Group the UnFCCC process, the SFDCC reaffirms the (WBG)--including the International Finance WBg's core mandate of supporting growth and Corporation (IFC), the Multilateral Development overcoming poverty in developing countries while Agency (MIGA), and the World Bank--toward recognizing the added costs and risks of climate achieving the twin objectives of: change and an evolving global climate policy. Financing for adaptation and mitigation must not · Effectively supporting sustainable divert resources from the core development needs development and poverty reduction in and from actions toward achieving the millennium developing countries as climate risk and Development goals. Developed countries are to lead the global effort to address climate change climate-related economic opportunities arise by significantly reducing their emissions and · Facilitating global action and interactions by transferring finance and technology to support all countries developing country actions. adaptation is a priority for many WBg clients. the WBg is The Framework's implementation has focused on committed to building partnerships with the other the six action areas that are closely aligned with actors in the international climate change arena in the Bali Action Plan adopted at the 13th order to have a stronger developmental impact. 12 D e v e l o p m e n t a n D C l i m at e C h a n g e Conference of Parties (COP) of the United on the Clean Energy Investment Framework Nations Framework Convention for Climate (CEIF) and prior initiatives. While this report Change (UNFCCC) and that support both largely focuses on new developments since the adaptation and mitigation-related measures: SFDCC endorsement, it also attempts to capture its impact on the activities that were under way at 1. Support climate actions in country-led that time and for which the SFDCC acted as a development processes catalyst by increasing visibility and profile, raising awareness of WBG operational staff and client 2. Mobilize additional concessional and counterparts, and providing new knowledge and innovative finance resources for addressing climate change­related 3. Facilitate the development of market-based risks and economic opportunities in core financing mechanisms development operations. This in turn has heightened expectations from our clients for 4. Leverage private sector resources further support, with a focus on moving from a phase of developing strategies and building 5. Support accelerated development and knowledge to translating such knowledge into deployment of new technologies specific actions and results on the ground. 6. Step up policy research, knowledge, and capacity building. Two main developments have affected progress and the future direction of WBG support to The SFDCC was adopted as a living document, climate action: (1) the 2008 global financial crisis mindful of the dynamically evolving nature of the and the response by the international community global climate dialogue and knowledge. and (2) the UN-led process of international Implementation to date has focused on learning climate negotiations. and capacity building and on supporting "no-regrets" solutions--that is, actions whose Coming on the heels of the food and fuel benefits to developing country clients are robust crises, the 2008 global financial crisis quickly under the uncertainties about future climate transformed into an economic crisis for WBG polices and impacts. Responding to client client countries, with a disproportionate demand and in support of the UNFCCC impact on the poor and vulnerable. While it negotiations, the WBG continues to adjust its shifted attention and resources away from the course of action, maintaining flexibility to evolving global efforts to address climate incorporate new developments and lessons as change, it also underscored the potential of international negotiations, scientific knowledge, climate change to further aggravate the development policy research, and implementation economic impacts, particularly on the poor and experience evolve. vulnerable in developing countries, given their lack of resources and capacity. The crisis affected SFDCC adoption facilitated and solidified developing countries through dwindling capital climate action across the WBG. Its preparation flows, huge withdrawals of capital that led to and early implementation phase benefited from losses in equity markets, and skyrocketing the already growing climate-related program interest rates. Like climate change, the crisis was across the WBG, with a robust pre-existing a result of market and regulatory failures in pipeline of analytical and investment work based developed countries. The financial crisis has Stepping Up SUppoRt to Developing CoUntRieS 13 profoundly shaken the foundations of global anticipated increased flows of specialized climate financial and economic governance established finance in transformational investments and in the last century and led to the emergence of programs, mainly in infrastructure, along a the G20--a group of major developed and "climate-smart" development path. developing countries and the European Union1--as the primary global economic forum. The year 2009 witnessed a concerted effort by the It has also focused attention on reform of the international community to achieve a strong multilateral development banks (MDBs), outcome at the Copenhagen Conference of including the WBG, particularly on issues such Parties (COP-15) that would enhance as governance and capital adequacy. Both of implementation of the UNFCCC, based on the these issues are relevant for the WBG's ability to elements of the Bali Action Plan. While the scale up its role in supporting climate action. UNFCCC negotiations process has remained the leading forum, several other processes and The WBG responded to the financial and forums--at the global and regional level--have economic crises by rapidly scaling up support to stepped in to add weight and support for the affected countries, increasing its International effort, including a Heads of State initiative by the Bank for Reconstruction and Development United Nations Secretary-General and the Major (IBRD) lending from $13.5 billion in FY2008 to Economies Forum by the United States. A notable almost $32.9 billion in FY2009 (with a view to development was the emergence of Africa as a reach $100 billion over three years), and advancing united and distinct voice in climate negotiations. International Development Association (IDA) With the financial crisis increasingly under control, resources. The timing of the global financial the G20 has engaged in exploring finance options crisis--which coincided with the growing for addressing climate change. Major conferences momentum to address the impending threat of and other meetings on various aspects of the climate change--focused the attention of some climate change agenda have been held by a cross- national governments and the global development section of stakeholders, such as parliamentarians, community on seeking complementarities between city mayors, community leaders, private sector the respective paths to recovery and future executives, academics, and civil society. All of these economic resilience. While the crisis led to a have resulted in the rapidly increasing awareness substantial increase in demand for Development and exposure of many WBG clients, including Policy Operations (DPOs), a special effort was government counterparts at the highest level, with made to ensure that critical infrastructure an increased pressure on the WBG to support investments--necessary for sustaining economic these multiple constituencies. recovery and growth in the medium term--were not neglected. Coupled with the availability of The COP-15 in Copenhagen highlighted the additional climate financing, this has placed an complexity of the issues, stressing the value of emphasis on the so-called greening infrastructure the WBG's increasing focus on helping its agenda as part of SFDCC implementation. developing country partners and clients achieve Scaled-up lending in response to the crisis has also their priority economic and poverty reduction raised the question of the long-term adequacy of objectives along a lower emissions growth path WBG capital resources, notably to provide that also strengthens climate resilience and the sufficient underlying finance for blending with the capability to deal with the impacts of future 1. argentina, australia, Brazil, Canada, China, France, germany, india, indonesia, italy, Japan, mexico, Republic of Korea, Russia, Saudi arabia, South africa, turkey, United Kingdom, and United States, plus the european Union. 14 D e v e l o p m e n t a n D C l i m at e C h a n g e climate change. It further pointed to the need countries with capacity building, climate-friendly for continued WBG engagement in facilitating technologies, and sustainable development, global action and helping articulate the needs opening further opportunities for the and views of developing countries. The WBG-GEF partnership to leverage and augment unprecedented engagement and participation of the impact of its resources. heads of state further affirmed the importance that climate change is taking in the global Going forward, progress in making additional development agenda. While not resulting in a climate-related resources that were pledged by legally binding agreement, Copenhagen sent developed countries in Copenhagen available to several important signals that can be expected to developing countries, the outcomes of the COP-16 inform the preparations for the Mexico COP-16 in Cancun in November 2010, IDA16 in November 2010 and that have implications replenishment and IBRD capital review, the WBG for the WBG (Box 1). voice and participation reform, and internal reforms to improve operational efficiency are all In another development, the Global important processes that are relevant for SFDCC Environment Facility (GEF)--an operating implementation. The launch of the World entity of the financial mechanism of the Development Report (WDR) 2010: Development UNFCCC--received a record boost from donor and Climate Change in September 2009 that countries in May 2010. More than 30 nations reaffirmed climate change as a major development pledged $4.25 billion. The 52 percent increase challenge, the work on Post-Crisis Directions for compared with the previous replenishment will the WBG, and the new Knowledge Agenda have allow GEF-5 to expand its support to recipient further contributed to refining future priorities. Box 1. SeveRal Cop-15 oUtComeS aRe impoRtant FoR the WBg'S Development manDate · negotiations continue in two tracks: the Kyoto protocol and the long-term Cooperative action. a significant role will remain for market instruments, including scaled-up mechanisms. · By January 31, 2010, 55 countries, developed and developing, submitted economy-wide emissions and information about nationally appropriate mitigation actions (namas) respectively. · Developed countries pledged to raise a "new and additional" $30 billion through 2012 for immediate action in developing countries, with a "balanced allocation" between adaptation and mitigation that could be channeled through existing bilateral channels and international institutions. · Developed countries indicated commitment to mobilize $100 billion annually for developing countries by 2020. · there is growing support and funding commitments for a new mechanism to finance ReDD-plus. · there is considerable consensus about the immediate need for a technology transfer mechanism. · there is continued debate on the definition of what constitutes adaptation costs, namas, and the ways to raise and manage climate finance. Stepping Up SUppoRt to Developing CoUntRieS 15 This interim progress report reviews and · Section 6 discusses internal arrangements summarizes the WBG's progress with and results measurement. implementing the SFDCC. It further discusses · Section 7 summarizes emerging lessons and emerging lessons, implications, and challenges new directions. associated with relevant global developments and it reviews milestones: Annex 1 presents the status of main actions and milestones to which the WBG committed under · Sections 2­4 describe implementation the SFDCC, while Annex 2 outlines the IFC's progress across six action areas, with a focus climate initiatives and Annex 3 summarizes World on SFDCC objective one, to support Bank (WB) regional climate change-related sustainable development and poverty strategies and major work. Annex 4 outlines the reduction under climate constraints. work undertaken under the Climate Investment Funds, and Annex 5 updates information on the · Section 5 reports on the WBG's work to play main instruments for climate finance. a global role, with the focus on strengthened partnerships and strategic engagement to facilitate global climate action. 16 D e v e l o p m e n t a n D C l i m at e C h a n g e Stepping Up SUppoRt to Developing CoUntRieS 17 2. IMpleMentatIon pRogReSS: SuppoRtIng CountRy-leD ClIMate aCtIonS · over 63 percent of all new Country assistance or partnership Strategies substantively addressed climate-related issues in FY2009 and there is a positive trend in FY2010 · Scaled-up support to adaptation in core development programs in water, agriculture, and natural resource management, using a combination of instruments and funds; increasing integration with disaster management · eighty-eight percent annual increase in new renewable energy (Re)/energy efficiency (ee) financing between FY2008­2009, with iFC new Re commitments increasing fivefold StRategY business plans that customize the SFDCC umbrella principles and priorities (Box 2 and The Framework's implementation follows a Annex 2). Reflecting the diversity of WBG clients, country-led approach that is driven by the needs of the focus of these operational strategies or business developing country partners and clients. Developing plans ranges from energy efficiency, clean countries are already taking action toward production, and promotion of clean technology in low-carbon and climate-resilient development. The private sector operations by the IFC, to the need WBG has focused on helping its clients acquire for strengthening climate resilience and capacity to additional financial resources, technology, technical manage climate risks in Africa. Climate change assistance, and knowledge for adaptation and issues have been addressed by the Sustainable mitigation, as well as internalizing them in their Infrastructure Action Plan and in the WBG's national, and regional, development plans. Urban Strategy, while the new Energy and Environment Strategies under preparation are incorporating climate change as a major In response to the intensified interest and requests dimension. A new Information and Communication for support from public and private sector clients, Technology Strategy is exploring how it can support the IFC, MIGA, and all World Bank Regions WBG clients in dealing with climate change risks. developed climate change strategies and/or 18 D e v e l o p m e n t a n D C l i m at e C h a n g e Box 2. WBg'S StRategiC appRoaCheS to Climate Change: gloBal pRoBlem, DiveRSe ClientS africa and Climate Change. increasing incidence of extreme weather events poses new risks and challenges, particularly in agriculture, water management, and infrastructure in africa, impacting food security and the progress toward meeting the millennium Development goals (mDgs). the WBg response to climate change in Sub-Saharan africa is anchored in supporting core development priorities. the climate change strategy for Sub-Saharan africa, Making Development Climate Resilient, calls for supporting climate action in country and regional programs along four pillars: (1) making adaptation and climate risk management a core developmental component, (2) taking advantage of mitigation opportunities, (3) focusing on knowledge and capacity development, and (4) scaling up financing opportunities. in-depth analytical work supports the strategy, including on climate change impacts on transport, land and river basin management, and identification of deforestation drivers in the Congo Basin. the iFC and Climate Change. having designated climate change as a corporate strategic priority, the iFC is actively increasing its climate-positive investing in all sectors of the economy and developing new programmatic and financial innovations. the iFC plans to grow its climate change-related activities from 10 percent today to 20 percent of its overall activities by 2012, building on past records in energy efficiency, cleaner production, and renewable energy as well as through leadership in designing climate risk measurement and tools for investors. the iFC's diverse climate program centers on: (a) promoting climate-friendly investments using commercial funds, (b) catalyzing cleaner production through a combined package of audits and financing to improve energy and resource efficiency, (c) investing in early-stage clean technology companies and private equity funds, and (d) supporting innovative concessional financing, blending geF and Clean technology Fund (CtF) financing, to support commercialization of sustainable energy solutions. The uptake of climate-related issues by client foundation of the WBG's support to country-led countries in their dialogue with the WBG since reforms and programs. Client country priorities FY2009 has been impressive, with over 63 remain focused on climate risks, particularly percent of all new Country Assistance or linked to natural disasters and sustainable natural Partnership Strategies (CASs/CPSs) approved in resource management, as well as energy efficiency, FY2009 substantively addressing such issues, renewable energy, and scaled-up access to climate particularly adaptation.2 There is a positive trend finance (Box 3). Corporate review functions have in FY2010. Prepared in close consultation with been expanded to provide regular input on developing country governments and other climate change issues in the CAS review process. stakeholders, these strategic documents form the 2. examples include argentina, armenia, Botswana, China, Costa Rica, Croatia, Djibouti, egypt, guatemala, guyana, haiti, india, indonesia, moldova, paraguay, peru, philippines, poland, Rwanda, and Yemen. Stepping Up SUppoRt to Developing CoUntRieS 19 Box 3. Climate iSSUeS in CoUntRY aSSiStanCe/paRtneRShip StRategieS Guyana. guyana is a coastal country with about half its population living below sea level. about 85 percent of the country is forested, but the pressures on forests are rising. the new CaS stresses the need for climate change adaptation and the opportunity to contribute globally to climate change mitigation by reducing emissions from deforestation (and getting economic benefits in return for such eco-services). the CaS provides for an iDa Forest, Climate Change, and Communities project that will complement the upcoming Forest Carbon partnership Facility (FCpF) grant. (guyana was among the first group of countries to apply and be selected into the FCpF in July 2008.) Burkina Faso. the CaS for FY2010­2012 views climate change as integrally relevant due to its aggravating impact on the country's development challenges, especially in the agriculture sector. in the longer term, efforts to stem climate change will be important, including through regulatory mechanisms to encourage investments in renewable energy and reduce urban pollution and through the exploration of carbon finance opportunities. Cameroon. the CaS incorporates climate change as a new area of focus to be addressed over time. While detailed sectoral interventions have not been identified yet, a "vulnerability assessment and adaptation strategy" is included in the CaS. in addition, the CaS program will focus on incorporating hydrologic risk in hydro development, including through the lom pangar Reservoir. India. the india CaS for 2009­2012 identifies the following areas of engagement on climate change issues: (a) Climate Change adaptation: priorities focus on enhancing knowledge of sectoral vulnerabilities; increased investments in climate-resilient infrastructure and livelihood; and high vulnerabilities, particularly relating to water resources, agricultural yields, and coastal areas. (b) Climate Change mitigation: enhanced knowledge of mitigation options; increased investments in low-carbon growth; programmatic carbon finance; and the use of carbon finance mainstreamed across WBg operations. Morocco. the Country partnership Strategy, currently under preparation, is considering climate change and sustainable development as one of its pillars. the World Bank is supporting the government in developing a multisectoral strategy that enhances climate change resilience and promotes low-carbon growth. Vietnam. the Country partnership Strategy progress Report for FY2007­2011 highlights vietnam's vulnerability to floods, typhoons, and a rise in sea level, as well as changes in temperature and rainfall patterns due to climate change. new areas of engagement include various studies on the economics of sectoral and spatial adaptation to climate change and prioritization of investments for climate change mitigation and adaptation. Yemen. Facing severe water shortages, in 2009 Yemen's cabinet endorsed a national adaptation plan of action that identifies priority adaptation options, which they can combine with vision 2025, the country's poverty Reduction Strategy. 20 D e v e l o p m e n t a n D C l i m at e C h a n g e Programme to assist ministers of agriculture in the region in responding to the challenges that climate variability and change pose to rural poverty alleviation. A subregional study of implications of climate change in the water and agriculture sector in Yemen and Djibouti has added to cooperation and understanding in the Middle East and North Africa (MNA) Region. The South Asia Water Initiative is a mechanism to coordinate--and harmonize donor interest in supporting--activities in the water sector to address water scarcity, water quality degradation, and uncertainties of climate change, among others, at the international river basin level. Regional approaches are equally important for making possible lower-carbon energy development programs at scale, such as large hydropower projects in Africa, the Concentrated Solar Power (CSP) initiative in the Mediterranean, or expanding gas trade in Asia. Growing client demand is positioning Development Policy Operations (DPOs) as a major vehicle for supporting clients' climate change policy and programmatic initiatives, with reduced transaction costs and simplified access. In FY2009 alone, a number of new DPOs included climate change considerations, amounting to $4.2 The WBG has placed an increasing focus on billion, increased to $6 billion when the first six regional programs and regional coordination. months of FY2010 are added. These include, With issues such as melting glaciers, which among others, two environment sector impact the availability of water across many Development Policy Loans (DPLs) in Mexico with geographical boundaries, there is a need for a strong focus on policy and institutional measures, greater regional dialogue as well as cooperation whose lending specifically targets climate change at on a programmatic scale that spans a range of more than $325 million; the Sustainable projects addressing climate risk management. In Environmental Management DPL in Brazil at $2 Africa, the WBG actively engaged in designing billion, supporting climate change actions at inter- an African regional forum on agriculture, climate sectoral and intra-sectoral levels, including natural change, and food security in partnership with the resources, water, sanitation, and energy; a series of Food and Agriculture Organization of the United Energy and Environment DPLs in Turkey, and the Nations (FAO), the International Fund for Morocco Solid Waste Management DPL, which is Agricultural Development, and the World Food the first development policy operation linked to a Stepping Up SUppoRt to Developing CoUntRieS 21 carbon finance program. New DPOs focused on water resource management programs dealing with climate change-related policies and institutional the impact of rapid glacier retreat in the tropical measures or having components of this nature are Andes or current and future irrigation water deficits being prepared for India, Indonesia, and Nigeria, in Morocco. Further examples include: improving with more operations expected. coastal and marine biodiversity to increase resilience in India, the Maldives, and the Gulf of Mexico; The diverse needs and capacities of different strengthening hydromet capacity in Central Asia; clients have led the WBG to utilize a wide range supporting adaptation of human settlements in of instruments to provide customized services. In Thailand, Vanuatu, and Vietnam; and addressing the addition to finance, technical assistance emerged as impact of extreme climate events on the health of an important tool for working with middle-income young children in Sub-Saharan Africa (Box 4). countries and the private sector, including through fee-based services. Thus, Reimbursable Technical Responding to client priorities, the WBG has Assistance plays a significant role under the new strengthened the operational links between Algeria CSP and also includes linking technical climate adaptation and disaster risk management assistance on environment issues with climate (DRM). Increasingly, risk reduction and risk change instruments, for example, in the solid waste transfer options are seen as integral to national sector. A similar model enables the Bank Group to climate adaptation programs, as reflected in the assist oil-producing client countries in the Middle Climate Change Strategy for Africa. An important East to address adaptation needs. Demand is partnership of the World Bank, the United Nations increasing for advice on policy and regulatory issues International Strategy for Disaster Risk Reduction, that facilitate "climate-smart" growth, including the and an expanding group of donor governments, the issues of pricing, taxation, and subsidy. Global Facility for Disaster Reduction and Recovery (GFDRR) has further expanded its support for capacity development, tools, and StRengthening methodologies, and knowledge sharing and ReSilienCe to generation activities to facilitate country-led Climate RiSKS initiatives for improved climate and disaster risk management (Box 5). Close to two-thirds of all The WBG has intensified its efforts to support GFDRR-financed technical assistance initiatives climate risk management in core operations, have a focus on adaptation to climate change, increasingly linking immediate priorities with providing more than $27 million in close to 90 measures to adapt to longer-term impacts. Projects countries across all Bank Regions since the that address climate risks span a range of GFDRR's inception in 2006. This support has interventions across all client countries and use a leveraged an additional $17 million in cofinancing variety of financial instruments and facilities, as well from development partners, as well as much larger as combinations of these. While driven by the amounts in World Bank investments. Increasingly, priority economic and social objectives, such as food risk reduction and risk transfer options promoted by security, these projects give heightened attention to GFDRR--such as the Catastrophe Risk Insurance current and future climate risks as critical factors for Facility for South Eastern and Central Europe, a effectiveness and sustainability. Examples range from catastrophe deferred drawdown option agriculture and rural development projects (CAT-DDO), or the launch of the MultiCat considering adaptation to increasing climate platform--are seen as integral to national climate variability, such as floods and droughts, in Ethiopia, adaptation programs. Malawi, and Nicaragua to natural resources and 22 D e v e l o p m e n t a n D C l i m at e C h a n g e Box 4. SCaling Up aDaptation eFFoRtS aCRoSS SeCtoRS anD RegionS--highlightS FRom FY2009 Enhancing livelihood protection through drought financing in Ethiopia. the government of ethiopia, the World Bank, and the World Food programme collaborated to establish the productive Safety net program, designed to deliver timely livelihood protection to the chronically food insecure. Increasing productivity and tolerance to climate shocks through sustainable land and rainwater management in Malawi. as part of the agricultural Development project Support program, financed in partnership with the geF, a conservation farming component aims to improve water and nutrient buffering capacities of the soil to increase productivity, as well as increase crop tolerance to climatic variation using fewer resources. Vanuatu Adaptation Project. this geF-supported project aims to improve the livelihoods of upland and coastal communities by increasing their climate resilience to the impacts of climate variability and change and weather-related hazards. Hydromet strengthening in Central Asia. a regional project to strengthen hydro meteorological capacity is planned for the end of 2010 to finance management systems, data gathering, and equipment. Nicaragua National Seed System Strengthening. this will strengthen seed producer organizations, provide technical assistance, develop seed storage capacity, improve seed certification, develop a revolving fund to finance seed production, and enhance seed testing facilities. Adaptation to Climate Impacts in the Gulf of Mexico Wetlands. this formulates and implements adaptation policy actions in representative systems of gulf of mexico wetlands to protect their environmental functions and biodiversity from climate change-related impacts. Morocco Integrating Climate Change in Development Planning and Disaster Prevention to Increase Resilience of Agricultural and Water Sectors (2010). this will assist the government of morocco in mainstreaming climate change in the national development planning process by improving the understanding of climate change implications for high-level strategic development planning and through pilot work to enhance climate resilience in the agriculture and water sectors. Yemen Adaptation to Climate Change in the Rainfed Highlands (FY2010). Using traditional knowledge, the project supports enhancing the adaptation coping strategies for farmers who rely on rainfed agriculture in the Yemen highlands through biodiversity conservation and utilization. Maldives Environment Management Project. this $13.5 million iDa credit is helping the government to effectively manage environmental risks to coral reefs and other marine habitats. Technical assistance to Sunderbans, India. this is being provided for economic development and adaptation in the world's largest halophytic mangrove forest. Stepping Up SUppoRt to Developing CoUntRieS 23 The WBG has advanced its work on assessing and that cuts across sectors such as water, energy, addressing climate risks and uncertainties for agriculture, environment, and social development at projects with long life spans. Early experience the local level. Tools and methodologies are under pointed to the need for more efforts to translate preparation and testing in the agriculture, water, substantial modeling work and emerging knowledge energy and urban sectors. The IFC has initiated a into operational guidance and tools. There is also pilot program to evaluate methodologies for increasing understanding of the need to identifying the financial implications of climate risk. complement risk assessment of select investments Studies of projects in several sectors and regions with a more comprehensive vulnerability assessment began in FY2009 for completion in FY2010. model that is undertaken on a sector-wide scale or Box 5. DiSaSteR ReSponSe management anD the Climate Change aDaptation nexUS the gFDRR serves as a knowledge hub and catalyst to promote the integration of hazard risk management into the World Bank's development efforts. as such, climate change adaptation is an integral part of gFDRR's mission and business plan, which includes mainstreaming disaster risk reduction and climate change adaptation in country development strategies and operations by supporting a country-led and managed implementation of sound risk management principles. Disaster risk reduction serves as a first line of defense in adapting to climate change; therefore, gFDRR has been financing disaster risk reduction programs that build adaptive capacities in its 20 priority countries. gFDRR has also been facilitating the development of integrated approaches and coordinated implementation of national disaster risk reduction and climate change adaptation interventions. in early 2008, gFDRR provided grants totaling $665,000 to the europe and Central asia Region (eCa) to address DRm and climate change adaptation issues in Southeastern europe. a year and a half later, this initial investment has mobilized nearly $60 million in World Bank funding for disaster risk mitigation projects in albania, Croatia, and moldova and 7 million in funding for DRm projects from bilateral and other multilateral donors. it has catalyzed joint DRm initiatives among countries in the region and has generated innovative approaches to DRm that are being replicated elsewhere. in FY2009, 12 gFDRR projects of over $4 million focused on climate change adaptation issues in various regions and at the global level, including the following: · a $250,000 grant helps the cities of Casablanca, tunis, and alexandria to formulate action plans--a critical first step toward increasing their resilience to climate change and disasters. Disaster risk reduction and climate change adaptation components are managed as one integrated agenda. the resulting risk management approach generates social and economic impacts in the short term, while reducing vulnerability to long-term climate change. · in lao pDR, a $1.2 million grant is assisting the country to take the next step in operationalizing and implementing the national strategic plan for disaster management (with a focus on droughts and floods). · Disaster risk management country plans are under preparation in nine african countries, analyzing the natural hazards and institutional environment and proposing tailor-made funding to address disaster risk reduction and adaptation to climate change. the plans are to leverage over $35 million of implementation financing. 24 D e v e l o p m e n t a n D C l i m at e C h a n g e Realizing mUltiple BeneFitS Agriculture and rural development work has increasingly focused on supporting climate- resilient economic growth and the linkages between climate risk management and food security. Increasing productivity and reducing risk and variability are among the five focal areas of the Agriculture Action Plan for FY2010­ 2012, which aims at promoting more and better investments to harness the potential of agriculture for poverty alleviation, economic The water sector portfolio review suggests an growth, and environmental sustainability. An increasing level of attention to climate change. integral part of this objective is the development Of all active projects approved in FY2006­2008, of state-of-the-art knowledge and assessment 35 percent (191 projects) are considered technologies for reducing emissions and strategies to reduce the impacts of climate enhancing carbon sequestration in agricultural variability and change, including adaptation and/ landscapes (Box 6). While increasing agricultural or mitigation measures. The primary focus is on productivity, food security, and climate resilience, adaptation, with 58 percent addressing climate this initiative aims at designing approaches and variability and change through adaptation methodologies that will allow for measuring, measures, 31 percent considering mitigation reporting, and verifying reductions in greenhouse measures, and 10 percent focusing on both. At gases (GHGs) in agricultural landscapes so that the regional level, LCR had the largest portfolio, agricultural carbon can be included in future with adaptation measures (28 percent), followed international mechanisms. Piloted in the by SAR (25 percent) and MNA (25 percent). innovative Kenya Agricultural Carbon Project,3 The pipeline shows increased attention to the this work is based on the recognition that, as adaptation agenda for most regions, with MNA increased soil carbon improves the productivity and EAP in the forefront in terms of considering of agricultural land, this is a win-win adaptation measures in their overall pipeline of opportunity, addressing not only the climate projects. There is also a growing percentage of change challenge but also the need to strengthen projects with clearly stated climate objectives, the agricultural sector in developing countries. most of which are in LCR, SAR, and EAP. 3. Blending financing from the BioCarbon Fund. Stepping Up SUppoRt to Developing CoUntRieS 25 Box 6. pRogRammatiC appRoaCheS to aDDReSSing Climate Change in agRiCUltURe anD RURal Development Hydrological modeling system to address climate change in agricultural and natural resource management projects. the objective of this cross-sectoral and cross-regional initiative is to facilitate land use planning at the watershed and community levels, primarily taking account of changes in the water cycle that will result from climate change. landscape and land use characteristics as well as hydrological data derived from satellites and site surveys are fed into a computer program for analysis of alternative land use options. this initiative includes the Bhutan Sustainable land management project, the market-led Smallholders project in the zambezi valley (mozambique), the lake victoria environment monitoring project, the landscape management project (Rwanda), and the espirito Santo (Brazil) Biodiversity and Watershed Conservation and Restoration project. Methane mitigation in agriculture. through the Black Sea­Danube nutrient pollution Control projects, the WBg is working with a number of countries in the eCa Region to identify options for scaling up and supplementing existing manure management composting practices in order to integrate climate change mitigation efforts. these new initiatives build on successful experiences in georgia and armenia that demonstrated biogas conversion on a micro-household-level scale. the same projects also invest in re-vegetation and the use of vegetative buffers to control nutrients, which creates additional ghg-reduction co-benefits. Adaptation in the agriculture sector in Africa. a newly established trust fund for integrated land and Water management for adaptation to Climate variability and Change ($11 million) will support scaling up the development of lessons, guidelines, and best practices for improving adaptation and resilience to climate change of land and water management systems, mainly in the agricultural sector. The WBG's growing engagement in sustainable forest management exemplifies how the climate agenda can help capture the full range of social, economic, and environmental benefits, from local to global. The Bank Group has stepped up its efforts to build partnerships with counterparts such as UN-REDD and The Nature Conservancy to provide incentives and investment finance for REDD-Plus activities that reduce emissions from deforestation and forest degradation and improve forest management.4 The Forest Investment Program (FIP) and the Forest Carbon Partnership Facility, described in Chapter 4, are major complementary initiatives that seek to strengthen linkages among 4. as provided in the UnFCCC Bali action plan, ReDD-plus refers to "policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation (ReDD) in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries." 26 D e v e l o p m e n t a n D C l i m at e C h a n g e this work is on building healthy marine economies, food security, ecosystem resilience, and marine and wetland carbon capture and sequestration. Urban Environment, Climate Change, and Disaster Management is one of the five core business lines of the new Urban Sector Strategy. The strategy promotes a focus on urban form and design to achieve efficiency gains, reduce a city's vulnerability to climate risks and carbon footprint, and take advantage of the co-benefits of adaptation and mitigation action. In line with this focus, a Climate Resilient Cities program--which combines climate change adaptation and disaster risk management at the city level--has been sustainable forest management, improved piloted by the East Asia Region in three cities in livelihoods, and climate. The WBG is also Vietnam. Each city develops its City Information supporting--working with the International Base and Local Resilience Action Plan, identifying Union for Conservation of Nature (IUCN), FAO, priority adaptation actions to be undertaken in the and the International Institute for Environment short, medium, and long term. Significant work, and Development--the development of the with a focus on adaptation of coastal cities in Growing Forest Partnerships initiative that is particular, is being undertaken in Egypt, Morocco, currently being piloted in Ghana, Guatemala, and and Tunisia, as well as in EAP and SAR. The Mozambique and that would create networks Bank Group is also supporting energy efficiency through which national climate change-related initiatives in cites and integrated approaches to policies and strategies could be discussed and sustainable urban development (Box 7) and is developed in a participatory way. helping pilot a GHG index for cities. The Bank is pursuing analytical and pilot work to identify ecosystem-based adaptation options and biodiversity mitigation opportunities. Pilot work--such as the Wetlands Carbon Market Development for Funding Coastal Community Adaptation in Sub-Saharan Africa Project-- explores opportunities for developing and achieving carbon offsets through wetland protection and restoration that can simultaneously provide incremental funding for adaptation. A new initiative under the PROFISH partnership is directing $500,000 into research and technical assistance to integrate climate change into fishery reforms in selected developing countries, with some 70 percent of the resources targeting Sub-Saharan Africa. Within the overall strategic approach, the focus of Stepping Up SUppoRt to Developing CoUntRieS 27 Box 7. pRomoting URBan eneRgY-eFFiCient pRogRamS anD SUStainaBle eneRgY planning The Energy Efficient Cities Initiative (eeCi) was launched in December 2008 to help promote energy- efficient programs and sustainable energy planning among developing country cities around the world. Supported by the energy Sector management assistance program, the initiative rests on the recognition that cities are an important engine for economic growth and that rapid urbanization will lead to massive requirements for new energy sources. to this end, eeCi supports city-level capacity in identifying and prioritizing energy efficiency interventions by developing and sharing analytical and planning tools; spurs city energy efficiency activities by providing small grants to cities to test new approaches and by sharing good practices; and helps develop large-scale city energy efficiency investments by assisting World Bank operational units to design, package, and finance urban energy efficiency. project preparation work is complete for two ee urban components in China. new project development efforts in armenia, india, mexico, South africa, Ukraine, and the West Bank are now under way. Ecological Cities as Economic Cities (eco2 Cities) bridges the urban, transport, energy, water, and environment sectors of the World Bank. the initiative provides cities with an analytical and operational framework that offers strategic guidance on integrated and sustainable urban development. its objective is to enable cities to harness the many benefits of ecological and economic sustainability. the Bank is now taking a strategic approach toward promoting this initiative in China, indonesia, philippines, and vietnam. the eco2 framework is flexible and easily customized to the context and priorities of each city, helping cities chart their own unique action plan or "Sustainable City pathway," consisting of a coordinated and sequential program of important reform, institutional, and policy measures; investments in specific "catalyst" projects; and capacity building of institutions and professional staff. importantly, many of the actions, reforms, and projects undertaken by a city using this platform can be linked to the availability of new funding for sustainability and climate change through sources such as geF grants, the CtF funds, and carbon finance. SUppoRting loW- total RE/EE financing in FY2009 to an all-time high of $3,305 million. The IFC's volume of RE/ CaRBon gRoWth EE investment during that year was the largest so oppoRtUnitieS far, at $1,036 million. The WBG share of commitments for RE and EE has risen steadily FY2009 was marked by major progress in relative to total energy commitments, reaching 36 scaling up financing for energy efficiency and percent in the past five years compared with new renewable energy. New RE and EE 13­20 percent in the preceding years and financing increased to $3,128 million from exceeding 40 percent in 2009. The very first CTF $1,665 million in FY2008--a considerable 88 project, the Turkey Private Sector Renewable percent increase that significantly exceeds Energy and Energy Efficiency Project, provided SFDCC commitment of a 30 percent annual another $100 million of financing for RE. This average increase for 2009­2011. Adding $177 reporting is not counting growing support for million of large hydropower projects brought EE/RE through DPOs. 28 D e v e l o p m e n t a n D C l i m at e C h a n g e Our current goal is to increase RE/EE and other WBG support for new renewable energy was "low-carbon"5 commitments to 50 percent of all strong in FY2009 (Box 9). Overall, WBG new WBG energy financing by end FY2011, with the RE financing tripled from $473 million to $1.4 remaining financing mainly supporting billion between FY2008­2009. IFC investments transmission, distribution, and policy reforms. The in new RE quintupled from $115 million in WBG will continue to support natural gas FY2008 to $587 million in FY2009, while World development as an important transitional energy Bank financing for new RE tripled from $269 source. Despite a long-term trend toward increasing million in FY2008 to $840 million in FY2009. investment in RE and EE, the WBG results for To further strengthen work in promoting FY2010 will reflect the impact of the global renewable energy, a Senior RE Adviser is being financial crisis manifested in a lower share of RE/ recruited. EE financing. This is in large part due to the impact of the crisis on the ability of African countries to In FY2009, lending to EE increased to $1,701 finance their conventional energy development million from $1,192 million in FY2008. The programs. Global economic recovery and the impact WBG is moving to strategically help identify of new instruments such as the CTF are expected energy efficiency opportunities and expand its to restore an upward trend in RE/EE financing portfolio, acting upon the directions of the during FY2011. To support long-term progress, a SFDCC and the recommendations of the five-year RE and EE operational strategy is being Independent Evaluation Group evaluation (Box developed with a view to being effectively integrated 10). The IFC is working to expand its lending for into the broader WBG Energy Strategy (Box 8). energy efficiency across its activities. For instance, the IFC conducted a systematic review of possible Box 8. eneRgY SeCtoR StRategY a new WBg energy Sector Strategy--which is currently going through a consultation process after the concept note was approved by the Committee on Development effectiveness in July 2009--recognizes climate change among the key drivers transforming the global energy sector. it aims to articulate a way forward to help developing countries achieve the twin objectives of improving access to and reliability of energy supply and facilitating a shift to a more environmentally sustainable energy development path. the strategy allows the WBg to tailor approaches to different country circumstances. it further proposes to promote the effective use of climate finance. Strategy development is supported by extensive global consultations with all stakeholders to promote complementary roles of the public and private sectors, facilitate the use of innovative blending of various financial products, and provide renewed attention to incentives for ee and Re and to pricing issues. the energy Strategy approach paper is posted on the web site, providing a good opportunity for external stakeholders and partners to review the document ahead of the consultations, as well as enabling them to gain a broad understanding of the WBg's engagement in the energy sector. the strategy is expected to be finalized in early 2011. 5. "low-carbon" is defined as: renewable energy projects (including all sizes of hydropower projects), energy efficiency, power plant rehabilitation, district heating, biomass waste-fueled energy, and gas-flaring reduction. Stepping Up SUppoRt to Developing CoUntRieS 29 Box 9. SCaling Up ReneWaBle eneRgY maRKetS guarantee of grid access, sufficient tariff levels, and clear rules to pass through the incremental costs for Re are the key factors to scale up Re market penetration. integrating geF, iBRD, and carbon financing can further make a transformational impact to scale up renewable development, as demonstrated in China. Under the China Renewable energy Scale-Up program (CReSp), the World Bank initiated active policy dialogues with the Chinese government to introduce international best available technologies and practices of Re market policies and to assist the government in developing Re policy frameworks. as a result, China passed a Re law to require mandatory purchase of Re by the grids and to allow the incremental costs to be shared nationwide. the policy dialogue is complemented by an iBRD investment ($173 million) in 2x100 megawatt (mW) wind farms, a 25-mW biomass power plant, and small hydro projects. these were two of the first such large-scale wind and biomass power plants in China. Similarly, the Bank's carbon financing played a key role in improving the financial viability of the inner mongolia wind farm, which is not financially viable at a power tariff at 38 fen/kWh set by the government. in addition, CReSp provided cost-shared research and development (R&D) to domestic wind manufacturers supporting joint design with international design institutes to transfer international wind turbine technologies to China. the market pull approach with favorable tariff policies--together with technology push through cost-shared R&D and the government's requirement of 70 percent local content--has boosted China's domestic wind manufacturing industry. opportunities for energy efficiency work/ investment among its chemical sector clients. The review produced several proposals for energy efficiency audits and an FY2009 IFC investment to enhance the efficiency of the operations of a Russian chemicals company generating savings of 115,432 tons of carbon dioxide (CO2) equivalent annually through reduced gas and electricity use. Ongoing work focuses on identifying new opportunities across all World Bank sector investments, starting with the upcoming energy projects for integrating feasible energy efficiency components at the project and/or programmatic level; providing support for low-carbon growth country studies; promoting energy efficiency across other sectors (including urban and transport) through the Energy Efficient Cities Initiative; and engaging clients during early stages (notably, the CAS stage) on energy efficiency support prospects. In the energy sector, projects under preparation are being reviewed with a view to capturing missed and/or 30 D e v e l o p m e n t a n D C l i m at e C h a n g e Box 10. WoRlD BanK gRoUp expeRienCe FinanCing eneRgY eFFiCienCY the World Bank and the iFC have financed a series of energy efficiency financial intermediary projects. With the hungary energy efficiency guarantee Fund, the iFC pioneered the use of a guarantee mechanism through selected domestic banks. no guarantee has been called, giving local banks confidence in and familiarity with energy efficiency lending. a similar iFC approach in China has also achieved success. the World Bank has an ongoing energy efficiency financial intermediary program. in China, the Bank project has played a key role in increasing local banks' confidence and capacity in energy efficiency financing and creating a robust line of business through learning by doing. the participating domestic banks on-lend iBRD funds ($200 million) to large industrial enterprises and energy service companies for ee investments, and they use the geF grant ($14 million) to prepare the project pipeline and build capacity. For example, a carbon financing deal was reached to recover waste heat for Bao Shan iron and Steel Company, one of the largest in the world. one of the key lessons of the experience is the importance of technical assistance, particularly at the beginning, to raise awareness of energy efficiency, to provide training and advisory services to the banks in developing financial structures, and to build the capacity of project developers. in Bulgaria, the transaction cost of institutional capacity building for both financial institutions and energy service companies--from project conception to financial closure--has been around 10 percent of total project costs at the beginning and is expected to decline to around 5­6 percent later on. potential EE opportunities, on both the demand average of $4.36 billion in FY2007­2009, compared and the supply side. This exercise is also feeding to $1.98 billion in FY2004­2006. Increasing into the development of a comprehensive system attention is given to supporting increased access for supporting energy efficiency in energy through RE and EE options (Box 11). One of the projects and sector dialogue, including through implications of the financial crisis was an increased assistance with sector-wide policy and demand for WBG lending to coal-based generation, institutional frameworks that would achieve largely in Africa, where average electricity access larger and more sustainable impacts. level is at 12 percent. The WBG has systematically applied the SFDCC screening criteria6 for new The WBG continues to scale up its support for coal-fired power projects, including an analysis of energy development, recognizing that reliable and alternatives that incorporates environmental affordable energy services underpin economic externalities and consideration of whether assistance growth and improve the welfare of the poor. Annual has been provided with developing low-carbon energy investments more than doubled to an projects and accessing additional climate finance. 6. as endorsed by the Development Committee, the SFDCC provided that, through its traditional financing instruments, the Wbg could support client countries to develop new coal power projects by considering the following: (a) there is a demonstrated developmental impact (e.g., the project/program improves overall energy security, reduces power shortages, or improves access for the poor); (b) there is assistance to identify and prepare low-carbon projects; (c) there has been optimization of energy sources by considering the possibility of meeting the country's needs through energy efficiency and conservation; (d) there has been full consideration of viable alternatives to the least-cost options (including environmental externalities), and additional financing from donors for their incremental cost is not available; (e) the project uses the best appropriate available technology, to allow for high efficiency and, therefore, lower ghg emissions intensity; and (f) there is an approach to incorporate environmental externalities in project analysis. Stepping Up SUppoRt to Developing CoUntRieS 31 Box 11. eneRgY aCCeSS FoR SUStainaBle Development as of June 2009, the Bangladesh Rural electrification and Renewable energy Development project has brought grid electricity to more than 600,000 consumers in Bangladesh, supported in part by geF grant financing. access to electricity has increased to about 40 percent from 30 percent in 2002. at the same time, 350,000 consumers have been provided with solar home systems, surpassing the original target of 50,000 with expanded support from the World Bank and others. in 2009, an additional $130 million in financing was committed to support, for example, increasing off-grid electricity access using solar photovoltaics (pv) to over one million households to complement carbon financing support provided in 2008 for 1.25 million solar pv systems. the World Bank­geF tanzania energy Development and access expansion project supports, among others, local renewable energy development to boost the country's generation capacity and expand access in rural areas, where the electrification rate is below two percent. a comprehensive regulatory framework has already been adopted to streamline and simplify procedures for small power projects. an initial project pipeline has been identified for over 60 mW of renewable energy investments along with electricity access through mini-grids to about 12,000 customers. in addition, the project is financing off-grid solar pv electricity services to households and essential rural community services such as health care, education, water supply, communications, and street lighting. in the West african energy program, the World Bank group--in close collaboration with the United nations industrial Development organization, the United nations Development programme (UnDp), and the geF Secretariat--has taken the lead in developing and implementing sustainable transport projects in nigeria and Burkina Faso, as well as energy-efficient lighting projects in Benin, Burundi, and togo. in Uganda, the World Bank group has collaborated with the geF in financing a new renewable energy project in the amount of $76 million. the project also aimed to increase energy access in rural areas. The first example was the Botswana Morupule B The review panel is to be convened for each relevant Generation and Transmission Project, which was project ensuring that its composition includes approved by the Board on October 28, 2009. The experts with in-depth knowledge of the given WBG also issued a guidance note to staff for regional and country context. applying these criteria and has instituted an external panel expert mechanism to review the conformity Looking forward, we expect that the demand for with the criteria.7 Such a panel was formed for the WBG engagement in coal power generation will South Africa Eskom Power Sector Project, approved be limited while the demand for RE, EE, and by the Board on April 8, 2010. The project meets clean energy finance will continue to grow. The the SFDCC criteria and is embedded in an application of the SFDCC screening criteria is ambitious country plan to stabilize GHG emissions resulting in greater selectivity. We anticipate a by 2025 and significantly reduce them in the long continued demand for "brownfield" term while meeting immediate energy needs using (rehabilitation) projects where the rehabilitation the most advanced technology ever applied in Africa. of coal-fired plants results in substantial reduction 7. Such a panel was formed for the South africa eskom power Sector project and is to be composed for each relevant project ensuring that its composition includes experts with in-depth knowledge of the given regional and country context. 32 D e v e l o p m e n t a n D C l i m at e C h a n g e of GHG emissions per unit of power generated The WBG is coordinating the preparation, due to increased efficiency. These projects also together with the International Energy Agency bring dramatic improvements in local (IEA), the Organization of the Petroleum environmental quality, with corresponding public Exporting Countries, and the Organisation for health benefits. On the other hand, a review of Economic Co-operation and Development the mid-term pipeline of "greenfield" (new (OECD), of the Joint Report requested by the capacity) coal power generation projects, as G20 to help these countries with rationalizing screened to meet the six SFDCC criteria, shows and phasing out inefficient fossil fuel subsidies no such projects for middle-income countries in that encourage wasteful consumption and by the pipeline for the next few years, and potential providing targeted assistance programs. The IDA projects in the coming years are very few. Joint Report will include a working definition and preliminary estimates of energy subsidies, Following on years of WBG work with the Global modeling-based analysis of the implications of Gas Flaring Reduction (GGFR) partnership, the phasing out fossil fuel subsidies on the economy, latest satellite estimates for gas flaring volumes in and suggestions for the implementation of 2008 show that reduction efforts are paying off. phase-out of these subsidies, drawing on Global gas flaring has declined by a total of 22 selected case studies. billion cubic meters (bcm) over the past three years to 140 bcm in 2008, with GGFR members being The Transport Business Strategy, launched in relatively more effective in reducing flaring intensity. 2008, focuses on ensuring the long-run The decrease in gas flaring corresponds to a developmental role of the transport sector reduction of some 60 million tons of CO2 emissions through the support of low-carbon technologies between 2005 and 2008. The World Bank­led for mobility, the shift of transport services to GGFR partnership will kick off a third phase low-carbon modes, and the containment of (2010­2012) to step up efforts in improving energy emissions by demand management. To reduce the supply efficiency and reducing emissions from carbon intensity of the transport sector, efforts flaring (Box 12). are being undertaken to change the modal Box 12. FlaReD gaS ReDUCtion FoR eneRgY aCCeSS in aFRiCa increased use of flared gas in nigeria and other countries in the gulf of guinea presents an opportunity to increase access to energy and support the transition to a low-carbon economy. Currently, ggFR is coordinating flare reduction with the major stakeholders in nigeria. the planned development of the nigerian domestic gas market in the medium term to supply the power sector will further contribute to gas flaring reduction and help reduce the unrest in the niger Delta, where most gas flaring in nigeria occurs. essential elements are a gas master plan, a new gas pricing policy, and a regulatory framework for the downstream gas sector--all currently under preparation by the nigerian government. the use of multiple WBg instruments could address the power sector's ability to purchase gas and provide payment guarantees in a comprehensive way (Bank guarantees, followed by the involvement of the iFC in public- private partnership projects or private financing of an infrastructure network). the ggFR is also working with the governments of angola, Cameroon, Chad, equatorial guinea, and gabon to reduce gas flaring. Stepping Up SUppoRt to Developing CoUntRieS 33 composition of sector activities and to change the emphasized, facilitated significantly by the quality of project designs within all modes to availability of additional concessional financing reduce GHG emissions. Responding to emerging and the successful blending of a number of development challenges, a trend increase in investment sources and instruments (Box 13). support for urban transport has been achieved Investments in rail projects have increased in that also yields GHG reduction co-benefits. FY2009, lowering emissions by reducing both Within the urban transport subsector, the higher carbon freight transport on roads and expansion of mass transit systems has been congestion in individual car use. Box 13. mUltiStaKeholDeR paRtneRShip FoR the URBan tRanSpoRt tRanSFoRmation pRoJeCt (Uttp) in mexiCo the Uttp seeks to transform urban transport in mexican cities into a lower carbon growth path. the project will develop 18 new integrated mass transit corridors that will move a total of 3.96 million passengers per day and will result in the avoidance of 1.96 million tons of Co2 per year once all the investments are in place. through its transformative impact, the Uttp is expected to significantly reduce the energy intensity of the transport sector by 2020 by about 10 percent from present levels. to finance this program, a multistakeholder partnership has been established between the World Bank, the Clean technology Fund, the Carbon partnership Facility (CpF), the global environment Facility, the government of mexico (through ShCp, BanoBRaS, and FonaDin), and mexican local governments. the CtF will contribute $200 million in concessional finance to transformational projects that (a) provide positive incentives for demonstration of low-carbon development and mitigation of ghg emissions; (b) promote scaled-up deployment, diffusion, and transfer of clean technologies; and (c) encourage the realization of social co-benefits of low-carbon projects. iBRD funding will complement CtF funding with an additional $200 million loan. the blending of these two resources enlarges the pool of low-cost available financing, thus reducing the financial barriers associated with these types of investments and facilitating the decision to adopt low-carbon systems. a CpF program will be set up to aid in the purchase of emission reductions produced by the project. the sustainable transport and air quality project, the geF-StaQ regional project will provide cross-reference and experience-sharing for the various cities implementing transformational subprojects. the mexico geF-StaQ project will support the preparation of four cities for inclusion in the Uttp. the government of mexico--through ShCp/BanoBRaS/FonaDin--will support mass transit public investments through a line of grants and credits. additionally, BanoBRaS is in the position of offering additional financing if needed to municipalities and the private sector. Uttp is unique in that it brings together the local urban transport agenda, the national poverty reduction agenda, and the global climate agenda, while responding to the government's voluntary pledge to adopt the UnFCCC principle of "common but differentiated responsibilities" to reduce its ghg emissions. 34 D e v e l o p m e n t a n D C l i m at e C h a n g e looKing FoRWaRD impact on peoples' lives and livelihoods is most immediate and multiple benefits are apparent--such as in the case of slum-upgrading, which offers one Growing client demand provides a foundation for of the best adaptation measures for the urban poor. scaling up WBG support to climate actions. Stronger emphasis will be placed on vulnerability assessments, linking experience in disaster Expecting an increased demand from developing preparedness with addressing longer-term climate country partners for supporting various aspects of risks and enhancing linkages with human the low-emission growth agenda, particularly as development and social protection as important these countries move ahead with NAMAs, the forms of adaptation. Implementation of programs WBG will step up efforts to develop expertise and such as the Pilot Program for Climate Resilience financial products that will be required. As part of (PPCR) will contribute to learning at the country energy sector strategy consultations, we will seek level, as the Bank is exploring the operational and to strengthen the understanding and analysis of developmental implications of robust--as opposed opportunities for improving energy access and to optimal--decision making, given inherent supply in an environmentally sound manner while uncertainties of downscaled climate projections. The achieving reasonable affordability for the poor. major focus will remain on achieving multiple The Bank Group will further strengthen its benefits in forestry and agriculture, as well as efforts to place the linkages between the transport enabling participation of these sectors in future sector and climate change in a broader global mechanisms. Building on the emerging developmental context that realistically reflects the momentum among city mayors, the private sector, importance of transport services for core and other stakeholders, the WBG is establishing development and poverty alleviation. new partnerships with municipalities, where the © anirban Dutta Stepping Up SUppoRt to Developing CoUntRieS 35 3. IMpleMentatIon pRogReSS: MobIlIZIng FInanCe anD MaRketS · Climate investment Funds rolled out stimulating new low-carbon or climate-resilient work in over 20 countries · mobilizing and facilitating client access to multiple sources of finance for adaptation, including catastrophe-risk financing products · Continued innovation to scale up impact of carbon finance, broaden its scope, and leverage resources · Successful engagement of the private sector by the iFC for more sustainable investment, with a leverage ratio of 5 to 1. moBilizing aDDitional ClI Mat e I nVe St Me n t F u nD S ConCeSSional anD The major resource mobilization exercise has innovative FinanCe been the establishment of the Climate Investment Funds (CIF), a partnership among Combating climate change requires tremendous MDBs, recipients, and contributors, with an effort and ingenuity to mobilize resources at scale innovative and balanced governance model, that without delay, coordinate their delivery through a has raised $6.3 billion endorsed by 13 countries combination of policy and financial instruments, (Figure 1 and Annex 3). Within one year of and maximize their leverage on public and private existence, the CIF have moved from concept to investment flows to effectively catalyze a shift full-scale operations and stimulated new toward climate-smart outcomes. Closely low-carbon or climate-resilient work in over 20 following and respecting the primacy of the countries, with significant stakeholder UNFCCC negotiations, the WBG is testing, in a engagement and MDB cooperation. collaborative approach with development partners, innovative ways to mobilize additional resources and leverage private sector investment to catalyze climate action. 36 D e v e l o p m e n t a n D C l i m at e C h a n g e FigURe 1. the CiF ventURe: SCaling Up paRtneRShipS FoR Climate aCtion Climate investment Funds Strategic Climate Fund (SCF) Clean technology Fund (CtF) targeted programs with dedicated funding to Finance scaled-up demonstration, deployment pilot new approaches with potential for scaling and transfer of low-carbon technologies up Scaling Up pilot program Forest Renewable Country investment plans for Climate investment energy in low Resilience program income Countries help build Reduce Support climate emissions thirteen investment plans endorsed with an transformational resilience into from overall funding envelope of $4.4 billion, change in using core deforestation leveraging over $36 billion renewable development and forest energy planning degradation $4.4 billion pledged (+/-) $1.9 billion pledged (+/-) Figures as of march 17, 2010 Since its first year of operations, the CTF has percent across the proposed investments, endorsed 13 investment plans--in Colombia, including through MDBs and bilateral Egypt, Indonesia, Kazakhstan, Mexico, Morocco, intervention. These plans consider scaled-up Philippines, South Africa, Thailand, Turkey, financing for renewable energy, including Ukraine, Vietnam, and a regional plan for the biomass, hydro, solar concentrated power, solar Middle East and North Africa--for a global water heaters, and wind power; energy efficiency, envelope of about $40 billion (Box 14). This will including power transport and distribution; leverage on average eight times CTF funding transport, including rapid bus transit and light through MDBs and bilateral financing, as well as rail; and several low-carbon financial climate finance instruments (carbon finance) and intermediary projects. the private sector, which is engaged on average 30 Stepping Up SUppoRt to Developing CoUntRieS 37 Box 14. CtF: thiRteen inveStment planS enDoRSeD With an oveRall FUnDing envelope oF $4.4 Billion leveRaging oveR $36 Billion (Figures as of march 17, 2010) Country/ Region CTF Total (US$ Ratio CTF to Highlights (US$ million) million) other fund- ing Colombia 150 2,995 1:18 Sustainable Transport Systems: allow the national Urban transport policy to include additional measures to increase the reduction of ghg emissions Energy Efficiency Program: identify great efficiency potential in electricity and thermal end uses Egypt 300 1,921 1:5 Urban Transport: Six rapid bus transit corridors (RBtC) and five light rail routes Wind Power: From <1,000 mW to 2,500 mW Indonesia 400 3,110 1:7 Geothermal Power: CtF support will have the transformational impact of dramatically reducing the country's emissions Energy Efficiency and Renewable Energy: support to small and medium enterprises (Smes) and end users which at the same time triggers local banks' confidence to jump into ee/Re business opportunities Kazakhstan 200 1,269 1:5 Renewable Energy Development: especially small hydro power, wind power generation and solar energy Associated gas flaring reduction and fuel switching to gas to reduce reliance on coal for heat and electricity generation District heating system modernization, including both supply and demand side interventions Demand side management and end-user efficiency in SME Mexico 500 6,197 1:12 Energy Efficiency: program to replace inefficient lighting and appliances with expected annual emission reductions of four million tons of carbon dioxide equivalent (mtCo2e) Renewable Energy: to accelerate and scale up recent commitments towards implementation of a comprehensive national Re program Urban Transport: 20 rapid bus transit corridors with low-carbon bus technologies MNA 750 5,604 1:7 Concentrated Solar Power expansion programs in algeria, egypt, Jordan, morocco, and tunisia: 900 mW (twice current installed global capacity) Morocco 150 1,650­1,950 1:12 Energy Efficiency: in cement, phosphates, and sugar Urban Transport: Rapid bus transit/tramway/light rail Wind Power: goal of 600 percent increase in wind power to reach 20 percent of power generation and energy efficiency improvements Philippines 250 2,780 1:10 Energy Efficiency: Smart grid and demand-side management Renewable Energy: Scaled-up private sector power generation Solar: 30,000 commercial buildings equipped Urban Transport--two bus rapid transit (BRt) systems 38 D e v e l o p m e n t a n D C l i m at e C h a n g e Box 14. (continued) CtF: thiRteen inveStment planS enDoRSeD With an oveRall FUnDing envelope oF $4.4 Billion leveRaging oveR $36 Billion South Africa 500 2,350 (Figures as of march 17, 2010) 1:4 Energy Efficiency: through financial intermediation Solar Power: 100 mW concentrated solar power plant and 500,000 households with solar water heaters Wind Power: 100 mW first utility-scale wind farm and private sector projects adding up to 100 mW thailand 300 4,263 1:13 Energy Efficiency and Renewable Energy: through public utilities (for scaled-up Re, and efficient public lighting) and financial intermediation (several mechanisms) for Re and ee Urban Transformation: BRt and city energy efficiency improvements in Bangkok metropolitan region turkey 250 2,100 1:7 Renewable Energy: Smart grid management and control systems to support large-scale integration of wind power Renewable Energy and Energy Efficiency: through credit lines to local development banks Ukraine 350 2,605 1:6 Energy Efficiency and Renewable Energy Smart grids: Design and implementation of the next generation of modern grid management and control systems Zero Emissions Power from Gas Network: the replication of such technologies has the potential to displace coal-fired power. vietnam 250 3,445 1:13 Energy Efficiency:in cement, Smes, and commercial Transmission and Distribution, including smart grid and demand-side management (DSm) Renewable Energy: Small hydropower, geothermal power, wind, solar, biomass (bagasse, paddy straw, rice husk), wood residue, landfill gas and other waste conversion Urban Transport: in hanoi and ho Chi minh City In addition to attracting financing, all CTF plans Work is well under way under the PPCR, with focus on improving the enabling policy and $967 million in pledges, to start activities in nine regulatory environment for sustainable growth. counties, three of which are in Africa and four are Approved projects include the Turkey Private in fragile states, and under two regional programs Sector Renewable Energy and Energy Efficiency targeting small island states (Box 15).8 The two Project ($100 million concessional loan from the other programs under the SCF were declared CTF blended with $500 IBRD loan), the Mexico operational in 2009 and are expected to initiate Urban Transport Transformation Project ($200 in-country activities in the first half of calendar million CTF concessional loan cofinanced by a 2010. The Forest Investment Program has $558 $150 million IBRD loan), and the Mexico million in pledges and selected an initial set of Private Sector Wind Development Project countries to provide support while the Scaling Up (IADB/IFC). CTF-cofinanced IBRD operations Renewable Energy Program in Low Income are under preparation for South Africa and Egypt Countries (SREP) raised $292 million in pledges. for submission to the Board in FY2010, while other MDBs are also developing projects. 8. Countries targeted for assistance under the SCF are identified by an independent governance panel, with country selection based on vulnerability as well as on completion of national adaptation programs (in the ppCR case), or on the importance of the forest sector and the interest of the countries in participating in ReDD initiatives (for the FIp). the SCFs also aim to achieve a regional balance and a variety of geographical vulnerabilities and opportunities in order to maximize lesson-learning opportunities. Stepping Up SUppoRt to Developing CoUntRieS 39 Box 15. piloting climAte resilience The Pilot Program for Climate Resilience was the first of the three SCF-targeted programs to become operational. Based on the recommendations of an independent expert group, the ppCR Subcommittee approved nine countries and two regions to take part as pilot programs to be financed under the ppCR. approved country programs are in Bangladesh, Bolivia, Cambodia, mozambique, nepal, niger, tajikistan, Yemen, and zambia. Regional programs include the Caribbean and South pacific islands. Funding to date for the ppCR has reached $967 million, of which about half can be provided as grants and half as highly concessional loans. Joint mDB programming missions have been completed in all participating countries, and the development of strategic programs to be financed by the ppCR is ongoing. the work has highlighted the diversity of issues faced by the individual countries but has also brought out some common themes. in most countries there was consensus that integration of the adaption and disaster risk management agenda, particularly management of floods, droughts, and coastal storms, is a key element in climate resilience. improved land, forest, and water management also rank as priority intervention areas for some of the ppCR participants. there are also emerging country specificities: for Bolivia, nepal, and tajikistan, changes in the pattern of glacier melt and river flows require special attention; for niger and zambia, there are interlinkages between woodland and charcoal management and broader energy supply issues. For some small-island developing states, climate change presents uniquely disproportionate threats to their economies despite their relatively high income; for example, recent hurricane damage in grenada, situated traditionally south of the hurricane belt, equalled 200 percent of gross domestic product. most participating countries have already undertaken substantial planning and analytical work related to climate resilience in the context of national adaptation plans of action, disaster preparedness plans, or broader poverty reduction and growth strategies. there are challenges in balancing the need to move quickly to achieve results on the ground, and the need for strategic and planning work to fine-tune priorities. a second challenge relates to broader resource availability in countries with severe budget and capacity constraints. a third relates to the balance between simplicity in the design of programs--necessary if they are to succeed on the ground--and the complexity of interlinked climate resilience issues. in october 2009, a first meeting of ppCR pilot countries was convened to build a community of practice among the pilot countries in order to exchange experiences, promote South-South learning, and document good practices and early lessons. in this regard, important lessons and considerations emerged from countries' initial involvement in the program, including selecting the right mix of planning, capacity building, technical assistance, and financing, as well as the valuable role of mDB coordination in the planning process. 40 D e v e l o p m e n t a n D C l i m at e C h a n g e These include dedicated adaptation finance instruments, such as the GEF Adaptation Program, the Least-Developed Countries Fund, and the Special Climate Change Fund (SCCF). For example, the GEF-financed India Land and Ecosystem Management Project includes adaptation funding of $5 million (from the Strategic Priority for Adaptation), with total project funding of $30 million. In Kenya, an incremental SCCF grant for Adaptation to Climate Change in Arid and Semi Arid Lands would complement an estimated IDA contribution of $40 million that focuses on improving service delivery and drought The CIF are explicitly designed to strengthen rehabilitation. Further assistance comes from the knowledge base for low-carbon and climate- strengthening synergies and integrating disaster resilient growth, providing practical lessons in risk reduction and climate resilience, notably with support of the UNFCCC deliberations. Lessons support of the GFDRR, and extending to date have focused mainly on the novel design partnerships and mobilizing new bilateral and process and innovative governance structure, multilateral donor funds, such as the multi-donor confirming that inclusion and openness are key Maldives Climate Change Trust Fund, established for successful operationalization. Learning from in December 2009, which will support the their initial experience, the CIF revised their development and implementation of the climate governance structure to include civil society change strategy and action plan for the Maldives.9 observers and incorporated lessons into the FIP design process. To catalyze dialogue among all This experience underscores the urgency of relevant stakeholders and harvest learning from additional technical and financial assistance to help experiences to date, the CIF hold an annual IDA countries make development investments Partnership Forum to openly assess existing resilient to increasing climate risks. Consistent with programs and to promote feedback and an its core mandate of poverty reduction and economic exchange of ideas among stakeholders. A study growth, IDA-15 provided a solid development on lessons learned from the CIF design process platform in a rapidly evolving financing landscape and operational experience was released at the for climate-resilient action (Box 16). Through its second Partnership Forum in March 2010. first year, IDA-15 financial flows to climate-affected sectors, such as agriculture, flood protection, water Rais i ng and Facilitating c lie n t supply, and health, reached $3.3 billion, a 17 percent access to Multiple so uR ce s increase above IDA-14 average annual financing for oF Fi nance F oR adaptatio n those sectors ($2.9 billion). Yet with an increasing number of sources, available financing to help To increase support for climate resilience and "climate-proof " these investments, assist adaptation, the WBG has been using a growing communities already affected by a changing climate, menu of resources to complement IDA and and build capacity for "climate-smart" development IBRD investments in climate-affected sectors. planning is well below the need. 9. Initial capitalization of 6.5 million from the european Community, with more donors expressing interest. Stepping Up SUppoRt to Developing CoUntRieS 41 Box 16. idA As A plAtform for climAte-smArt development the Climate Change Financing landscape STRATEgy AND AAA FiNANCiNg MoNiToRiNg iDa Climate change iDa's leverage for climate change performance aaa work measurement CaS iDa-15 SFDCC WB and CiF: ppCR, SRep, Fip regional CC Rio markers Strategy geF gFDRR CF: CDCF, Bio CF, FCpF UnFCCC Climate Funds note: elements in gold indicate what is new under iDa 15 · Stronger emphasis on climate change risks in CaSs, with focus on disaster management, flood protection and natural hazard response · Starting operations under the ppCR; continued efforts and innovation in DRm and catastrophe financing (for example, malawi weather derivative) · Doubled core funding for energy efficiency and renewable energy, at $233 million (iDa-14 annual average was $103 million); further opportunities with SRep · Continued efforts toward improved forest and land management; further opportunities under existing FCpF and recently operational Fip · increased knowledge program: Six analytical and advisory assistance (aaa) products dealing specifically with adaptation and vulnerability to climate change during the first year of iDa-15 and 14 planned activities for FY2010 (compared with about two per year on average during iDa-14). 42 D e v e l o p m e n t a n D C l i m at e C h a n g e Expanding the pool of adaptation financing, the been signed, while 52.4 million Kyoto World Bank is fulfilling its role in monetizing compliance units (assigned amounts units, certified emission reductions (CERs) as trustee certified emission reductions, and emission for the Adaptation Fund. The fund's main reduction units) have been generated. As the source of funding comes from a two percent share international community searches for effective of proceeds on CERs issued to Clean and practical solutions to the challenge of Development Mechanism (CDM) projects. climate change, the World Bank is looking Depending on CDM project performance and through its 10 years of experience in carbon CER pricing, the Adaptation Fund could manage finance to analyze success and challenges in between $300 million and $600 million by 2012. working with carbon markets for development By early February 2010, the Adaptation Fund and global GHG mitigation. Emerging findings had already received 7.5 million CERs, of which are highlighted in Box 17. about 2.4 million have been monetized by the World Bank, raising close to $40 million. The Africa accounts for one-fifth of active projects inaugural sale (600,000 CERs) took place during in the World Bank's carbon finance portfolio the third week of May 2009, raising close to $10 (projects that are registered/finally determined, million. The World Bank's role as trustee for the in validation/determined or active in the World Adaptation Fund reflects the priority it attributes Bank pipeline), much beyond its 2­3 percent to supporting innovative approaches to meet share of projects in the CDM pipeline, adaptation needs in developing countries. reflecting the World Bank's concerted efforts to increase the region's access to the carbon market, expandi ng ca Rbon Ma Rke t s notably through land-based carbon opportunities and projects or programs bringing additional Facilitating the Development of Market-Based community benefits. Among ERPAs closed in Financing Mechanisms. The World Bank has FY2010, the World Bank contracted the continuously sought to strengthen the capacity first-ever CDM project in the Democratic of developing countries to benefit from carbon Republic of Congo (half a million CERs from a asset transactions and has played a catalytic role 4,200 hectare (ha) reforestation project) whose in building, sustaining, and expanding the carbon revenues will generate resources for carbon market. From pioneer activities in 2000 health, education, and agroforestry for local with the Prototype Carbon Fund (the first communities. The World Bank's BioCarbon Fund global carbon fund, with $180 million in played a pivotal role in helping the project capital), carbon finance operations at the World sponsor obtain loans from private firms to finance Bank have grown to $2.5 billion under up-front investments. This project is also management, through 10 funds pooling promoting South-South collaboration with a resources from 16 governments and 66 private similar initiative in Brazil. Another initiative is companies. The current World Bank carbon the partnership with the ECOWAS Bank, which finance portfolio consists of more than 200 the WBG is working with to establish the Africa projects and programs in 57 countries Carbon Fund for Biofuels and Renewable representing quite diverse technologies. As of Energy. At the same time, significant reforms in February 1, 2010, a total of 136 emission the CDM are needed to enable Africa realize its reductions purchase agreements (ERPAs) have lower carbon development potential. Stepping Up SUppoRt to Developing CoUntRieS 43 Box 17. cArBon finAnce: Building on experience And looking forwArd Carbon finance is an important revenue stream for greenhouse gas mitigation projects. it has so far played a catalytic role in leveraging other sources of finance in support of low-carbon investments. however, there is still room for improvement. as we enter the second decade of carbon finance, the World Bank is taking stock of its experience and progress to date to inform future development and implementation of the mechanisms. · the CDm and Joint implementation market mechanisms are important tools for private sector action on climate mitigation, which should be further encouraged. · there are significant developmental and social co-benefits associated with market mechanisms, and these need to be valued. · an obstacle to maximizing the leverage potential of carbon finance for low-carbon investments is insufficient predictability in the CDm. · a supportive enabling environment and overall investment climate is key to attracting CDm investments. · Some CDm decisions have resulted in limiting access to carbon revenues by low-income countries. · environmental integrity is essential for both the overall climate regime and the carbon market. however, the additionality requirement remains a challenge. · improvements to the CDm are needed to scale up emission reductions. measures are already being taken and must be sustained and stepped up. Progress has been achieved in developing due to extensive technical and capacity operations of the Forest Carbon Partnership challenges, additional capacity-building activities Facility and the Carbon Partnership Facility, and learning have been carried out. In turn, this is two new facilities focusing on piloting post-2012 nurturing a strong tradition of candid exchange carbon finance options (Box 18). The FCPF has and learning-by-doing, supported by South- grown to include 37 tropical and subtropical South transfers of experience. countries, compared with its original design target of 20. To support their REDD readiness Launched at COP-15, the CPF is developing a efforts, the target of the Readiness Fund (with pipeline of programs to assist developing countries about $115 million in contributions by 11 donor and economies in transition to implement countries) was raised to $185 million. Current programmatic and sector-wide carbon finance plans call for assessing 10 Readiness Preparation interventions with significant and durable impact Proposals and signing 15 readiness grants by the on emissions trajectories. The programs are linked end of FY2010. In parallel, the FCPF Carbon to Bank investment operations and other Fund ($55 million in pledges to date) works to instruments such as the CTF. Significant pilot performance-based transactions for CPF-related work is being carried out on countries that have readied themselves for developing methodologies for programs of activities REDD-Plus, reducing emissions against their to scale up the impact on investment decisions, reference scenario. As meeting the initially including for citywide applications--a potential not adopted indicators proved to require more time yet reached by the market. The latter will enable 44 D e v e l o p m e n t a n D C l i m at e C h a n g e Box 18. progress in implementing the new cArBon pArtnerships Forest Carbon Partnership Facility (FCPF) Carbon Partnership Facility (CPF) The Carbon Partnership Facility reducing emissions from deforestation cpf programmatic and sector-wide think big and forest degradation (ReDD) G as Flaring emission re ductions Larger scale, longer term, and bigger impact carbon finance interventions ener gy efficiency long-term impact a assist developing countries in reducing emissions Scale up impact of carbon finance on mitigation from deforestation and forest degradation, forest actions and poverty reduction through programs carbon stock conservation, sustainable of investment and sector-based approaches management of forests, and enhancement of forest carbon stocks (ReDD-plus): promote introduction of new methodologies and advanced technologies · Readiness Fund to support capacity building, *** including elaborating a ReDD strategy, launched in Dec. 2009, at Cop-15 (Copenhagen) developing a reference scenario, and setting · 7 million in Carbon asset Development Fund up a monitoring system (CaDF) for programs preparation (operational) · Carbon Fund to pilot payments for verified · 100 million in the Carbon Fund (became emission reductions operational in may 2010) Balanced participants Committee: 10 developing Substantial progress in developing a pipeline of countries, 10 financial contributors, observers operations, in combination with other sources of (indigenous peoples, private sector, civil society finance (iBRD, geF, CtF): organizations and intergovernmental organizations. · three Seller participation agreements signed: *** Brazil and morocco (Waste management), operational in June 2008: vietnam (Renewable energy) · $115 million in the Readiness Fund (target · more than 10 other programs under $185 million) preparation in all regions to cover ee · $55 million in Carbon Fund (target $200 million) (appliances, CFls, possibly leDs, buildings), Re (biogas, concentrated solar power, Rapid progress in implementation: geothermal), transport, waste management, · 37 countries selected and citywide approach for urban · 11 Readiness grants signed ($200,000) and transformation five Readiness proposal plans assessed for ghana, guyana, indonesia, panama, and Suriname · active discussion with other mechanisms (Un-ReDD, Fip) Stepping Up SUppoRt to Developing CoUntRieS 45 aggregation of GHG mitigation impacts across finance advisory product for financial institutions various sources and activities, expanding the World to build carbon finance capacity at local banks and Bank's already substantial contribution to opening facilitate more investment in smaller emission- new potentials for market innovation. So far, the reducing projects. The product's first client was the World Bank has submitted, alone or in Industrial Bank of China. The IFC is also actively combination, 52 new methodologies, 33 of which offering training to financial institutions interested have been approved (out of 124 globally) and seven in expanding their activity in the realm of carbon of which are currently being processed. finance, including, more recently, to institutions in Armenia and Georgia. The IFC's role in carbon finance focuses on providing services and financial products that e xpa n d i n g c ata s tRo p h e R i s k contribute to generating carbon revenues and Financing unlocking greater amounts of low-carbon investment. Carbon market participants still face The WBG has expanded its work on climate risk challenges addressing the need for up-front management and capital markets, broadening its financing of mitigation investments in addition to product offerings and working toward integration other business risks that may deter project of disaster risk management strategies at country sponsors or potential investors. By offering a or regional levels (Box 19). Over the past decade, carbon delivery guarantee product, the IFC helps there has been an increase in the intensity and maximize the value of carbon credits and enhances damage caused by natural disasters worldwide, the impact of carbon finance on low-carbon with developing countries suffering the most. The investment. The IFC has also launched a carbon WBG is offering two complementary lines of Box 19. innovAtion in cAtAstrophe weAther risk finAncing Contingent financing in Guatemala. Building on gFDRR support, in march 2009 the World Bank provided to guatemala a Dpl with a catastrophe deferred drawdown option totaling $85 million. this is a contingent credit line, disbursed upon the declaration of a state of emergency. in order to have an impact on disaster reduction, the condition for eligibility for a Cat-DDo includes an acceptable Disaster Risk management Framework. two other countries in latin america have requested Cat-DDos recently: Colombia ($150 million in December 2008) and Costa Rica ($65 million in September 2008). Weather derivatives in Africa. the WBg approved mediation for the first weather risk (drought) management derivative in malawi and has pilots (related to livestock) under development in Cameroon, ethiopia, and Kenya. During the 2008/2009 season, about 2,600 farmers in malawi were covered with a sum insured at $2.5 million. MultiCat Program. multiCat is a catastrophe bond issuance platform that gives governments and other public entities access to international capital markets to insure themselves against the risk of natural disasters. this is the first time a platform has been designed specifically to help governments from developing countries access affordable insurance coverage through the capital markets. in developing multiCat, the World Bank worked closely with the government of mexico (building on a gFDRR grant), one of the most experienced sovereign issuers in the catastrophe bond market. mexico's successful use of the multiCat platform to issue a $290 million series of notes is the first offering utilizing the new World Bank platform. 46 D e v e l o p m e n t a n D C l i m at e C h a n g e catastrophe risk financing products and advisory p ut t i n g c a p i ta l M aRk e t s to services to countries, as part of their broader W oR k Fo R c li Mat e - sM a Rt disaster risk management strategies: sovereign risk i n v e s tM e n t financing for direct budget support (to provide immediate liquidity should a disaster occur while The World Bank Treasury is engaging investors other resources are being mobilized) and advisory looking for climate-related, long-term services to strengthen domestic property sustainable investment opportunities in the catastrophe insurance markets (to facilitate capital markets. FY2009 saw the launch of the increased penetration of insurance in developing World Bank Green Bonds, which dedicate countries and access to re-insurance markets). funding raised for a specific development purpose Progress over the past 18 months included by supporting projects or programs that finance extension of index-based agriculture insurance to low-carbon or climate-resilient development help farmers hedge against weather risk. For activities in client countries. To date, more than instance, the successful scaling up of coverage $1.5 billion in Green Bonds equivalent has been under the Central American Weather Risk mobilized in the capital markets. Eighteen World Management Program in Nicaragua went from Bank Green Bonds have been issued in 15 inaugural transactions, covering 181 hectares of different currencies: for example, the first was in groundnuts crops in 2007, to 16,000 hectares Swedish kronor (inaugural issue in November covered for some 400 farmers with total value 2008 primarily for Scandinavian pension funds, insured at $7­10 million in 2009. Follow-up with two additional tranches later on), the second feasibility studies are in preparation for Belize, and third in U.S. dollars (April and December Bolivia, Grenada, Haiti, Jamaica, and Mexico. 2009, purchased among others by the State of California Treasury and European and American pension funds), the fourth in NZ dollars ( January 2010, designed for Japanese investors), and the fifth in Swedish kronor (February 2010 for European investors). As part of the bonds initiative Nikko Asset Management is cooperating with the World Bank on the World Bank Green Fund for the Japanese market, investing in World Bank Green Bonds. A second World Bank Green Fund targeting European and Middle Eastern institutional investors has also been launched. Examples of the types of projects supported by World Bank Green Bonds include new energy-efficient and solar thermal technologies in Montenegro, expansion of renewable energy in rural markets in Argentina, and biogas programs in rural areas in China. Other issuances of similar magnitude could be expected over the next year. Stepping Up SUppoRt to Developing CoUntRieS 47 Importantly, IFC direct investment in FY2009 has attracted more than $5 billion in cofinancing, or a leverage ratio of 5 to 1. Building on its experience in the hydropower sector, the IFC is now actively growing its financing of wind-power projects and expanding into the solar, biomass, and geothermal sectors. More generally, IFC investments in clean energy often open new markets by introducing innovative technologies or financial products--for example, a "merchant" wind power project in Chile in which power is sold on the spot market without price guarantees. Programs with local financial The IFC and Treasury are working with the P8, a institutions to support specialized financial products group of the world's largest pension funds, to for energy efficiency lending are now operating in explore ways in which institutional financing can be Russia, China, the Philippines, and several other directed to climate-friendly investments in countries, with commitments of more than $400 emerging markets. Recognizing the role that MDBs million in IFC funds. The IFC seeks to expand this can play in channeling funds and in financial business with financial intermediaries to the level of structuring, the WBG was asked to participate in $500 million in new commitments per year, the P8 group's meetings, and does so together with supporting more than twice the level of lending by selected other representatives of the financial other partner banks. New programs aimed at community. In March 2009, the IFC hosted the creating markets for financing energy efficiency and third summit meeting in Washington, DC. Given renewable energy through local banks have recently the somewhat different investment and risk profiles started in several Eastern European countries. of these pension funds, bilateral follow-up is taking place between the WBG and individual pension To expand further engagement of the private funds to identify tangible collaboration possibilities. sector, the WBG has continued developing The IFC has also engaged with Standard & Poors innovative application of its instruments to to develop the first global emerging markets Carbon address financial and other barriers, including: Efficient Index. Launched in December 2009 at COP-15 in Copenhagen, the new index aims to · Financing packages enabling the conversion encourage carbon-based competition among of anticipated carbon revenues into financial emerging-market companies and give carbon- flows (see examples from Chile and Brazil in efficient companies access to long-term investors. Annex 2). · A combined package of cleaner production leverAging privAte audits and financing by the IFC to sector resources implement recommendations for improving energy and resource efficiency through With the IFC in the lead, the WBG is continuing low-cost, high-return measures. Following a its engagement of the private sector for more successful pilot program, a $125 million sustainable investment. FY2009 was the first year facility is now available with a streamlined in which more than 50 percent (both in numbers process for approving related loans, and and dollar amounts) of IFC power projects programs are under implementation or being committed represented renewable energy projects. 48 D e v e l o p m e n t a n D C l i m at e C h a n g e developed in Eastern Europe, South Asia, A new strategic approach to the use of guarantees Latin America, and Africa. by the WBG, currently under design, aims at facilitating sustainable investment through more · An arsenal of concessional instruments through systematic detection of opportunities where such the CTF investment plans to scale up risk-management products can make a difference. participation of the private sector in climate This work is expected to enable scaled-up action with replication potential, notably applications of the guarantee instrument for a through efforts targeting direct lending to range of operations, including innovative "climate- renewable energy projects as well as expansion smart" investments that may involve higher risks. of lending by domestic financial institutions for A subnational finance group provided financing energy efficiency and renewable energy for projects with climate change co-benefits, such (Mexico, Turkey, Thailand, and South Africa). as water or wastewater services, bus rapid transit, · Risk-management products, such as and other public transportation with important technology risk or noncommercial risk energy efficiency elements. Three such projects guarantees, and their combination with were approved in FY2009. WBG project risk-mitigation instruments may help mobilize additional (long-term) MIGA's contribution focuses on supporting capital for climate action and may lower private sector investment in green infrastructure borrowing costs by mitigating (perceived) projects in developing countries. These performance and repayment risk, linked for investments expand renewable energy capacity, instance to currency, interest rate, or encourage resource conservation and distribution commodity price risk. Box 20 highlights efficiency, improve sanitation, and also generate recent examples of successful application of climate benefits. Since FY1990, MIGA has such products in Africa. provided guarantees totaling over $2.7 billion for Box 20. risk-mitigAtion instruments At work for low- cArBon growth in AfricA a $400 million iDa partial risk guarantee, along with a $200 million iDa credit for the nigeria electricity and gas improvement project, helps reduce ghg emissions through substitution of captive generation with cleaner grid-based generation. the guarantee mitigates the risk to international firms from supplying gas to the nigerian market (instead of exporting it all from the niger delta region). an increased use of gas in nigeria in turn reduces the use of inefficient back-up diesel generators. the african Rift geothermal energy Development program, a five-year $18 million regionwide multicountry facility to tap geothermal resources, provides regional technical assistance ($5 million from the geF with approximately the same amount in cofinancing, administered by the United nations environment programme, Unep) and offers partial insurance to project promoters/investors against the short-term, up-front risk of geological exploration through the Risk mitigation Fund ($13 million from the geF, administered by the World Bank). the Risk mitigation Fund offers contingent grants that would be dispersed if the geothermal project is not pursued. as opposed to a direct grant, this arrangement may support a greater number of projects; non-allocated resources (if projects are successful) can be reutilized for new projects on a revolving basis. projects are under preparation in Djibouti, eritrea, ethiopia, Kenya, tanzania, and Uganda. Stepping Up SUppoRt to Developing CoUntRieS 49 72 infrastructure projects in all regions of the increAsing innovAtive world. In FY2009, MIGA issued guarantees in excess of $120 million, facilitating investment in use And comBinAtion power distribution (Brazil), water treatment and of instruments wastewater management (China), and modernization and expansion of existing The scarcity of both development and climate production lines in such energy-intensive sectors as finance against the multitude of urgent needs in steel and aluminum, including state-of-the-art developing countries is propelling WBG efforts to technology transfer (Nigeria and Ukraine). leverage its menu of financing instruments, Through its noncommercial risk guarantees, including innovative use of and combination with MIGA has added value in green infrastructure climate-change-dedicated instruments. The WBG is development, including (a) mitigation of risks and working toward an effective combination of dispute resolution, often at the subsovereign level, instruments to reduce transaction costs in an keeping investments on track; (b) support for increasingly diversified landscape of climate finance projects that address resource scarcity and waste and to maximize synergies between instruments, each issues in middle-income countries such as China, addressing specific barriers, risks, or needs (see Annex where the prospect of working with untested local 5). The WBG has a long tradition of blending GEF governments often inhibits investment; and (c) resources with IBRD/IDA or IFC regular longer loan tenors and reduced costs, including for instruments. More innovation has taken place over projects in frontier markets. the past few years. Box 21 details a recent example Box 21. Building on synergies Among the gef, montreAl protocol funding, And cArBon finAnce to scAle up climAte Action the india Chiller energy efficiency project seeks to improve energy efficiency of building chillers (a major source of power demand) and accelerate phasing out of ozone-depleting substances by providing an incentive to overcome the up-front capital cost barrier of replacing and upgrading older CFC-based chillers with more-efficient non-CFC-using ones. Despite a potential 40 percent improvement in energy consumption, most building owners/managers have not embraced early timely replacement of outdated chillers, given higher up-front capital requirement, perceived technology risks, and high opportunity costs. the objective is to replace a total of 370 chillers (out of a total market size of about 1,200 chillers) over three years, with an average incentive of 20 percent, leading to an estimated (direct and indirect) 13 mtCo2e reduction in ghg emissions over 20 years. the project draws on an innovative combination of the geF and multilateral Fund for the implementation of the montreal protocol resources (up-front subsidy for early adopters of new chiller technology) and carbon revenues (contributing to a revolving fund to support replacement of additional chillers). this project illustrates how a limited up-front provision (less than 10 percent) of highly concessional resources (mostly from geF) can potentially mobilize a much larger amount of resources (total cost of replacement estimated at $90 million) with greater transformation impact (more than 25 percent of chillers are targeted), building on synergies and maximizing effectiveness of resource use and increasing their leverage. a similar project operates in the philippines (with KfW purchasing the carbon credits) and is under consideration in indonesia. 50 D e v e l o p m e n t a n D C l i m at e C h a n g e (already being replicated) of an innovative improving monitoring combination of several dedicated environmental sources of funding to support programs with multiple of finAnciAl flows benefits, thereby maximizing the effective use of resources, their leverage on public and private Throughout 2009, the WBG has maintained a domestic investments, and their impact on climate dynamic dialogue with the OECD Development action. An analysis of practical experiences in Assistance Committee (DAC) and the blending and packaging different instruments, as well UNFCCC Secretariat on the issue of monitoring as difficulties in doing so, and in providing and reporting climate finance. After a trial period operational guidance has been prepared. during 2005­2007, the Rio Marker for climate change (focusing on mitigation) was approved for inclusion in the OECD DAC data collection With new climate finance instruments and system and made mandatory from 2010. An mounting experience in this field, DPOs are adaptation marker is being introduced for use by emerging as potential integrating platforms. A all OECD DAC countries. The WBG series of programmatic energy sector DPLs in participated in the work on Rio Markers, as well Turkey illustrates a successful leveraging of CTF as prepared the paper Monitoring and Reporting resources to promote inclusion of sustainable on Financial Flows Related to Climate Change, development principles, including climate with inputs by OECD DAC and the UNFCCC change considerations, in sectoral policies and Secretariat. The paper provides a comprehensive programs (Box 22). Three DPOs with a picture of various types of financial flows for CAT-DDO, totaling $300 million, were climate action, with the focus on the relationship approved in FY2009 in Colombia, Costa Rica, between public climate finance and official and Guatemala, increasing support for weather development assistance, and it provides risk management. This new generation of DPOs recommendations for improved transparency and tackling climate change together with earlier consistency in reporting. It complements the operations, such as the FY2007 Morocco continued production of an annual report on the Energy Sector DPL, the FY2008 Himachal State and Trends of the Carbon Market. Pradesh (India) DPO (assisting the state government in building its capacity to adapt to the melting of Himalayan glaciers triggered by The Climate Finance Knowledge Platform, climate change), and the FY2008 Agriculture currently under development through a DPO in Ghana, are setting an example of a partnership between the UNDP, the UNFCCC developing country's efforts to integrate climate Secretariat, and the WBG, is expected to play an risk management into the broader economic important role in assisting developing countries, growth and poverty reduction agenda. NGOs, and civil society to navigate the complex-- and often compartmentalized--existing system of available financing for climate actions. It will further include examples of how an enabling policy environment can leverage public and private funds and present successful cases of bundling different types of grant and concessional funds to leverage commercial resources. Stepping Up SUppoRt to Developing CoUntRieS 51 Box 22. policy And institutionAl reforms help scAle up the impAct of climAte finAnce instruments Morocco Solid Waste DPL: Connecting carbon finance and sectoral policy reform. the Dpl supports the government of morocco in implementing its program of reforms aimed at improving the financial, environmental, and social performance of the municipal solid waste sector. Carbon finance was introduced at an early stage to improve financial sustainability and promote sound environmental practices. additional resources resulting from the sale of certified emission reductions generated by investment in landfill gas elimination or reuse projects creates an incentive for municipal investments in such projects. Fonds d'equipement Communal (FeC), the municipal bank in morocco mandated to help municipalities develop CDm projects and access carbon markets, received World Bank assistance to develop a CDm program of activities. approved by the CDm executive Board in 2007, the program facilitates CDm access for individual project developers and helps scale up carbon finance. FeC signed the first Seller participation agreement for the Carbon partnership Facility in october 2009. FeC will coordinate the program of activities and sell the CeRs to the CpF through a 10-year purchase contract, running much beyond 2012. the program could attract up to 11 landfill gas projects--including those developed by major moroccan municipalities during the first phase of the reform program (2008­ 2012)--and generate average emission reductions of up to 7.6 million tCo2e over 10 years. this operation illustrates the synergies between World Bank lending and carbon finance activities with the packaging of different financing instruments to support a policy reform and an investment program in the solid waste sector. the involvement of a local bank to coordinate the program and channel the carbon finance revenues could help leverage more financing for the sector. Turkey DPL and CTF Investment Plan. the turkey environment Sustainability and energy Sector Dpl is the second project in a programmatic series that commenced with the programmatic electricity Dpl operation approved in June 2009. the government of turkey requested that the scope of the First programmatic electricity Dpl be expanded to cover climate change and environmental management. the broad objective of this program is to balance socioeconomic development with environmental protection by (a) integrating principles of sustainable development, including climate change considerations, in sectoral policies and programs of key development sectors, and (b) improving the effectiveness and efficiency of environmental management processes and the supply and consumption of energy. this energy efficiency/energy security/environment nexus reflects the energy, climate, and environmental goals of the european Union (eU) and effectively contributes to turkey's eU accession process. the CtF investment plan for turkey will provide and leverage additional resources to support expansion of energy efficiency, notably through intermediation with domestic financial institutions to promote the engagement of the private sector. these two examples are part of a much broader energy reform, for which turkey has utilized the World Bank's support strategically through a combination of instruments to put growth on a sustainable path. 52 D e v e l o p m e n t a n D C l i m at e C h a n g e looking forwArd Recognizing the potential of market mechanisms to commit increasing amounts of capital to sustainable investments, the WBG will continue innovating The WBG will continue to work toward with carbon finance and capital markets. With increased mobilization of climate-dedicated growing engagement on disaster risk management resources and fulfillment of the Copenhagen and climate adaptation, there are opportunities to pledges by developed countries. The WBG will further expand coverage, depth, and efficacy of continue emphasizing that climate finance must catastrophic risk financing. Future work will include complement and strengthen, not erode, further exploring and articulating linkages between development assistance, as well as working with the suite of existing WBG instruments and the OECD DAC and UNFCCC Secretariat to emerging climate finance--pubic and market-based. improve monitoring and reporting of climate- In the case of REDD-Plus, for instance, capacity- related financial flows. Our top priority will building grants from the Readiness Fund of the remain the replenishment of IDA-16 for core FCPF can be followed by concessional and (non-climate-related) development assistance, innovative finance, notably through the FIP, to while emphasizing the importance of support the creation of an enabling environment and complementary financing for adaptation as key required investment, with further performance-based for sustaining poverty reduction outcomes in a incentives through the Carbon Fund of the FCPF. more hostile climate. As climate finance seeks to Similarly, pipeline operations under the CPF will catalyze development finance for achieving combine carbon finance and other sources of finance country-led sustainable development outcomes, (IBRD, GEF, or CTF) to enhance the impact of an increase in IBRD capital will be important for carbon finance on supporting sustainable helping WBG clients undertake the sustainable development investment. Attention will be given to development investments they will need. sharing lessons on such topics as innovative governance, efficient access to financing, and maximization of the leverage impact of dedicated climate funding that will be needed under any future funding scenarios. Stepping Up SUppoRt to Developing CoUntRieS 53 4. IMpleMentatIon pRogReSS: FoSteRIng InnoVatIon, knoWleDge, anD CapaCIty · the WBg broadened its reach to mobilize additional concessional and grant financing to catalyze the introduction and transfer of emerging energy sector technologies · the WDR 2010 on Development and Climate Change, with a series of flagship global, regional, and country reports · a suite of global common goods: Climate Change Web and Data portal, guidance notes, high Demand training programs SuppoRt aCCeleRateD The WBG continues its partnership with the GEF in pioneering RE and EE work. The DeVelopMent anD GEF-WBG partnership has invested significantly DeployMent oF neW in the pre-commercial development of solar teChnologIeS thermal power over the years, with another two new projects soon to become operational in In support of country adaptation priorities, the Egypt and Morocco. The WBG is supporting the WBG is investing in science and technology GEF technology needs assessments (TNAs) by development, engaging both the public and helping to develop and implement new TNA private sectors to introduce efficient agricultural methodologies. In parallel, the IFC continues to inputs (improved varieties and seeds, fertilizers) actively engage in both introducing and scaling and knowledge delivery systems. The Consultative up the deployment of new RE technologies, Group on International Agricultural Research through investments such as a grid-connected (CGIAR), in cooperation with the Earth Systems solar cell facility in the Philippines, a fuel cell Science Partnership, has initiated a Challenge project in South Africa, and a biomass power Program on Climate Change, Agriculture, and technology in Brazil. The pilot $40 million IFC/ Food Security that focuses on vulnerability GEF Earth Fund is building partnerships with reduction and capturing climate change-associated the private sector to promote clean technology, opportunities in the Indo-Gangetic plains, East with $7.8 million invested in five projects to date Africa, and West Africa. that have leveraged another $37.2 million. 54 D e v e l o p m e n t a n D C l i m at e C h a n g e After a successful initial experiment with donor technology, including a joint WBG-IEA funds, the IFC is now investing from its own workshop on CCS held in September 2009. account in early-stage clean-tech companies and private equity funds. Investments in early The World Bank has undertaken extensive stage climate-friendly technologies are centrally analytical work and consultations to identify barriers coordinated with overall targets, across all sectors to technology commercialization and possible and industries. The IFC's Cleantech Investment programs to address them.10 The Bank is using its Program supports the growth of early-stage clean core competencies, leveraging past technology technology companies in developing countries successes in agriculture and vaccines, and partnering with initial investments in energy efficiency in with complementary organizations to contribute to China and Russia, as well as in clean drinking global efforts in this area. The Bank has also water in India. The IFC is also engaged in an developed programs to gather and disseminate to investment strategy across the solar value chain, developing countries objective, cutting-edge investing in materials, manufacturing, solar knowledge on key emerging technologies (for applications, and power generation (Box 23). example, concentrated solar power, CCS, and smart grids). Among the Bank's technology acceleration A new multi-donor trust fund for supporting efforts, InfoDev launched the Climate Technology the introduction of carbon capture and storage Program in September 2009. The program explores (CCS) technologies has been established at the the feasibility of climate technology innovation World Bank and will provide technical assistance centers in developing countries as a way to stimulate to clients. This work further complements the locally relevant climate technologies and harness WBG's long-standing cooperation with the economic opportunities at the SME level, with its International Energy Agency (IEA) to enhance first centers already under development in Brazil, international collaboration on clean energy India, and Kenya (see infodev.org/climate). Box 23. new investment under the sun: the ifc pushing solAr the iFC's $50 million equity investment and $25 million loan to Russian polysilicon producer nitol Solar in southeastern Siberia promotes solar cell technology, thus contributing to the growth of the country's renewable energy sector. nitol Solar's projected output of 3,700 tons annually equals about nine percent of global polysilicon supply as of 2007, or about 300 mW of solar power per year. iFC investments of $110 million in two solar pv manufacturers in China provided critical support for overcoming the severe growth constrains imposed by the 2008 financial crisis. With the iFC's help, the two companies have been able to move forward, with aggressive plans to launch a new line of highly efficient solar modules, making use of its cutting-edge, proprietary crystalline silicon technology, and with plans for a new solar thin film facility. this contributes to making solar energy a more cost- competitive power alternative--part of the iFC's overall strategy to help solar industry players achieve "grid parity" with conventional power sources without subsidies. leveraging $1,355 million from the private sector, the iFC's investment also helped to create new jobs, promote economic growth for the frontier regions, and contribute to global Co2 reduction. 10. technical briefing accelerating Commercialization of advanced energy technologies for Developing Countries was delivered to World bank executive Directors on January 27, 2009. Stepping Up SUppoRt to Developing CoUntRieS 55 Moving forward, growing experience in using new knowledge for informed decision supporting new technologies underscores the making. There is an effort to bridge the WBG's comparative advantage in deployment knowledge gap that exists in adaptation in and scale-up of relatively tested and mature developing countries through the Global Expert technologies, where the main barriers are Team on Adaptation to Climate Change financing, market penetration, and business (GET-CCA) and the PPCR. The WBG is growth, as opposed to an early R&D stage. The focusing on increasing climate change awareness WBG's efforts in the technology area will be and the skills of development practitioners. focused accordingly, expanding its partnership with the GEF, which is better positioned to take k no Wl e d g e a n d po l i c y on early R&D risks. Reflecting the continuing R e s e aRc h at t h e g l o b a l l ev e l disparity between available climate financing and ambitions for new technology research, The 2010 WDR on Development and Climate development, and transfer to developing Change was launched on September 15, 2009. It countries, emphasis should be given to supporting points to massive funding requirements for early-stage deployment of technologies like CCS mitigation, adaptation, and technology that dwarf in interested developing countries and bringing official development assistance of roughly $100 down costs rather than R&D itself. Through the billion a year. Moreover, current efforts to CIF/CTF, the WBG is already supporting mobilize funding for mitigation and adaptation technology scale-up with the help of innovative stand at less than five percent of projected needs. financing, a process that is expected to expand as The report shows that a "climate-smart world" is the SREP and FIP funds gain momentum. possible if the world decides to "act now, together and differently." The World Bank is launching a Information and communication technologies follow-up flagship analytical work and a (ICT) emerge as an area of growth and knowledge platform on Infrastructure and Climate innovation for enabling climate-smart solutions Change to fill knowledge gaps on key economic in sectors like water, transport, and electricity. and operational issues that climate change raises The WBG should build on its strength in for infrastructure. assisting clients to set up the policy environment for the enabling ICT technologies and making The Development Economics Group has also applications like remote sensing and mobile engaged in systematic investigations of critical applications more real and tangible for a client's cross-cutting as well as sector- and country- routine decision making and economic activities. specific climate change issues. Examples include development work with the FAO and the UK scAling up Foresight Initiative on the climate change policy reseArch, impacts on agriculture, including potential sector shifts and the impacts on food self-sufficiency. knowledge, And Other research topics address the implications of cApAcity Building potential border tax adjustment policies, including carbon leakage, and the structural Knowledge and capacity building are crucial in impacts of international mitigation policies on enabling investments, markets, and technologies. developing country manufacturing. The WBG has massively stepped up its analytical work across sectors, issues, and countries and is 56 D e v e l o p m e n t a n D C l i m at e C h a n g e The importance of adaptation in World Bank change on water sector investments and to programs is reflected in a series of global develop screening methodologies and tools. flagship reports produced over the last year, · Emerging work on health and climate change which have helped client countries improve points to the additional cases of diarrhea and their understanding of science and the malaria in the developing world, the impact economics of climate change adaptation, as well of extreme rainfall and temperature events on as possible solutions and tools. the incidence of diarrhea, malnutrition and mortality in young children in Sub-Saharan · The Economics of Adaptation to Climate Africa, and increased vector-borne disease Change (EACC) global report, released in burdens in South Asia, including in September 2009, identifies development as a previously unaffected regions. critical imperative in scaling down adaptation financing needs. The global report estimates · Analysis of the linkage between climate that the cost for developing countries to change and human rights is being pursued in adapt to climate change in a 2-degree- close collaboration with partners, such as the warmer world would be $75­$100 billion per UN Office of the High Commissioner for year during the period 2010­2050. Seven Human Rights. country studies--Bangladesh, Bolivia, Analytical work on low-carbon growth has focused Ethiopia, Ghana, Mozambique, Samoa, and on understanding CO2 emissions growth drivers, Vietnam--as well as the synthesis report, distributional impacts of mitigation policies, and were completed in the spring of 2010. financing instruments and policy options to affect · Social Dimensions of Climate Change: Equity them, as well as on accelerating technology and Vulnerability in a Warming World explores innovation. Renewed attention is given to policy the role of equity and socially differentiated work on energy subsidies and associated social vulnerabilities, migration, conflict, gender, impacts, and how they can be addressed in a way indigenous knowledge, and local institutions that improves economic and social welfare while in adaptation. supporting low-carbon development. New work on carbon footprinting and food systems analyzes · A report on Adaptation in Agriculture possible trade impacts of current GHG accounting addresses an area of growing importance, methodologies, which may put developing looking to develop a state-of-the-art countries at a disadvantage. assessment of agricultural carbon sequestration knowledge, evolved In parallel, the WBG is moving to improve data methodologies, and emerging technologies to availability and indicator reporting. The annual overcome constraints in soil carbon trade. Green Book publication has been augmented in · Biodiversity, Climate Change, and Adaptation, 2009 to offer climate change­related data on launched at the IUCN Congress this year, cities. The WDR 2010 report widely publicized reviews the Bank's biodiversity portfolio, selected global and country-specific indicators on emphasizing how activities primarily energy-related emissions and carbon intensity; contributing to biodiversity can also support land-based emissions; total primary energy climate change adaptation and mitigation. supply; countries' exposure to natural disasters and sea-level rise; land, water, and agriculture, · Water and Adaptation to Climate Change: including projected physical and agricultural Implications on Investment and Project Design impacts by 2050; and the wealth of nations, set the foundation for a larger programmatic including natural capital. initiative to assess the impact of climate Stepping Up SUppoRt to Developing CoUntRieS 57 Regi on- and count Ry-s pe c iF ic extend similar support to its private sector clients. a nalyti cal WoR k All World Bank Regions have substantially scaled up analytical work responding to the needs of The Bank Group works closely with client their clients. Highlights are summarized in Box countries to inform and support national, sectoral, 24; details on region-specific analytical work are and local development policy and planning and provided in Annex 2. Box 24. wBg regionAl studies on climAte impActs And strAtegies the World Bank works, in collaboration with developing country governments and research institutions, on a suite of regional studies on climate impacts and strategies for building resilience. a few are mentioned here: Climate Change and Africa's Water: What are the Operational Implications? focuses on the economic impact of climate change and adaptation costs and benefits in ethiopia, ghana. mozambique, South africa, and Sudan. ongoing work also addresses climate change impact on smallholder agriculture in Kenya and related options for carbon sequestration, as well as coastal adaptation in Senegal. in the transport sector, the report Making Transport Climate Resilient builds on case studies in ethiopia, ghana and mozambique,to identify potential engineering, planning, and resource impacts on road development and maintenance in Sub-Saharan africa. Meeting East Asia's Growing Energy Needs in a Sustainable Manner Flagship Report is now available, and a regional study on Climate impact and adaptation in asian Coastal Cities is under way with the asian Development Bank. the poverty Reduction and economic management network (pRem) is undertaking a program on economic policy and Climate Change in apeC economies consisting of three major studies: Using trade and investment policies to promote Climate Friendly technologies (China, indonesia, thailand, and vietnam); the impact of extreme Climate events on the poor and policy Responses (indonesia, mexico, and vietnam); and Using Fiscal policies to Respond to Climate Change. Adaptation to Climate Change in Europe and Central Asia Flagship Report is also available and a follow- up pilot program on national adaptation to Climate Change aims to help clients understand likely climate change impacts on vulnerable subregions and develop cost-effective adaptation approaches. Low Carbon, High Growth, Mitigating and Dealing with Climate Change in Latin America and Caribbean Flagship Report focuses on the development and climate change nexus, while another pioneering study explores the social impacts of climate change. The Economic and Social Impacts of Climate Change on Agriculture in Middle East and North Africa: A Regional Analysis aims to improve the understanding of the regional impacts of climate change on agriculture in order to improve the design of adaptation initiatives and promote their integration into sector policies and programs. Climate Change Impacts in Drought and Flood Affected Areas in India informs adaptation choices in india, while similar analysis in Bangladesh explores the implications of climate change for food security and adaptation strategies for Bangladesh. 58 D e v e l o p m e n t a n D C l i m at e C h a n g e Underscoring the nexus between climate change specific needs and priorities of each country. and sustainable economic growth, low-carbon Collectively, analysis covers energy efficiency in growth studies in seven countries--Brazil, China, end-user applications, the power sector, transport, India, Indonesia, Mexico, Poland, and South land use, and bio-energy, complemented by policy Africa--are being undertaken in close collaboration and implementation advice (Box 25). Three studies with the respective governments, agencies, and local were completed in 2009 and four more are expected stakeholders. These studies are targeted to the to be finalized in 2010. Box 25. low-cArBon growth country studies progrAm Studies in China, india, indonesia, mexico, poland, and South africa have reinforced some broad messages (for example, the need for renewable energy and energy efficiency support) and also returned some surprises (for example, low-cost transport options and cogeneration investments). the studies have also fostered in-country ownership of mitigation strategies. Some highlights are as follows: in Brazil, the impacts are evident. Detailed sector methodologies are in use, yielding technical results, improved information-sharing across sectors and within the public sphere, and stronger linkages between technical research groups and corresponding government ministries and agencies. the study was delivered to the Brazilian government in november 2009 and disseminated through 2010. China's study provides policy support to better understand renewable energy and energy efficiency targets and low-carbon growth. Final outputs from analytic work for three policy papers on renewable energy, power dispatch efficiency, and cement sector efficiency were delivered in october 2009. india's study reveals that the country has a relatively low-carbon economy. the priority remains to meet energy demand and sustain high economic growth despite energy shortages, problems with access, and poverty concerns. the Indonesian study offers insight into fiscal and financial policy instruments--and tax and spending policies--used to promote movement toward a lower-carbon economy, consider strategic investment approaches and financing sources, and improve fiscal incentives in forestry. Mexico's study provides a body of knowledge about prospective low-carbon "wedges," specific low- carbon projects, and the continuing policy reform agenda. the primary energy savings identified arise from cogeneration and improved industry energy efficiency. the untapped mitigation potential in the forestry sector is highlighted. the Polish study aims at formulating an integrated strategy for ghg mitigation on the basis of a methodology that integrates detailed "bottom-up" sectoral work with "top-down" macroeconomic modeling. South Africa's study is helping to create an environment for implementing energy efficiency and demand side management (DSm) by reviewing long-term mitigation scenarios and developing implementation strategies in key sectors. Stepping Up SUppoRt to Developing CoUntRieS 59 t ool S , Metho Dolog Ie S, began measuring the GHG footprint of its real an D g uI Dan C e note S sector investments in February 2009 and is now developing methodologies and tools to be applied The WBG has been developing a wide range of to financial intermediaries and advisory services. analytical approaches and instruments to inform In parallel with the IFC, the World Bank has its policy dialogue, technical assistance, and initiated a number of complementary initiatives, financing at the project, sector, and country level: including (a) development of citywide approaches for assessing the GHG footprint, including a · The Climate Change Data Portal (http:// common GHG Index for cities, and assisting sdwebx.worldbank.org/climateportal) has cities to generate carbon finance revenues under been developed to provide World Bank staff the CDM; (b) technical inputs to a GEF-led and development practitioners with access to process aimed at improving ex-ante estimates of climate change and climate-related spatial urban transport project emissions; and (c) datasets and tools for operationalizing development of project-specific approaches in the climate resilience and low-carbon energy, transport, and forestry sectors, as part of opportunities in development projects. This lending operations in EAP, AFR, and SAR. portal also serves as a launching point for region-specific data on land use, the World Looking ahead, it is envisaged that the ongoing Bank's screening tool "ADAPT," and work at the IFC and the World Bank will help UNDP's Adaptation Learning Mechanism. identify applicable methodologies and tools for GHG analysis taking into account the nature and · Guidance notes to help with climate risk scale of activities, further the understanding of the management and adaptation in development GHG implications of the respective portfolios, and projects have been developed for a number of inform the dialogue with clients in accordance sectors, including a suite of analytical tools for with the principles agreed in the SFDCC. The understanding the role of local institutions in IFC and World Bank are also initiating analytical climate change adaptation, new transport work to explore the role of carbon pricing in sector assessment tools to reflect external costs analysis of project feasibility, with a particular focus and co-benefits, a series of eight guidance on emission-intensive projects and sectors. notes to assist with "climate proofing" in agriculture and natural resource management, and gender dimensions of climate change. c apa c i t y bu i l d i n g · Extensive legal analysis is being carried out on Climate change competencies are being built and all aspects of the WBG's climate change-related the knowledge base enhanced within the WBG. work with complex legal implications, devoted There has been a rapid growth in climate change- to legal issues that may potentially arise. related seminars with the total monthly average of The WBG is advancing pilot work on GHG events doubling every year for the last three years, analysis of its investments.11 As the methods for from five (2007) to 11 (2008) and 20 (2009). GHG analysis for the World Bank differ from Dedicated new programs were developed for staff those for the IFC, concurrent and coordinated with the stated objective of strengthening the WBG's work is carried out in each institution. The IFC internal capacity to provide quality advice and timely 11. the SFDCC provided for pilot work on ghg analysis meant to (a) build staff and client capacity to understand and apply the analytical tools to prepare for a carbon-constrained future; (b) gather information to better understand the implication of possible new approaches; (c) identify low-cost mitigation opportunities across operations; (d) facilitate analysis of alternatives; and (e) help promote efficient use of emerging climate funds. Such work should be demand- driven, undertaken as an analytical exercise, and not used for decision making. 60 D e v e l o p m e n t a n D C l i m at e C h a n g e support to our clients across sectors and regions. They the service of CF-Assist, the Bank's corporate target WBG practitioners and leaders as well as program for carbon finance capacity development, development partners outside the Bank Group: which designs and implements programs focused on strengthening regulatory institutions, setting · Climate Change for Development up procedures, and assisting in project portfolio Professionals (CCDP) is a comprehensive development. To date, it has reached more than knowledge, learning, and capacity-building 3,000 professionals across 20 countries. In initiative for WBG staff. With more than parallel, legal capacity-building efforts focus on 4,000 participant hours delivered in training how climate change either triggers or intensifies sessions and 1,300 in knowledge-sharing the threats faced by developing countries. events, this initiative is furthering staff skills and improving their understanding of climate The IFC Advisory Services makes significant change complexities and challenges. contributions to addressing climate change. Relevant advisory interventions include those · The Sustainable Development Leadership that improve the enabling environment for Program (SDLP) targets WBG senior climate-friendly approaches by the private sector, management and team leaders. Its objective as well as direct capacity-building support to is to develop a common view on firms and financial intermediaries. Advisory sustainability and ensure literacy on services focusing on climate change are projected cutting-edge topics, with several modules on to increase from less than five percent of total climate change. More than 300 leaders have advisory project expenditure in FY2009 to nearly been trained and an additional 50 will 20 percent by FY2013. Box 26 provides an participate in the next cohort. Results are example of such services in the ECA region. already visible in the consideration given to sustainability and climate change issues across operational WBG units. South-South knowledge sharing has emerged as a priority. To promote learning across regions Responding to client demand, the WBG has facing similar challenges, the World Bank Institute initiated a number of country-specific and (WBI) has initiated a series currently focusing on regional technical assistance programs. a system of rice intensification for "producing more Collaborative analytical and advisory work with with less water and farm inputs for adaptation." In clients contributes to capacity building and is 2009, the Global Development Learning Network already influencing national climate action plans, linked practitioners and government officials from exemplified by partnership with Turkey and a Africa (Kenya, Madagascar, Rwanda) and South program on climate-resilient cities with pilot Asia (India), enabling them to synthesize and implementation in China, Indonesia, and share effective practices for reducing the adverse Vietnam. Other examples include support to the agricultural impacts of present-day extreme climate Ministry of Finance in India and a regional variability. South-South exchange is also technical assistance program for countries in the undertaken by the regions and is a priority activity Middle East and North Africa, including for the GET-CCA. knowledge exchange and identification of project ideas. Client countries continue to actively seek Stepping Up SUppoRt to Developing CoUntRieS 61 Box 26. An integrAted investment-Advisory plAtform for tAckling climAte chAnge in ecA through extended partnerships, the iFC has implemented an integrated investment-advisory platform for addressing climate change in Russia (source of 60 percent of the region's ghg emissions): · providing advisory services and financing to financial institutions on developing and rolling out energy efficiency lending products and to real sector clients seeking to improve energy efficiency and reduce ghg emissions and other waste · Joining forces with the government, the iBRD, and the european Bank for Reconstruction and Development to promote new policies that stimulate private sector investments in energy efficiency, cleaner production, renewable energy, and, most recently, residential energy efficiency · engaging with a broad range of stakeholders to provide sector benchmarking and disseminating best practices--educating the market about the benefits of investments in energy efficiency and cleaner production · Building the capacity of local technical experts to effectively cooperate with financial institutions, companies, and governments on their climate change-related pipelines and programs Similar programs are being introduced in Ukraine (cleaner production and residential energy efficiency), the Balkans (renewable energy), and the Caucasus (energy efficiency finance). Moving ahead, climate change is increasingly with a greater emphasis on the integrated emerging as a strategic knowledge priority, management of the emerging vast body of climate building on the wealth of analytical and capacity- change-related knowledge, priority will be given to building work. Future knowledge and developing customized knowledge and capacity- capacity-building programs will be closely aligned building products that can be quickly translated into with the new Knowledge Agenda, with particular climate action and integrated into operations. Work focus on joint learning and working with developing will also expand on developing stronger monitoring country institutions, sharing of best global expertise, and evaluation systems, allowing for real-time and South-South knowledge exchange. Together learning and assessing operational applications. 62 D e v e l o p m e n t a n D C l i m at e C h a n g e Stepping Up SUppoRt to Developing CoUntRieS 63 5. IMpleMentatIon pRogReSS: global IMpaCt thRough StRategIC paRtneRShIpS · the growing partnership among mDBs is exemplified by the Climate investment Funds, while the Climate Finance Knowledge platform demonstrates the Un system-wide effort · Regional partnerships and a dialogue with mayors on cities and climate change show broad range of engagement · an enhanced communications strategy is reaching out to external and internal audiences No one institution or group of stakeholders can members' development needs. In addition to a address the climate challenge alone. The World body of sector- and country-specific analytical Bank Group is therefore working to broaden and work, the WBG has provided strategic advice on deepen a variety of partnerships with an as-needed basis regarding Sub-Saharan governments, sister agencies, the private sector, Africa's options for advancing its developmental and civil society in all aspects of climate action. objectives in the face of climate change. The Particular attention is given to building World Bank is engaged with other developing collaborative relationships with developing country groups--including the least developed country governments and stakeholders and to countries and small island developing states-- addressing the impacts on the poorest and the that are among the most vulnerable to climate most vulnerable groups, while remaining neutral impacts and also capacity-constrained. In to the negotiation positions of various member partnership with other development agencies, the countries. The examples below are indicative of WBG facilitated and supported the government the overall approach of the WBG to supporting of Nepal in hosting the first conference of South global climate action. Asian countries on climate change, which concluded in a joint statement endorsed by the Led by the Africa Region, the WBG has governments of Afghanistan, Bangladesh, India, supported the Africa Union to understand and Kyrgyz Republic, Maldives, Nepal, Pakistan, and address climate change issues in the context of its Sri Lanka (Box 27). 64 D e v e l o p m e n t a n D C l i m at e C h a n g e Box 27. kAthmAndu to copenhAgen: A regionAl climAte chAnge diAlogue the government of nepal, with the support of the World Bank and other donors, hosted the 2009 South asia regional ministerial climate change conference--"From Kathmandu to Copenhagen: a vision for addressing Climate Change Risks and opportunities in the himalaya Region." the conference provided a forum for the countries of the South asia himalayas and other countries in the region to share knowledge and experience about common climate change risks and the development opportunities that could be fostered and develop a common message to the global community regarding the climate change challenges faced by the region. the Kathmandu conference concluded with a joint statement that South asia, including the hindu Kush­himalayan region, is a climate change hot spot. the declaration further affirmed the need for the countries in the region to accelerate sustainable social and economic growth and to come together to enhance their climate change responses through capacity building, the generation of required data, and adaptation at all levels. it called for the provision of special strategies and financial support to address the specific vulnerable communities of the region. Responding to a call by the government of present the wider UN system as "Acting as One on Indonesia to help nurture a dialogue among Climate Change," including a joint UN thematic ministers of finance, economy, and development side event in Copenhagen on climate finance. In on climate change issues, the World Bank their function as co-conveners of the UN-wide Group has continued the Bali Dialogue Series. working group on climate finance, the WBG and The four events organized so far, linked to annual UNDP, in close collaboration with the UNFCCC and spring meetings, focused on various aspects Secretariat, are developing a web-based Climate of financing needs and options for climate action, Finance Knowledge Platform (see Chapter 3). The adaptation, and mitigation. These events provided WBG is contributing to the UNEP-led effort to a forum for finance, economic, and development develop a Green Economy Report that seeks to ministers to engage in informal and open support and advise governments on green discussions, raise awareness, and increase investment approaches across a number of sectors. understanding of challenges, solutions, and strategic choices. Strategic partnership with the GEF continues. As of FY2009, the WBG had mobilized $4.29 The WBG is actively participating in the UN's billion from GEF since its inception, with 40 system-wide effort--initiated by the UN percent concentrated in the climate change focal Secretary-General--to provide a coordinated area. This has leveraged close to $4 billion in response to climate change. The WBG formed IBRD and IDA investments. The IFC has part of the Climate Change Team that advises the mobilized nearly $2 billion in private sector UN Secretary-General on matters related to the additional investment (leveraging GEF 1 to 13). role of the UN system, helping to conclude a The WBG, as both trustee and implementing successful new global agreement on climate agency of the GEF, had joined other organizations change. The WBG has engaged in the initiative in support of a strong GEF-5 replenishment and spearheaded by the UN Chief Executive Board to will continue to facilitate greater leveraging of Stepping Up SUppoRt to Developing CoUntRieS 65 GEF resources through a wider use of committee, with a representative from each bank, programmatic approaches packaged with other serves as a conduit of the MDBs, functioning as a instruments, such as carbon finance and the CIF. facilitator and adviser, harmonizing MDB climate Supported by the GEF and bilateral donors, the change portfolios, linking programs with IFC worked with Standard & Poors to develop CIF-supported initiatives, and engaging outside the first Global Emerging Market Carbon actors--bilateral development agencies and Efficient Index that enables large institutional development partners--to promote cofinancing. investors to send a powerful signal to companies to The heads of several MDBs and the International improve their emissions performance. Monetary Fund (IMF) signed a joint statement calling for an ambitious global climate action prior The new FCPF and CPF exemplify important to the Copenhagen COP in December 2009 and partnership efforts and platforms for dialogue agreed to coordinate future efforts. and cooperation. Supported by 14 contributing countries, the FCPF is a partnership with 37 The WBG has been strengthening partnerships to developing countries and organizations. It address local dimensions of climate change. The provides technical and financial assistance to Global Development Marketplace is an annual country participants for analyzing the drivers of competitive grant program that identifies and deforestation and forest degradation, designing funds innovative, early-stage development projects monitoring systems, defining reference scenarios that have high potential for replication and of land use change and emissions, devising development impact. The 2009 theme was Climate REDD-Plus strategies, and setting up national Change Adaptation, made possible by a WBG management arrangements for REDD-Plus. partnership with the GEF, the International Fund Together with the CPF facility, it provides for Agricultural Development, and the government partners with "learning by doing" opportunities of Denmark. It attracted a pool of 1,755 applicants and provides critical space for experts from from 47 countries (Box 28). various sectors and countries to build the understanding needed to advance the UNFCCC The Mayors' Task Force on Urban Poverty and decision-making process. Climate Change is a new high-level initiative that brings together mayors of megacities to The CIF further elevated partnership and develop concrete programs to address urban coordination among the MDBs. Building on the poverty in a "climate-smart" way. Results and CEIF foundation for scaling up collaboration in lessons learned will inform deliberations in the area of climate change, the MDBs combined international meetings of city and climate change efforts to design and operationalize the CIF. They leaders, such as the C40 biannual summit. The now work together to provide coordinated support Bank Group is also working with to country-driven programs, allowing countries to UN-HABITAT and UNEP to prepare citywide select assistance from each MDB based on its vulnerability assessments and a pilot GHG comparative advantages. A separate MDB emissions index for the world's 40 largest cities. 66 D e v e l o p m e n t a n D C l i m at e C h a n g e Box 28. gloBAl development mArketplAce 2009: 100 ideAs to sAve the plAnet in peru, an innovative forest fire management program prevents the risks of more fires with rising temperatures. in Kenya, communities share experiences with multipronged approaches to managing climate risks, combining indigenous knowledge with modern technologies. in india, women and youth use reality-show methods to describe climate options. in the philippines, a mangrove restoration initiative helps improve livelihoods and the crab catch during storms and also protects against longer- term climate change impacts. these are just some of the "100 ideas to save the planet" featured at the 2009 Development marketplace, which focused on innovative solutions for climate change. out of these 100 great ideas, 26 winners were announced in three categories--Resilience of indigenous peoples Communities to Climate Risks; Climate Risk management with multiple Benefits; and Climate adaptation and Disaster Risk management. each winner receives a grant of up to $200,000 to implement its project over two years. making the selection was tough because of so many wonderful ideas and dedicated people behind them. But the most important "take-away" message from the 2009 marketplace was that the ingenuity of people has no limits. it is this ingenuity that will define our planet's future. communicAtions And including contributing and eligible recipient countries, MDBs, UN and UN agencies, the outreAch GEF, the UNFCCC Secretariat, the Adaptation Fund, bilateral agencies, NGOs, indigenous The SFDCC consultations dialogue continues peoples, private sector entities, and scientific and with a range of stakeholders, including civil technical experts. Its first meeting took place in society, indigenous groups, the private sector, and Washington in October 2008, and the second the most vulnerable communities. These meeting was held in Manila in March 2010. stakeholders were instrumental in framing the action areas of the SFDCC. They continue to A Climate Change Communications Plan is in inform its implementation through a web-based place that maps out priorities and directions to discussion forum, as well as in direct discussions increase synergy and harmonization of climate at the UNFCCC meetings in Poznan (December change initiatives across the WBG. One of the 2008) and Bonn (March and June 2009). The cornerstones of the plan is to communicate the WBG's commitment to such dialogue is further priorities of developing countries on climate exemplified by the annual CIF Partnership change. A concerted effort to "speak with one Forum, a broad-based meeting of stakeholders, Stepping Up SUppoRt to Developing CoUntRieS 67 voice on climate change" within the WBG, which greater increases in traffic from developing was initiated in the lead-up to Copenhagen, is countries, with a 93 percent increase in monthly now being scaled up to better reach country visitors and a 127 percent increase in page views in offices. A cross-sectoral climate change one year, starting in September 2008. A service communications team has been organized that account, Climate Change Help, has been created holds weekly consultations to coordinate climate and is now servicing 1,800 self-selected members change-related communication approaches, every week with event listings, relevant articles on messaging, and products. As the institution builds climate change, and upcoming conferences and knowledge and expertise, the WBG staff is other meetings. actively engaging in a wide range of national and major international forums addressing climate While communications has improved-- change issues. The WBG has substantially internally as well as externally--a number of contributed to several high-level climate change challenges remain. Because of the cross-sectoral events, such as the UN General Assembly. The and interdisciplinary nature of climate change WDR 2010's detailed communications strategy work, the flow of information does not fully helped in successfully disseminating key messages reflect the true range of work being done within to country offices and a worldwide audience. the WBG, nor does it reach all relevant constituencies. In particular, communications A new climate change web site was launched in with the country offices needs to be strengthened July 2009 as the first pilot of a larger World Bank in order to help them become familiar with the strategy to upgrade its web services. This has work done across other World Bank regions and improved web search functions and usability as sectors of the WBG. This is becoming a top well as increased the effectiveness of World Bank priority, as it is the regions that will ultimately messaging on the subject. The web site has also operationalize technical research, tools, and become a vehicle for soliciting feedback, reporting guidance, as well as integrate the latest science the latest news and comments on climate change, and economics of climate change into their and disseminating various knowledge products. mainstream development work for WBG clients. The new site has seen a 74 percent increase in monthly visitors in one year, with page views increasing by 99 percent. The site has shown even 68 D e v e l o p m e n t a n D C l i m at e C h a n g e lookIng FoRWaRD on emerging experiences from the CIF programs, FCPF, and analytical work--would benefit the Extensive experience gained in working with recipients and also help a broader process of others creates a stage for deepening collaborative designing the architecture for delivering future efforts by better recognizing comparative climate finance flows. advantages of each institution and defining their roles in a common endeavor. Among the MDBs, The WBG will expand its dialogue with client the WBG's unique strength is global convening countries to continue active learning about power, as well as knowledge and experience across their priorities and expectations from the all countries and development stages, while the WBG in order to build more effective regional development banks (RDBs) may have partnerships. There will be an effort to bring simpler processes and business products that are together diverse stakeholders at the national tailored to regional contexts. The UNDP has an level (for example, ministers of finance and advantage of wider presence at the local level, environment) and subnational levels (private particularly in smaller and poorer countries, which sector, city officials, local governments, and is important, for example, for community-based communities) to facilitate integration of adaptation work, while UNEP is well suited for different perspectives. These opportunities innovating changes in business behavior using would be used to undertake a more systematic small funding. Developing and demonstrating outreach about WBG's policies and products as practical models of support services in which these part of an enhanced communications strategy. institutions play complementary roles--building Stepping Up SUppoRt to Developing CoUntRieS 69 6. InStItutIonal aRRangeMentS anD ReSultS · the WBg has created or strengthened dedicated climate change entities and coordination mechanisms, including the WBg-wide Climate Change management group · the SFDCC's focus on learning and innovation is paying off, but scaling up operations will take more time--and will require simpler procedures · the development of a comprehensive results framework is coordinated with similar processes and allows more precise monitoring of climate change-related investments InStItutIonal "climate change concerned" development professionals. Its functions include serving as a aRRangeMentS platform for communication--sharing up-to-date information on WBG activities in climate change, Several steps have been taken to provide coordination--exchanging work programs and institutional support to growing climate change- plans across units to minimize duplication, and related work while recognizing its cross-cutting facilitation based on a review of implementation of nature. the SFDCC and taking account of new developments, identifying and supporting action The WBG-wide Climate Change Management areas that require increased attention or emerge as Group (CCMG), involving representatives from all new priorities. sectors (all Sustainable Development Network (SDN) sectors, PREM, Human Development, Over the past year, most regions have built Concessional Finance and Global Partnerships "climate change beams" led by the climate unit), regions, and entities (IFC, MIGA, change coordinator and including several other Development Economics Group, WBI, Treasury), staff from key sectors. A network of climate has been established and emerged as an effective change coordinators has been developed that coordination mechanism. Its objective is to complements and works closely with the CCMG. coordinate the cross-sectoral work on climate Each region and anchor unit/entity has a senior change, facilitate the development and staff member responsible for facilitating, implementation of a common corporate vision, and monitoring, and reporting climate change help create a "community" or a "mega-network" of 70 D e v e l o p m e n t a n D C l i m at e C h a n g e activities in the respective region/unit, for · The Carbon Finance Unit (Environment developing a climate change strategy or action Department) has significantly expanded its plan, coordinating with other sectors and regions, operations, including on REDD and in the and for working with the CCMG and its area of programmatic and sector-wide carbon secretariat. Climate change coordinators/focal finance, and has aligned carbon finance points also have been appointed for countries activities with the overall country programs with significant programs in climate-relevant to maximize leverage and impact. sectors and an interest in WBG support in this · The Climate Change Team (Environment area. Recognizing the importance of helping Department) work program has grown client countries adapt to climate risks and substantially, ref lecting increasing external significant knowledge and capacity gaps, one of and internal demands. Today the team the 10 Global Expert Teams, established under a serves as a secretariat to the CCMG and new knowledge initiative, is on Adaptation to the network of climate change coordinators; Climate Change (GET-CCA). The team focuses supports the implementation of the SFDCC on supporting priority operations with the best and is responsible for monitoring and available expertise, sharing knowledge, and reporting its progress; develops and supporting South-South partnerships. disseminates knowledge products, training modules, and analytical tools on cross- cutting issues; provides technical advice and support to operations and other anchor units; monitors and supports UNFCCC negotiations; and coordinates with UN agencies and other external partners. · The IFC Climate Change Unit, established as the SFDCC was being prepared, helps ensure implementation of IFC climate change-related priorities, alignment with the SFDCC, and enhanced coordination between the IFC and World Bank work on climate change. The unit has provided leadership on analytical issues of shared corporate interest, including carbon accounting and evaluation of climate The WBG has also created or strengthened risk from a private sector perspective. dedicated climate change entities. · Recently, the IFC announced a new Climate Business Solutions Group under the leadership · Following the establishment of the Climate of the IFC Global Head of Climate Business Investment Funds, a CIF Administration Unit Solutions whose function is to spearhead the was created and housed within the World implementation of the IFC's climate change Bank (SDN Anchor). This unit serves all strategy into investment development, participating MDBs (yet another unique advisory services, and industry knowledge. institutional arrangement), acts as a secretariat for the governing bodies of the various funds under the CIF, and reports on progress. Stepping Up SUppoRt to Developing CoUntRieS 71 · A Climate Change Practice at the WBI has global day-to-day-operations, including facilities, been created in response to increasing key meetings, and trackable business travel in all demand for capacity building by clients. The regions. This would be a 35 percent increase in WBI's Climate Change Practice includes emission offsets, compared with its current four key capacity-building programs: practice of achieving carbon neutrality for its leadership and coalition building for climate Washington-area facilities and associated staff change; mitigation-innovation in carbon travel. The WBG has also started reporting its finance; cities and climate change; and water, operational footprint through the Carbon agriculture and natural resources Disclosure Project, a not-for-profit organization management, and climate adaptation. The that is the recognized standard for detailed practice has made cities a special priority, corporate reporting on emissions data and other given their role in terms of emissions, climate-related disclosure information. mitigation potential, and adaptation needs. As a demonstration of its corporate Looking forward, reducing transaction costs in an commitment to addressing climate change, the increasingly diversified landscape of climate WBG continued and deepened its efforts to be finance--and maximizing synergies among a "carbon-neutral" in its offices and travel. The number of instruments--entails an effective World Bank is well on target to meet its combination of financing instruments, each commitment of seven percent emission addressing specific barriers, risks, or needs. reductions from headquarters-based operations. Enabling operational staff to deliver such Moreover, in 2009 the Bank joined the IFC in innovative financing solutions requires new skills. committing to become `'carbon-neutral'' for its While innovative task teams grow, there is still 72 D e v e l o p m e n t a n D C l i m at e C h a n g e limited knowledge of climate finance meAsuring progress opportunities or experience with a combination of resources. Continuous support, training and The SFDCC adopted a dual-track approach to guidance documents, examples of successes from developing a results framework. Annex 1 presents early innovators, simplification of procedures, and the progress to date on the set of key actions, increased experience in blending resources will be deliverables, and indicators adopted by the Board needed to promote innovative solutions in to monitor the WBG's progress during fiscal programming and lending at the country level. years 2009­2011 and proposed additions. Internal coordination will be strengthened with other networks like Human Development, the In consultation with development partners, Poverty Reduction and Economic Management the WBG has started the process of developing Network (PREM) and the Financial and Private a comprehensive results framework (RF) for Sector Development Network (FPD). the WBG's climate action in the longer term. Cooperative work on financial instruments and Following the preparation of a design approach products will similarly become more systematic note, it is now working on specific indicator across the IFC, MIGA, and the World Bank. development, in close coordination with the Addressing regional and cross-regional issues development of results measurement systems continues to be difficult and should receive (RMS) for the Climate Investment Funds. further attention, while the truly global nature of Reflecting on the SFDCC umbrella function GHG emissions mitigation needs to be better and to avoid duplication the RF is expected to recognized in analyses driven by a country and use existing WBG corporate and sectoral RMSs. even regional level perspective. Stepping Up SUppoRt to Developing CoUntRieS 73 This includes incorporating (to the extent appropriate source for the RF's sector-specific possible) relevant elements of the IFC RMSs, as indicators to track the WBG's progress in building well as those that are being designed and tested a more climate-resilient and sustainable investment by the CIF. The CTF, in particular, is expected portfolio. As part of this process, the WBG is also to provide a model for monitoring the extent to improving its portfolio tracking and monitoring which client countries benefit from WBG system to better track investments that yield investments that help transition to lower GHG climate-related benefits and analytical and advisory emissions development while delivering activities that address the impacts of climate economic and social benefits. The PPCR, on the change and related policies on development. At other hand, offers a learning platform for present, the World Bank and the IFC are defining and measuring country-level adaptation systematically tracking and reporting on clean actions and impacts. energy and climate-friendly projects. Work is ongoing to expand such tracking to other relevant lookIng FoRWaRD sectors and to integrate it with the WBG's core corporate systems, taking account of ongoing relevant work in the OECD. The development of It is expected that the RF indicators will be used sector-specific guidance notes is ongoing and will and reported in linkage with and as a supplement be piloted in Q3­4 of FY2010. to the core MDG indicators and in conjunction with the models developed as part of the ongoing RMS standardization work. The latter are also the Stepping Up SUppoRt to Developing CoUntRieS 75 7. eMeRgIng leSSonS anD DIReCtIonS · Continued importance of learning, knowledge sharing, capacity building and strengthening partnerships with WBg clients, with particular attention to the most vulnerable · three-pronged approach of strong iDa-16 replenishment, iBRD capital increase, and predictable, reliable, and adequate flows of additional climate finance essential for effective support to developing countries as they tackle poverty in a changing climate · priorities for the remaining implementation period informed by lessons from implementation, growing climate demand, and evolving global context takIng StoCk: global player on climate change supported by the Bank Group through a comprehensive regional ClaRIFyIng strategy to help the continent achieve sustained aChIeVeMentS anD climate-resilient growth. As the WBG's regional ChallengeS operations and various entities have engaged in addressing climate change issues relevant to the The WDR 2010 and growing operational development goals or business interests of their experience reaffirm the premise of the SFDCC clients, significant new initiatives included a that development efforts can no longer ignore the successful dialogue with cities, expanding work on risks of climate change or the local and global "soil carbon," an increased focus on "green benefits of sustainable solutions. As this progress infrastructure," and a growing engagement with report shows, the IFC, MIGA, and World Bank institutional investors, in addition to a series of operations to support climate-related actions and demand-driven activities developed by all regions initiatives are gearing up. The IFC invested more (see Annex 3). than $1 billion in RE/EE energy in FY2009, while the World Bank estimates $7.3 billion in active and Overall, progress was made across all areas of pipeline operations yielding adaptation and action and all parts of the WBG, with useful mitigation co-benefits in the Latin America and the lessons going forward. A tangible impact has been Caribbean Region alone. Africa emerged as a major particularly evident on knowledge, capacity, uptake 76 D e v e l o p m e n t a n D C l i m at e C h a n g e of country and sector dialogue, the development of sector, a typical situation in middle-income innovative pipelines, and collaboration with the countries and larger countries). This observation is UN and MDBs, as well as within the Bank Group. consistent with broader ongoing efforts to reform New knowledge and finance undertakings have World Bank processes toward supporting improved WBG capacity to support its clients on sector-wide approaches and country systems, and a range of issues related to development and emphasizes the importance of factoring the unique climate change, as well as contribute to the global strengths of a particular international financial dialogue. The institution has met or is on track to institution (IFI) when "transferring" other IFI meet most of the key indicators it has committed experiences. Analytical work has commenced to to under the SFDCC (see Annex 1). At the same assess and articulate a comprehensive approach to time, several indicators and milestones require this issue in the context of different countries with modifications to better assess the WBG's a different level of energy sector dialogue. performance and recognize some challenges. The World Bank's comparative advantage of a strong The WBG demonstrated an ability to respond, country-level policy dialogue and global convening adjust, and deliver in a very volatile political power could be better reflected. environment, reconciling strategic priorities with tactical considerations. SFDCC implementation For example, while a major effort was made to efforts were influenced by global climate change initiate climate-risks screening for water dialogue in the run-up to the Copenhagen COP-15 investments with a long life span, in-depth in December 2009. A significant emphasis in WBG analytical work revealed the need for a new work was to produce and share relevant knowledge to decision-making framework that helps the water inform and help the negotiations. The external sector deal with wide uncertainties of long-term environment of intense preparations for COP-15 projections at the project scale, rather than simply placed multiple new demands and requests on clients modifying the engineering design for a new level of and partners, often at very short notice. This led to a particular climate risk. This was reinforced by the frequent reassessments of work program priorities, WDR 2010, which advocated a shift from "optimal" particularly for the anchor units, but increasingly for to "robust" decision making. A program of analytical the regions, as exemplified by a request for support work is being developed to tackle this issue. from the Africa Union. Yet the mainstay of the work programs, based on a longer-term strategic vision and Operationalization of screening for energy commitments, sustained progress. efficiency opportunities highlighted the importance of the World Bank's engagement at The initial stage of SFDCC implementation the country-wide and sector-wide policy level. offers the following observations and lessons Project-level screening further progressed at the that are relevant for further action under the IFC. At the WB, many regional and country Framework, as well as related WBG strategies: energy teams felt that the level of engagement they had established with government counterparts · Continued consultation, learning, and dialogue warrants--and would achieve a greater impact with all key partners, making adjustments as through--working on improving a sector-wide necessary and ensuring broad ownership, remains policy framework for promoting energy efficiency, critical. An extensive process of global as opposed to screening a particular project that consultations and consensus building, with happens to be World Bank-financed (and particular attention to listening to and represents a very small amount of investment in a understanding the views of developing Stepping Up SUppoRt to Developing CoUntRieS 77 countries, has paid off. The Framework evolved · Substantial resources coming out of the very significantly during the preparation UNFCCC negotiation process, particularly process to better reflect and balance the diverse pledges for fast-track financing made by perspectives, which has fostered partnerships. developed countries in Copenhagen, will be Similarly, a bottom-up internal process necessary for accelerating future progress. involving almost all parts of the WBG and Growing availability of dedicated climate- building on their initiatives--while facilitating related resources for adaptation and a coherent corporate vision and offering new mitigation, while still short of the need, tools--galvanized creativity and action. played a significant role in achieving progress to date. The establishment of the CIF and · Responding to client demand with customized new carbon facilities, which were rolled out support is a way forward. A strategic decision to alongside the development and put a country-based assistance model and client implementation of the SFDCC and demand at the center of the SFDCC--while contributed to its major deliverables, set the respecting the primacy of the UNFCCC stage for scaling up climate-resilient and low- negotiations--was essential in building trust and carbon investments in the next years. scaling up engagement with developing countries, as evidenced by an impressive uptake · Capacity to use, blend, and package various of climate-related issues in CASs and a growing instruments leveraging significant resources is portfolio of investments and technical assistance among key WBG comparative advantages. The in just one year, with no operational target. WBG teams, together with partners, worked across the entire menu of instruments helping · The climate risk management and adaptation governments and other clients to access and agenda has become a call to duty across the WBG. leverage GEF resources, carbon market, As a major financier of long-term World Bank-managed carbon funds and new development investments in locations facilities, UNFCCC funds, bilateral vulnerable to current and future climate risks, financing, and the newly available CIF the WBG is faced with an urgent challenge to resources. The WBG was also complementing address climate risk management and an expanding use of climate finance with adaptation needs in the projects and programs innovative applications and packaging of other it supports. It also faces an increasing demand relevant instruments such as guarantees, from its clients to help them understand the subnational applications, and DPLs. economic and decision-making implications and to prepare for changing climatic · As multiple channels of climate finance will likely conditions. The most rapid buildup in continue, this places enormous capacity analytical work, training, and knowledge has requirements on both recipients and implementing been in the area of adaptation, including the agencies to coordinate and optimize various establishment of the dedicated GET. sources. Even with the WBG's substantial capacity, more effort is needed to service · Yet grant-based resources to cover the added costs of clients better--both by providing most development in a more hostile climate are woefully suitable packages at reduced transaction cost insufficient. This is particularly a problem for and strengthening their capacity and IDA countries, which are most in need of "readiness" to operate in an increasingly major infrastructure investments. Finding a complex international financial landscape. way to provide predictable financial flows to make IDA-supported investments resilient to · A significant--but selective--experience with aggravated climate risks is an urgent priority. technology calls for further clarifying comparative 78 D e v e l o p m e n t a n D C l i m at e C h a n g e advantages and the role of partnerships. While the · A large agenda takes time, patience, and WBG can make a substantive contribution to institutional resources. While the WBG's technology commercialization, its comparative substantial role, knowledge, and expertise is advantage differs across technology stages and increasingly recognized, realism should be the type of technologies. In agriculture, the built into future efforts, both in terms of WBG has been supporting all technology time needed to achieve results that matter for stages, including location-specific research. With clients and resources to make it happen. respect to much more expensive novel energy technologies with a potential to serve the global market, the WBG advantage remains with moving forwArd: scaling up and deployment stages, while CTF and SREP provide new opportunities to move to refining priorities a larger scale. Opportunities for specific partnerships, such as the GEF/IFC Earth Fund, Progress made in the first 12­18 months or for programs ensuring a seamless move from reinforced the decision taken about the flexible early GEF support to support by CTF and/or and evolving nature of the SFDCC. The agreed other WBG instruments once the technology focus on learning, drawing lessons, and adjusting matures, or with bilateral financing like a new in due course proved necessary, as did the emphasis CCS Trust Fund, could be further explored. on guiding, supporting and incentivizing · Investing in knowledge and skills remains a top operations rather than imposing fixed "targets." It priority. Needs in technical assistance and should also be noted that progress was not capacity building are enormous in many expected to be linear over FY2009­2011. In many developing countries and have already emerged cases, the reported implementation period focused as significant barriers to developing action on understanding the issues, building capacity and plans and accessing currently available climate consensus on addressing them, thus creating a finance (such as CDM and adaptation-related platform for accelerating action in the next years. funds). With the growing and increasingly complicated agenda, issues, and instruments, Going forward, three processes are key: the WBG will need to rapidly step up its ability post-Copenhagen actions and decisions by to provide such assistance on a range of issues, UNFCCC parties, IDA replenishment, and as well as respond to requests for "just-in-time" IBRD capital review. While Copenhagen and assistance very quickly in a fluid external subsequent submissions by UNFCCC parties environment. Two major new programs--the offer important guidance for future climate- CCDP and SDLP, which were developed and related work, much depends on the outcomes of initiated in parallel with the preparation of the the Cancun COP-16. The establishment of a SFDCC--increased awareness, skills, and high-level Advisory Group on Climate Change action by many staff and managers, as did the Financing by the UN Secretary-General is WDR 2010 and other analytical work. In another relevant development. In parallel, the coming years, it will be important to use these next top priorities are a successful replenishment and other vehicles, such as the Adaptation of IDA-16 and an adequate capital increase for GET, for reaching out to country-based staff, IBRD. These processes are critically important in clients, and a wider range of sectoral experts, as their own right; furthermore, development well as increase more specialized training. finance and climate finance play complementary roles in ensuring sustained progress toward the Stepping Up SUppoRt to Developing CoUntRieS 79 MDGs, including MDG-7 for environmental activities, to create a platform for broad-based sustainability. Both must be adequate, and learning, inside and outside the WBG. enhance--not substitute for--each other. · Ensure implementing and learning by doing from the PPCR--the primary objective of While the overall Framework, guiding principles, which is to make core development planning areas of action, and broad priorities proved robust more climate-resilient at the country level. and suited for continued uncertainty about post-2012 global climate policy and finance, · Accelerate the work on methodologies for and implementation experience and new practical applications of vulnerability assessments developments suggest a sharper focus on select at a country/sub-national level and climate risk activities and outcomes, as well as strengthening screening for relevant investments, led by some targeted outcomes. These are described agriculture, water, social development, below, within the three broad operational disaster management, and urban practices. priorities agreed to by the SFDCC, and reflecting · Explore options for substantial and predictable access linkages with the Post-Crisis Directions paper by IDA-supported programs to complementary and the framework for Transforming the Bank's adaptation funding, in order to climate-proof Knowledge Agenda. development investments in IDA countries and build capacity for managing increasing climate Strengthening resilience of communities and risks. Options will be defined in consultations economies to climate risks remains the top with developing and developed country partners priority, as it was in the SFDCC. A more and may include, among others, Memorandum concerted and comprehensive effort will be made of Understanding arrangements with the to increase financial and technical support for Adaptation Fund or other specialized climate risk management and adaptation. UNFCCC funds, scaling up the PPCR, or Building on strong empirical evidence that providing new targeted windows under the SCF. development is key to improved adaptive capacity An assessment of options will involve due while adaptation is essential for sustainable consideration to the need for reducing poverty reduction outcomes, the WBG will step proliferation of vertical funds and ensuring up efforts to emphasize the imperative of synergies--while avoiding duplication--among complementing development assistance for the WBG instruments, the Adaptation Fund, GEF, MDGs, such as IDA, by specialized grant-based and other funds supporting adaptation. resources to address additional climate risks. In parallel to advocating strong replenishment of Another SFDCC priority--to help capture the IDA-16 for core development needs, we will: full range of benefits, local and global, of sustainable development programs--will grow in · Step up building capacity--among staff, clients, importance, enhanced by the WDR 2010, other and partners--to understand and manage studies and experiences, and increasing concerns adaptation-development linkages in different about energy, water, and food security, as well as the contexts, by using all tools and instruments at availability of natural resources and quality of local our disposal. environments to sustain the development path. It is · Share more proactively and systematically lessons also consistent with the view of developing from pilot projects, programs, and analytical work countries that their contribution to climate action is in the regions, the EACC study, the GFDRR through sustainable development strategies, and it is experience, and the Adaptation GET the premise of the UNEP-led work on the Green 80 D e v e l o p m e n t a n D C l i m at e C h a n g e Economy report, for which the WBG is a partner. Bank vis-ŕ-vis other entities would have to be The Mayors' Task Force on Urban Poverty and modified. Climate Change is another example of an · Within the CIF, the FIP provides another innovative partnership addressing development and learning opportunity on how additional grant climate imperatives in tandem. While the new support can complement capacity-building grants Environment Strategy, under preparation, as well as and performance-based incentives to realize work in a growing number of sectors, will further transformational investments inside and seek synergies between local and global co-benefits, outside the forest sector, leading to lasting the recognized role of sustainable forest reductions in emissions from REDD or to management in sequestering GHG emissions, further efforts to conserve, sustainably together with growing support for international manage, or enhance forest carbon stocks financing for REDD-Plus, calls for sharing the while protecting biodiversity and supporting WBG's extensive experience in this area on a rural livelihoods. The FIP complements and priority basis. In particular, cooperates closely with the FCPF and the UN-REDD Programme. Studying options · The process of mutual learning with partners for enhancing cooperation and seeking and stakeholders on REDD-Plus through the coherence between various institutions that FCPF has created a platform for further support countries in REDD-Plus efforts engagement, including the design of a new would be an important next step. financing window or mechanism. The Participants Committee of the FCPF · Work will continue on exploring agricultural provides one possible model for how to set up opportunities for reducing emissions while the governance body of a future "REDD- enhancing food production. Although soil Plus window," though the role of the World carbon management in agriculture is not included in the scope of REDD-Plus, Stepping Up SUppoRt to Developing CoUntRieS 81 investments in the agricultural sector--for NAMAs. This would be complemented by example, to increase agricultural yields and preparing--jointly with interested developing reduce emissions from deforestation and countries--and disseminating sector-specific forest degradation--are eligible as potentially (and more detailed) toolkits for NAMAs. transformational investments under the FIP · Explore and demonstrate more systematically and as underlying carbon finance how an arsenal of existing and potential IDA, transactions under the FCPF's Carbon Fund. IBRD, IFC, and MIGA instruments, including the use of guarantees, risk-sharing The WBG will continue helping private and schemes, subnational applications, and fast- public sector clients take advantage of expanding disbursing instruments, can work to support low-carbon growth opportunities while moving a domestically funded share of NAMAs, to a more strategic engagement, as developing complemented with a portfolio of climate countries prepare and implement their NAMAs finance instruments (for an internationally within sustainable development strategies. The supported share of the total cost). This WBG has built a solid analytical base through approach can extend to involve including supporting some of the first low-carbon growth instruments and facilities of other MDBs studies; it provides extensive policy, institutional and IFIs. The IFC will build on the dialogue development, and investment support in relevant with institutional investors to increase sectors; and it holds expertise in a wide range of financial mobilization toward climate- financial instruments. These pieces can be put friendly investment in emerging markets. together to engage with interested developing countries on the various aspects of operationalizing · Distill and share lessons from implementing new the NAMA concept, which ensures the priority of programmatic instruments of climate finance-- economic growth and effective service delivery. such as the CPF, CTF, and SREP--to make While the main interest is coming from middle- the lessons directly relevant for NAMAs. income countries, certain elements and approaches Based on these and other operational are expected to be of value to low-income experiences, build and disseminate countries. Specific areas where the WBG can assist knowledge on how to link different elements developing countries, in partnership with other of NAMAs to the best-suited (in a country- MDBs and UN agencies, include: specific context) financing instruments and packages. Using wide-ranging experience with results-based financing (including · Establish a platform for South-South knowledge outside of the climate change area), the exchange through extensive dissemination of the WBG can help interested countries establish toolkits and knowledge developed under several transparent monitoring and reporting low-carbon growth studies and other relevant procedures for the achieved emission analyses. The focus will be on bringing reductions, differentiating between together countries at different stages of low- domestically and internationally funded carbon-growth modeling and planning and reductions. other development agencies (RDBs, UNDP, bilaterals) supporting such assessments. In · Explore how energy, transport, and urban coordination with these agencies, support practices across the WBG, , including the IFC, similar long-term strategic exercises in other can support low-carbon strategies and NAMAs interested countries as a longer-term through their sectoral programs, including a framework for preparing medium-term recent focus on "greening infrastructure." 82 D e v e l o p m e n t a n D C l i m at e C h a n g e The new energy strategy, in a public finance through strong IDA-16 replenishment. consultation phase, is expected to articulate Without finance for a road, it is impossible to how energy sector assistance in a particular make it "climate-proofed"; without finance country will take into account low-carbon for an energy project, it is impossible to make options and opportunities--as they relate to it cleaner. Anticipated growth in climate the energy sector--and balance it with other funding and implementing domestically strategic needs. funded NAMAs by middle-income countries, following the impacts of the To support these priority actions and outcomes, financial crisis, also makes having adequate the WBG will need to make substantive efforts IBRD capital an important issue from both in the three cross-cutting themes. These themes the development and the climate perspective. are built on synergies, lessons, and gaps that · Concentrate on delivering resources to the have emerged from implementing the six action recipients for specific projects through the newly areas of the SFDCC. established instruments and programs--the FCPF and the CPF under the carbon finance umbrella and the PPCR, CTF, SREP, and FIP under the CIF umbrella--that provide enormous major opportunities to all participants for experimenting and learning by doing. Equally important are effective arrangements for monitoring performance and impact, assessing results, and making lessons and recommendations available to a broader international community. It is also prudent to anticipate and prepare for using some of these instruments as channels of a portion of fast- track financing for adaptation, mitigation, and REDD-Plus announced in Copenhagen, as well as explore how they can be made more responsive to UNFCCC guidance. · Articulate how different climate finance Work toward becoming a premier provider of a instruments, within and outside the WBG, can wide range of financial solutions and expertise complement each other at the program and project to help achieve "climate-smart" development: levels with an added value (separately for This is a long-term objective that supports the mitigation and adaptation). The work that Post-Crisis Directions paper while recognizing examined the complementary use of GEF, the essential role of other MDBs, IFIs, UN carbon finance and CTF resources for agencies, and private sector groups, as well as the mitigation actions will be extended to cover need for access to new climate resources. Several other instruments. It will also critically assess steps can--and need to--be taken in the the trade-offs between the potential for more remaining SFDCC period, including: fine-tuned financial packages and the capacity needs to make them a reality, to avoid · Enhance WBG ability to support climate actions reaching a point where the multiplicity of in developing countries and leverage climate instruments may become counterproductive. Stepping Up SUppoRt to Developing CoUntRieS 83 This could be supported by consolidating deliver resources in support of country WBG dialogue and advice on climate finance priorities. The WBG has initiated the work at the country level--moving to a situation to explore how development policy support when the "climate finance" contact point (or instruments, SWAPs, and disbursement team) is helping government counterparts and mechanisms used in multi-donor trust funds private sector clients understand all available can be developed into tools for providing instruments and "match" the needs with the more direct and efficient access, while still available instruments. adding value by providing fiduciary services. Experience with performance-based · Develop guidelines on how new climate resources instruments, such as output-based aid, could can and should be used to effectively leverage also complement such an assessment. This private sector investment. Such guidelines could be linked to broader processes looking would be necessary to provide some measure at simplifying WBG procedures, such as of certainty and transparency to project investment lending reform. developers and to create a strong set of ex-ante rules whereby public resources will · Continue and expand the work with OECD DAC be made available to incentivize private and the UNFCCC Secretariat on monitoring and investment. The IFC has begun to explore reporting new and additional climate finance flows, these issues with the financial sector. building on a review the World Bank has undertaken on tracking of climate-related · Harness expertise to use the entire menu of financial flows delivered via official development financial, risk management, and technical assistance (ODA) channels. Taking account of assistance products in developing country settings. the recently redefined OECD DAC Rio Bottom-up initiatives are growing: for example, Markers for mitigation and adaptation in ODA, a new finance and private sector development we will also accelerate the process of improving strategy for Africa is looking at how to facilitate the tracking and monitoring of the WBG's own investment in clean and efficient technologies portfolio of investments with adaptation and and help Africa "leapfrog" with economic and mitigation co-benefits. environmental benefits. The WBG will accelerate efforts to share experiences in financial applications and innovations across Expand the reach of knowledge through traditional sectoral, professional, and customized services, innovative partnerships, institutional boundaries (including those by and South-South exchange: The WBG has other institutions). In this respect, most recent stepped up research on development and climate initiatives include the launch of the Climate and linkages, producing major knowledge products Finance Policy Notes Series, and the and rolling out specialized training. Much establishment of the Climate Finance Ad-Hoc remains to be learned, however, including Expert Group of WBG and IMF experts. empirical assessments of the efficacy of different approaches to climate-smart development. · Help developing countries make informed choices Increasingly, the WBG will be shifting toward a as they increasingly seek direct access to climate learning and capacity-building process that is an funding. As the concept of direct access has a interactive two-way avenue, where comparative continuum of applications, a useful advantages and partnerships are key. In particular, contribution would be to assess the comparative advantages of a range of · Greater emphasis will be given to developing-- instruments that can quickly and efficiently jointly with partners--customized knowledge, 84 D e v e l o p m e n t a n D C l i m at e C h a n g e capacity building, and technical assistance address the new challenges. Leadership by products that can be quickly translated into country offices and country teams, with climate action and integrated into operations. adequate support, would be critical for As an example, World Bank Regions have building stronger and informed partnerships. started work in several countries to help · Work to bring together diverse stakeholders at governments estimate the cost and benefits the national level (for example, ministers of of adaptation measures using the finance and environment through country-level methodologies developed under the EACC engagements and the Bali Dialogue series) and study and then reflect them in national subnational levels (private sector, city officials, adaptation programs. local governments, and communities) to · A key role will be given to joint learning and facilitate integration of different perspectives. working with developing country institutions. · Undertake more systematic outreach about While making global knowledge and expertise WBG experience, using opportunities available through the Adaptation GET and provided during the country dialogue and at other tools and processes, more effort will be regional and international forums. An required to better serve the client in such a emerging consensus on the need for balanced dynamic and constantly evolving field where and equitable governance of institutions generating and sharing knowledge is not managing climate funds points, for example, optional. to the importance of more extensively · South-South knowledge exchange is particularly sharing innovative governance arrangements important in the climate change area, where for CIF and FCPF, as well as the ongoing experience of developed countries is of process of WBG governance reform. limited relevance while many innovations are happening in developing countries. More To conclude, the level of future ambition and emphasis and instruments will be needed to achievement continues to depend on a number of support this exchange. external factors, as does the pace of progress. Strengthen dialogue and outreach: In parallel to Learning and flexibility to adjust will remain the scaling up priority services in response to growing key features. Yet, the overall Framework appears demands, there remains a need for continued and robust, and the proposed priority actions are enhanced dialogue with clients, partners, and driven by already existing or growing demands other stakeholders to clarify their expectations from clients and partners and rooted in from the WBG vis-ŕ-vis its comparative significant experience and consultations. As advantage. Specifically, the WBG will: development-climate linkages are getting stronger and affecting poverty eradication prospects, the WBG has mobilized and will continue · Deepen its dialogue with client countries on harnessing its capabilities in knowledge and what their priority needs are, what services innovation, combined with extensive experience and products the WBG can provide, and in development and finance, to deliver effective how we can work and learn together with support to developing countries. different stakeholders in these countries to Stepping Up SUppoRt to Developing CoUntRieS 85 anneXeS anneX 1. IMpleMentatIon pRogReSS FoR key aCtIonS anD DelIVeRableS Objective Action Products/Processes/ Timeline Progress Reporting/Comments Indicators12 enhance · Collaboration with FY2009­2011 On track: Coordination started between CCDp and cooperation with the Un and its capacity building instruments developed by Un development agencies on a agencies and other mDBs. the Climate Finance action area 1: Support Climate actions in Country-led Development processes partners to coordinated Knowledge platform is being developed jointly by facilitate global approach to UnDp and the WBg under the acting on Climate action climate change, Change: the Un System Delivering as one Umbrella, particularly in collaboration with other Un agencies and mDBs. financing, capacity the World Bank participates in the UnSg Climate building, and Change team including the Un system-wide event in monitoring Copenhagen. Joint conferences with the aDB, gtz, iDB, and Unep on transport. Strengthened · Joint FY2009­2010 collaboration through sectoral work on climate implementation of change (for example, transport with Unep, human the CiF with other rights with the Un ohChR, weather information with mDBs Wmo) and country programs (joint work implementing gFDDR, geF, ppCR, and so on). · new partnerships FY2009­2010 established, On track: Joint CtF investment plans developed and particularly to ppCR program identification missions under way. facilitate the work Collaboration extended to the design of the Fip ($558 on technology and million in pledges) and SRep ($292 million in pledges), adaptation both approved and declared operational in 2009. On track: Several new partnerships emerged; examples follow. technology: Joint work between eSmap and infoDev to explore potential for promoting renewable energy technologies, with bilateral support; a new trust Fund for CCS pilots. adaptation: South asia Water initiative (SaWi) targeting water and climate change (with DfiD and aUSaid); vulnerability assessment for cities (with Unep, Un habitat, and city mayors); memorandum of Understanding with Ramsar on climate modeling. the iFC and treasury engagement with p8 offers an example of innovative financing partnership. 12 Specific indicators for Wbg operations, when provided, are based on existing pipeline and estimated demand. 86 D e v e l o p m e n t a n D C l i m at e C h a n g e Objective Action Products/Processes/ Timeline Progress Reporting/Comments Indicators12 Support · actions to FY2009­2011 On track, with a higher than planned uptake: Climate climate actions strengthen climate resilience in 63 percent of FY2009 CaSs, including for by resilience are Djibouti, guyana, india, indonesia, moldova, and operational supported by Yemen; included in business plans for Burkina Faso, strategies several CaSs, with ethiopia, ghana, Kenya, niger, madagascar, malawi, an estimated mozambique, Senegal, Sudan, and zambia; 81 demand by at least percent of end-FY2010Q3 CaS/CpSs including for 10 countries with Belarus, Burkina Faso, Central african Republic, high vulnerability Dominican Republic, Jamaica, morocco, nigeria, to climate risks Romania, Russian Federation, Serbia, tunisia, turkey, and vietnam. an example at the regional level is work · Support to climate with the new partnership for africa's Development on actions included in land and water management. business strategies for World Bank FY2009 Completed: the iFC has designated climate change Regions, miga, as one of its Corporate Strategic priorities and and the iFC adopted a new Solar investment Strategy. a regional strategy for Climate Resilient growth in africa and a action area 1: Support Climate actions in Country-led Development processes (continued) · Strategy updates report on climate change in South asia to guide SaR for relevant sectors activities are completed, as are climate change papers include and/or business plans in eap, eCa, lCR, and mna. consideration of climate risks and Completed: Urban Strategy includes Climate Change support to climate and Disaster management as one of its five business actions lines. · Urban FY2009 On track, with delivery moved to FY2011: the new energy Sector Strategy and the Social Development · energy, Social FY2010 Strategy update are in consultation process, both Development addressing climate changes issues. · Environment, ICT FY2011 New proposed indicator for FY2011, reflecting progress to date and next priorities: the Environment Strategy (in consultation process) is dealing with the broader environmental sustainability, while the ICT strategy is outlining opportunities to enhance mitigation and adaptation results. Support · a plan for FY2009-2010 On track: adaptation is a core pillar of the gFDRR climate actions strengthening business plan. FY2009, 12 gFDRR projects of over $4 in lending synergies between million focused on climate change adaptation issues in programs support to disaster , aFR, eap lCR, mna, and SaR and at the global level. risk management an approach paper to strengthening long-term adaptive and support to capacity building through operations focused on adaptation immediate disaster response is commissioned. Significant developed and integration is happening at the regional level: for implementation example, a core pillar of africa climate change strategy is started synergy between disaster risk management and adaptation. gFDRR programs addressing this synergy are · Screening of under way in Burkina Faso, Central african Republic, relevant projects ghana, ethiopia, madagascar, malawi, mozambique, for climate risks namibia, Senegal, and Uganda. SaR Regional Disaster and sector-wide Risk management Strategy, under preparation, also vulnerability addresses synergies with adaptation, as do several assessments specific activities. introduced The scope of screening indicators is proposed to be · starting with FY2009 re-examined and modified based on analytical and hydropower pilot work. experience points to the usefulness of projects sector-wide vulnerability assessments completed by FY2010­2011 project-level screening as/if needed · extending to other vulnerable Pilot screening started: methodologies and tools sectors within under development and piloting, with a draft regional context hydropower toolkit delivered. gaps in global FY2011 knowledge and analytical uncertainties necessitate · Methodology for additional work to develop operational applications. citywide climate vulnerability assessment developed Stepping Up SUppoRt to Developing CoUntRieS 87 Objective Action Products/Processes/ Timeline Progress Reporting/Comments Indicators12 Support · Screening for ee Pilot work has been extended to the rest of the energy climate actions opportunities in sector as well as to the urban sector. analytical work is in lending infrastructure ongoing for the transport sector. iFC pilot program programs projects introduced initiated to evaluate methodologies for identifying (continued) financial implications of climate risk. · starting energy FY2009 sector projects New proposed indicator for FY2011. · extending to FY2010­2011 On track (IFC): the iFC continues energy sector transport, water, investment screening and is on track expanding it to and urban other sectors. projects Progress made (World Bank): pilot work screening · Comprehensive FY2011 selected energy projects initiated. analytical and approach to operational work indicates the need for a sector-wide action area 1: Support Climate actions in Country-led Development processes (continued) promoting EE in and policy-focused approach in World Bank World Bank operations for scaling ee in energy programs that is operations closely customized to individual country needs. developed New proposed indicator to better reflect the nature · increase in WBg and impact of World Bank work. financing for new Re and ee by an FY2009­2011 On track: Continued strong growth, with WBg's new Re/ average of 30 ee investments increasing 88 percent to $3,128 million in percent per annum FY2009 from $1,665 million in FY2008. the iFC saw a 53 percent increase to $901 million in FY2009 from $545 · WBg low-carbon FY2011 million in FY2008. an additional $100 million of Re was energy projects financed through the first CtF project in turkey. share reaches 50 percent On track: over 40 percent for FY2009. · increased demand FY2011 On track: examples include improving urban for and lending in transport in lagos (nigeria), and accra (ghana) by support of modal facilitating modal shift. growing analytical and shifts in freight and technical assistance program, as exemplified by the public transport (as transport section of Brazil climate policy report or a compared to thailand report on making transport more energy FY2006­2008) efficient. a flagship report on transport and climate change to be delivered in FY2010. · a program to assist with sustainable FY2011 On track: Under implementation, with CtF support, in urban investments Bangkok, Cairo, and mexico City. a "rapid diagnostic" is developed and program to integrate climate change within a broader piloted in at least city-based assessment has been initiated with pilots five cities identified in Dar el Salaam, india, and amman. Develop an a set of definitions FY2009 Delivery moved to FY2010, to allow for aligning with outcome-based and outcomes oeCD DaC work on the adaptation Rio marker. results developed by the Design approach note prepared. monitoring framework WBg definitions for investments with adaptation benefits developed and in process of testing with relevant improved climate- sectors. Work is ongoing on specific indicators, in related portfolio coordination with the development of results tracking, with the measurement systems for the Ci. focus on projects addressing climate FY2010 On track: iDa-15 interim results reporting completed. risks and vulnerability pilot program established for developing methods to in iDa countries improve the accuracy of tracking share of climate action in the WBg loan portfolio. methodology developed for monitoring climate-related investment in Bank systems. monitoring definitions for investments with ghg benefits finalized for agriculture and Rural Development, Urban Development; in preparation for energy and transport. 88 D e v e l o p m e n t a n D C l i m at e C h a n g e Objective Action Products/Processes/ Timeline Progress Reporting/Comments Indicators12 increase access · maintained or FY2011 IDA-16 replenishment process started, aiming at an to additional increased iDa ambitious replenishment over the iDa-15 level to meet finance to cover replenishment core development needs while exploring options to higher costs and levels, and provide predictable access by iDa-supported programs risks improved tracking to adequate complementary adaptation financing. of oDa to climate- related actions, On track (oDa tracking): Strengthened collaboration mitigation, and with oeCD DaC on monitoring climate finance within action area 2: mobilize additional Concessional and innovative Finance adaptation (with oDa through the Rio markers, including participation DaC) in the task force for the development of the adaptation marker adopted in 2009. paper on · Climate investment FY2009 improving monitoring of climate finance flows Funds operational prepared, in collaboration with the oeCD DaC and with a target of $6 UnFCC Secretariat. billion Completed: the CtF and ppCF became operational · Country-level FY2011 in FY2009, with pledges of over $6 billion. the Fip activities start and SRep under the SFC became operational in the under the FIF and first half of FY2010. $4.4 billion are committed in CtF SREP; investment plans, leveraging other resources 1 to 8. implementation of across the CtF and ppCR, activities are ongoing in strategic programs over 20 countries. starts under the PPCR New proposed indicators for FY2011. · increased leverage FY2009­2011 On track: new geF programs developed and adopted of geF funds include (a) pacific alliance for Sustainability: mitigation through ($5 million) and adaptation ($10 million); (b) West programmatic africa energy efficiency program ($11 million); and (c) approaches technology transfer program ($8 million). transport sector projects approved in FY2008­2009 achieved · guidelines to help FY2009 leveraging ratio of 1:18.7; projects to be approved in access various FY2010 are expected to achieve geF leveraging ratio financing of 1:24.3. instruments and reduce transaction Completed Phase 1: Draft paper comparing use of costs prepared geF, CtF, and CF instruments prepared in June 2009. prototype Climate Finance Knowledge · guidelines platform developed. extended to a broader range of FY2011 New proposed indicators for FY2011: This proposed instruments indicator reflects the need to add new climate finance instruments, guarantees and packages of development and climate finance, as well as assess experiences with fast-disbursing tools. increase access · FCpF rolled-out: Progress made on agreed milestones, albeit at a to market slower pace, as new activities were added and in the action area 3: Facilitate the Development of market- products, · at least 18 FY2009 face of significant technical and client capacity including for readiness grants challenges that require adjustment in indicators going ReDD and provided forward. adaptation · at least 5 countries FY2010 eleven readiness grants signed, of which five are based Financing mechanisms have successfully already under disbursement (aFR examples include to built FCpF capacity Cameroon, Central african Republic, DRC, ethiopia, gabon, ghana, Kenya, liberia, madagascar, and · Readiness Uganda); projected 15 grant agreements signed end Preparation FY2010; additional financing mobilized from Bank or Proposals other donors to complement FCpF funding. assessed, national working groups on FY2011 Significant additional assistance and capacity building REDD-Plus to carried out, establishing the FCpF as a platform for guide policy engaging on a range of issues related to the design of dialogue the new ReDD-plus mechanism established, and broad-scoped New proposed indicators for FY2011. consultations on REDD-Plus strategy initiated, in 15 countries Stepping Up SUppoRt to Developing CoUntRieS 89 Objective Action Products/Processes/ Timeline Progress Reporting/Comments Indicators12 increase access · CpF FY2009 Operational as of May, 2010. action area 3: Facilitate the Development of market- to market operationalized: products, Capitalization ongoing, with 100 million in CpF including for · initial capitalization Carbon Fund commitments from Buyer participants; based Financing mechanisms (continued) ReDD and of at least 350 9 million in technical assistance resources raised for adaptation million program and methodology development. (continued) · 12­16 CpF FY2011 eight emission reduction programs under emission Reduction development; Target for FY2011 is 8­10 programs, programs reflecting slower capitalization pace and persisting developed uncertainties with carbon markets. · access to climate FY2010 On track: Broadened coverage and range of risk management catastrophic risk financing and weather insurance products and products involving 39 examples. new initiatives for reinsurance crop monitoring and early warning systems under markets increased preparation. innovative work on managing risk in agriculture: multiple interventions of micro-/mesolevel applications of weather-index insurance linked to World Bank/iFC/partner programs. Stakeholder training in risk management delivered. increase · miga guarantee FY2009­2011 On track: in FY2009 miga-issued guarantees have leveraging of instruments facilitated investment in water treatment and private increasingly used wastewater management (China); modernization of investments for low-carbon (Re/ steel and aluminum production lines, including state ee) investments-- of the art technology transfer (nigeria and Ukraine); at least 10 or helping alleviate the imbalance of electricity supply guarantees and demand caused by the geographic distance and provided over climate difference across regions in Brazil. FY2009­2011 On track: the iFC mobilized up to $15 million from · innovative FY2009­2011 CtF to help support an initial private wind action area 4: leverage private Sector Resources financing packages development and supplement regular financing from combining CF, the the iFC and iaDB; provided Carbon Delivery geF, and/or the guarantee to himadri Chemicals in india; structured a CiF to leverage loan to estre ambiental in Brazil; and launched private investments Carbon finance advisory product (first recipient was structured and the industrial Bank of China). applied by the iFC--at least 10 On track: iFC direct investment in FY2009 has during FY2009­ attracted more than $5 billion in cofinancing, or a 2011 leverage ratio of 5 to 1. an ongoing iFC program to develop sustainable investment ratings and indices · iFC leverage of FY2011 aims to make private sector investment more low-carbon private responsive to climate constraints. investment is at least 4 to 1 in Completed: three subnational operations with dollar values climate change co-benefits approved by the Board in FY2009 (panama, Russia, and turkey). · Subnational level FY2009 application of Subnational piloting of projects with climate financial tools is co-benefits continues in FY2010, with a target of at tested for projects least another three projects delivered. with climate co-benefits--at least three in a pilot phase (further estimates to be provided if/when post­pilot stage approved) 90 D e v e l o p m e n t a n D C l i m at e C h a n g e Objective Action Products/Processes/ Timeline Progress Reporting/Comments Indicators12 Develop new · proposals for FY2009 Completed: iFC Solar investment Strategy adopted action area 5: Support accelerated Development and partnerships and supporting clean and a Cleantech investment program initiated for approaches for energy technology early stage cleantech companies in developing technology innovation countries (FY2009). three technology innovation cooperation prepared by the models (for example, regional energy innovation Deployment of new technologies iFC and World centers, technology policy support, and strengthening Bank client's science and technology capacity) developed and presented in a technical briefing to the Board in · program to January 2009. support technology FY2010 Progress made: Building on one of the above- innovation piloted mentioned three innovation models on a smaller scale, the Climate technology program was launched · Work by CgiaR on by infoDev to explore feasibility of Climate climate-resilient technology innovation Centers. pilots launched in agriculture india and Kenya, to be followed by Brazil and technologies vietnam. technical assistance program for CCS scaled up initiated. (measured by increase in funding) FY2009­2011 On track: Challenge program on Climate Change and Food Security being finalized, with $13 million secured in addition to in-kind support from the host organization, the University of Copenhagen. advance · the global FY2010 On track: global report completed and delivered in knowledge on economics of September 2009. Detailed country case studies to be climate and adaptation study finalized in spring 2010. development completed and improved the On track for delivery in FY2010: Brazil, india, and knowledge of mexico country studies delivered in FY2010; poland action area 6: Step Up policy Research, Knowledge, and Capacity Building adaptation and South africa studies also to be finalized in processes, costs, FY2010. Work ongoing in indonesia and new studies and benefits are being initiated in response to growing client demand. · low-carbon growth studies provided FY2009 Completed: the WDR 2010 launched September knowledge of the 2009. incremental costs On track: the WDR, World Development indicators and benefits of (WDi), and the green Data Book include more climate development change-related indicators; The State and Trends of the programs with Carbon Market report has gained increasing lower ghg recognition and use; the city ghg index (a new emissions--at least initiative with developed and developing country five studies cities) to be launched in FY2010. paper on completed in "monitoring and reporting on financial flows related FY2009 to climate change" formulated in consultation with · the WDR 2010 on FY2010 the oeCD DaC and UnFCCC Secretariat contributes climate change recommendations for improved monitoring. the web- launched and based Climate Change portal and Climate Finance contributed to Knowledge platform are being developed to help global knowledge provide comprehensive information on global action. and dialogue · monitoring on FY2010 global climate action improved, through joint effort with the Un and oeCD, and reported in flagship WBg knowledge products (such as WDi). Stepping Up SUppoRt to Developing CoUntRieS 91 Objective Action Products/Processes/ Timeline Progress Reporting/Comments Indicators12 Develop and good practice FY2009 Progress made: partially completed in FY2009, with test new guidelines to help work ongoing in FY2010, including on gender- analytical tools relevant operations responsive monitoring indicators for use under the account for social and CiF. analytical tools for understanding role of local gender dimensions of institutions in climate change adaptation developed climate change and tested in nine countries in aFR, lCR, and mna. prepared Research and review of international law aspects of climate change and human rights. toolkits and decision- making guides for FY2009­2010 On track: lessons-learned guidebook on watershed adaptation to climate management approaches issued. publication on climate change in agriculture change response strategies for agriculture and a first of and water sectors a series of policy notes on reduced emissions and developed and enhanced adaptation in agricultural landscapes. lCR applied piloted good practices on agricultural landscape adaptation. new economic modeling tools under ghg analysis is development for assessing aggregate impacts of action area 6: Step Up policy Research, Knowledge, and Capacity Building (continued) developed and different energy and climate policies, trade issues in applied in the iFC real agriculture. investment portfolio and select World Bank FY2009­2011 On track: the iFC applying ghg analysis to all real- energy, transport, and sector projects since February 2009. the World Bank forestry sector is advancing methodology development by projects supporting sector-specific pilot projects in energy, transport, and forestry. Capacity · Country-level FY2009­2011 On track: Several new technical assistance programs building expertise and per client request initiated by the World Bank capacity to Regions, including for the africa Union, manage complemented by analytical work, jointly with development- country counterparts and local institutions, and climate linkages technical assistance components in projects. existing and access programs continued (CF-assist, CF training and additional finance methodology development) and extended to new strengthened countries and sectors. new CF-assist programs in Benin, Burkina Faso, the gambia, Rwanda, Syria, and · potential of FY2009 Yemen, and partnerships at national/regional level in existing programs india, morocco, philippines, Uzbekistan, and West reviewed and africa. the WBi initiated new programs. the FCpF enhanced, and a and CpF emerged as new tools for assisting with coordinated country readiness. program with Un agencies Completed: a new joint program with the UnDp to developed develop a Climate Finance Knowledge platform established and generated broad support and interest · Wide coverage of from other development partners. staff and managers by specialized FY2009­2011 On track: By end FY2009, CCDp and SDlp training training programs developed and delivered, with the CCDp providing on development over 4,000 participant hours to over 850 participants in and climate FY2008­2010 and the SDlp covering over 250 change; climate managers, senior staff, and external participants. more issues included in than 1,300 participant hours delivered in knowledge- other training sharing events. Reciprocal partner learning initiative programs, as (Rpli) under development. Development of Core appropriate learning program (Clp), learning programs on low- carbon growth (partnership with eSmap) and energy · Number of training efficiency. sessions held in client countries New proposed indicators for FY2011: This proposed (and staff covered) indictor reflects the need to expand training and knowledge services reach to country staff, in · enhanced skill mix FY2010 particular. to support climate actions On track: Recruitment of several experts and training for WBg staff. adaptation global expert team established. More staff with climate-development knowledge needed in regions and country offices. 92 D e v e l o p m e n t a n D C l i m at e C h a n g e Objective Action Products/Processes/ Timeline Progress Reporting/Comments Indicators12 outreach and · Communication FY2009­2010 Progress made: Communications plan developed and Knowledge, and Capacity Building (continued) communications and outreach plans a corporate coordination group on climate change- action area 6: Step Up policy Research, for the related communications established. new World Bank implementation and region-specific climate change web sites phase developed launched. Moving forward, the WBG will step up and implemented communications and outreach efforts at the regional and country levels, as part of client dialogue and · ghg emissions for partnership program development. all WBg offices enrolled in the FY2011 On track: the World Bank on track to meet its carbon-neutral emission reduction pledge of seven percent between program reduced FY2006 and FY2011. new commitment to offset 100 by seven percent percent headquarters and country-office emissions. by 2011 and remaining emissions offset by purchase of carbon credits © philippe ambrosi Stepping Up SUppoRt to Developing CoUntRieS 93 anneX 2. IFC ClIMate-poSItIVe InVeStMentS anD InnoVatIon The International Finance Corporation (IFC) has dealing with effective use of climate finance by the designated climate change as one of its corporate private sector. It will be responsible for developing strategic priorities, recognizing the role of the new financial products while expanding climate private sector in both financing climate change investments in developing countries. mitigation and adaptation measures as well as harnessing the major new business opportunities addressing Climate Change in for clean energy and other climate-friendly technologies. Responding to the increasing a Diverse program of activities commercialization of solar technology, the IFC has adopted a new Solar Investment Strategy that The IFC expects to increase its climate-positive targets the entire solar value chain, from materials investing in all sectors of the economy, as well as and manufacturing to power generation. While to develop new programmatic approaches and evolving with scientific understanding and political financial innovation alone, with others, and with agreements, the IFC's strategy is to integrate climate finance, to leverage the impact of its own climate change in all departments and regions, capital and the climate funds pledged by its including investment and advisory services, as a shareholders. Specifically, the IFC plans to double model for the larger world of commercial finance its climate change-related activities from 10 to 20 in emerging markets. percent of the IFC's overall activities in three to four years. To this end, the IFC will build on its With this objective in mind, the IFC has rich record in energy efficiency, cleaner established a new Climate Business Solutions production, and renewable energy as well as its Group that will support industry groups and leadership in offering measurements and tools regional departments to set--and monitor-- that allow investors to build climate risk--and ambitious climate goals. It will develop opportunities--into their investment decisions. climate-friendly investment strategies by working Current IFC climate activities focus on: with the IFC's global industry department. The Group will further ensure better analytical baselines · Promoting climate-friendly investments using for tracking carbon intensity of the IFC's portfolio, commercial funds, where the IFC has grown use carbon tools to support clients' efforts to its clean-energy investments at an average of improve their competitiveness, and increase access 51 percent per fiscal year over the last four to the carbon market. The Group will expand the years to reach $1,036 million in FY2009. IFC's already significant work on building IFC investments in clean energy often open partnerships with funds and institutional investors, new markets by introducing first-of- venture capital, international finance institutions, their-kind technologies or financial products. and donors to bring innovative climate financing · Catalyzing cleaner production through a solutions to the markets. The Group will position combined package of cleaner production the IFC as the global leader in knowledge products audits and financing to improve energy and 94 D e v e l o p m e n t a n D C l i m at e C h a n g e resource efficiency through low-cost, high- million in equity with its first direct return measures. Programs are under investment in a grid-connected solar implementation or being developed in power projects developer in India. Eastern Europe, South Asia, Latin America, ­ Many of the IFC's investments in and Africa. Following a successful pilot renewable energy are first of kind program, a $125 million facility is now projects in their markets, which provide available with a streamlined process for demonstration and catalytic effects to approving related loans. expand the sector. An example of this is · Investing in early-stage clean technology the $30.75 million in debt financing to companies and private equity funds. the first project-financed wind farm in Examples include a high-efficiency turbine Chile (46-megawatt Totoral Wind manufacturer in India and a Chinese Farm), which is experiencing serious company with dehumidification technology power shortages and rising wholesale to improve energy efficiency in blast electricity prices. furnaces. ­ $24.4 million support to Estre Ambiental · Innovative concessional financing, blending to assist with the upgrade of the Global Environment Facility (GEF) and company's landfill facilities and associated Clean Technology Fund financing to pilot landfill gas collection and combustion pre-commercial sustainable energy. The GEF systems. supported Earth Fund allows for streamlined ­ $85 million dedicated loan to the MDM approval cycles and the management of such Bank, a long-term IFC partner in Russia, projects on a portfolio basis. Other projects, to finance the nationwide roll-out of its such as the Lighting Africa program (www. energy efficiency finance product. lightingafrica.org), develop markets for new technologies and help meet the needs of the poor for modern energy services. packaging Clean investment and advisory Services Renewable energy/energy · The IFC offers existing and new clients a efficiency investments combined package of cleaner production audits and financing to implement · The IFC is involved in a range of activities, recommendations for improving energy and such as: resource efficiency through low-cost, high- ­ The IFC is actively financing all proven return measures (a $125 million facility). renewable energy technologies (hydro, · Programs are under implementation or being wind, solar, biomass, and geothermal) developed in Eastern Europe, South Asia, across all regions. Over the years, the Latin America, and Africa: IFC has financed over 3.4 GW in hydropower and has a strong pipeline of ­ A 2009 investment/advisory engagement wind projects in Mexico, Romania, with Kuibyshev Azot in Russia resulted China, and elsewhere. In FY2010 the in a package of five energy efficiency/ IFC has financed its first stand-alone cleaner production projects worth $40 biomass project, with a $6 million loan to million, of which the IFC financed $20 Auro Mira in India and has invested $10 million, leading to a reduction of Stepping Up SUppoRt to Developing CoUntRieS 95 115,432 tons of carbon dioxide · Clean energy finance: Building on more than a equivalent (tCO2e) per year. decade of experience with initial support from donors, the IFC has partnered with ­ A $30 million IFC investment in Assan local financial institutions to support Aluminum (Turkey) will improve the specialized financial products for energy aluminum producer's overall efficiency lending. This product is now environmental performance with a 45­70 operating in China, the Philippines, Russia, percent decrease in energy consumption and several other countries. and a 0.50­0.55 tCO2e per ton of aluminum processed, with a projected · Sustainable investing: The IFC is working capacity of 240,000 tCO2e annually. with public pension funds and other long-term asset holders to promote investment in sustainable businesses in innovative Financial products emerging markets. By making a small shift in the trillions of dollars managed by these · Carbon finance: Building on experience funds, it may be possible to generate a large investing donor funds for carbon credits, the source of additional resources for climate- IFC has introduced value-added financial friendly investments. The IFC is also products to help mitigate risks in the carbon working with asset managers to develop market by leveraging its ability to take methodologies for measuring climate change long-term project and credit risk in emerging as an element of business risk. markets. The IFC, which is AAA-rated, offers a Carbon Delivery Guarantee for credits from projects in developing countries. outreach and Collaboration A Carbon Delivery Guarantee provided to an with other Stakeholders Indian chemical company helped maximize the value of carbon credits generated from a · Through its relationship with the Equator waste-heat-to-power project. A carbon banks and sharing of experience with finance advisory product was also launched international business organizations like the to build capacity at local banks and facilitate World Business Council for Sustainable more investment in smaller emission Development, the IFC provides an reducing projects. The first recipient was the important link between climate change- Industrial Bank of China. related business practices and evolving best practices like carbon disclosure. 96 D e v e l o p m e n t a n D C l i m at e C h a n g e anneX 3. aDDReSSIng ClIMate Change­RelateD pRogRaMS In the WoRlD bank RegIonS a da p tat i o n a n d cl i M at e R i s k aFRICa (aFR) M a n a g eM en t making Development Climate Resilient: acting now, acting The World Bank is actively engaged in together, acting Differently strengthening the climate resilience of sectors particularly vulnerable to drought, floods and Making Development Climate Resilient: A World other climate hazards, such as agriculture and Bank Strategy for Sub-Saharan Africa, the Region's urban development. For example in drought- Climate Change Strategy, is grounded in four core prone Ethiopia, the Bank is supporting principles: (1) disaster risk reduction and climate Government efforts (including through a recently change adaptation form a single integrated agenda; approved Productive Safety Net Program worth (2) adaptation and risk reduction are $2.1 billion--of which $480 million is World fundamentally about sound development; (3) Bank financing) to improve the effectiveness of mitigation and adaptation go hand in hand, but the country's system to assist chronically food should not be a constraint to increasing Africa's insecure rural households; and is working with access to energy and broader growth; and (4) the government to integrate into the system scaled-up finance is necessary to meet Africa's additional drought risk that climate change might development needs in a climate-constrained bring about. In Madagascar (a country environment. The Strategy calls for mainstreaming chronically exposed to cyclones), the World Bank support for climate action into country and has been supporting since 2006 hydro- regional programs along four pillars: (1) making meteorological risk assessment for agriculture, adaptation and climate risk management a core cyclone impact modeling, updating of developmental component; (2) taking advantage of infrastructure norms and standards, vulnerability mitigation opportunities; (3) focusing on analysis for drought-prone areas, an analysis of knowledge and capacity development; and (4) historical and projected climate change, and scaling up financing opportunities. In-depth technical assistance and capacity building for region-wide analytical work supports the strategy local entities. In Malawi, to complement its in a number of areas, including work on the assistance to agriculture, irrigation, and rural economics of adaptation to climate change in development, the Bank is working with the Ethiopia, Ghana, and Mozambique; the impacts of government to develop innovative climate risk climate change on transport; land and river basin management tools, including weather index- management, including hydroelectric generating based crop insurance. capacity; and identifying deforestation drivers in the Congo Basin. Stepping Up SUppoRt to Developing CoUntRieS 97 add R essi ng cli Mate chan ge in million). DRM Country Plans--in initial count Ry and Regional implementation for Ethiopia, Mali, pR og RaM s: Mozambique, and Senegal; in preparation for Burkina Faso, Ghana, Madagascar, Malawi, Within the regional strategy's four pillars climate and Togo--also identify strategic investment is being increasingly mainstreamed into CASs. needs for DRM and adaptation to climate- Cameroon, Kenya, Nigeria, and South Africa are related disasters recent examples, and climate-related work is being · Major focal area for three PPCR countries: undertaken or deepened in Burkina Faso, Central Mozambique, Niger, and Zambia African Republic, Democratic Republic of Congo, · Agricultural, irrigation, and rangeland Ethiopia, Ghana, Madagascar, Malawi, Mali, management operations in Burkina Faso, Mozambique, Namibia, Niger, Rwanda, Senegal, Ethiopia, Kenya, Madagascar, Mozambique, Sudan, and Uganda. Regional integration is of Niger, Nigeria, and Uganda; under special importance for Africa, and work on preparation in Ghana, Malawi, and Rwanda integrating river-basin management, regional grids, and power development contributes to a more ­ Increasing productivity and tolerance to energy-efficient and hence lower-carbon growth climate shocks through sustainable land path, while supporting broader sustainable water and rainwater management in Malawi resource development. Work is ongoing on the ($13 million) Niger, Senegal, Zambezi, and Nile River Basins, as ­ Enhancing the protection for livelihoods well as on Lake Victoria. in Ethiopia through drought-risk financing (Second phase of support $175 Good Examples of Progress in Integration of million) Disaster Risk and Adaptation Programs: ta k i n g ad va n ta g e oF loW- caR b o n o p p oRt u n i t i e s : · Integrated approach to the work on disaster risk and strategic climate resilience in Mozambique The World Bank has mobilized, in partnership with · Integrating flood and drought management the Africa Development Bank, resources to finance and broader climate and watershed a $2.3-billion Investment Plan in South Africa management in Kenya, Malawi ($75.5 million) (including a $500 million contribution from the ­ The Kenya Adaptation to Climate Clean Technology Fund). The plan includes support Change in Arid and Semi-Arid Lands to grid-connected solar thermal power, utility-scale Project ($5.5 million, GEF) will support wind-power development, solar water heaters, and community-led efforts to increase energy efficiency. In Nigeria, a CTF intervention in climate resilience (plus capacity-building the order of $200 million is being designed, efforts at the national and district level) targeting the energy and transport sectors. In Kenya, the Bank is supporting a pilot program--the first of · Support post-disaster recovery and its kind--aimed at supporting the adoption by reconstruction through GFDRR-sponsored smallholder farmers of innovative sustainable assessments in Burkina Faso, Central African agricultural land management practices. These Republic, Namibia, and Senegal. Opening the practices will, at the same time, raise farms' way for more climate-resilient reconstruction, productivity, enhance their resilience to climate a project for urban drainage in the Central shock, and enable them to receive payments from African Republic is in preparation ($22.3 98 D e v e l o p m e n t a n D C l i m at e C h a n g e the carbon markets for enhancing the storage of · In Kenya, the BioCarbon Fund is supporting carbon in agriculture soils. This can pave the way to development of methodologies to measure scaling up the Africa soil carbon market, which carbon sequestration in agricultural according to one estimate has the potential to landscapes through cultivation of coffee mobilize resources of the same order of magnitude under shade and improved soil moisture of current Official Development Assistance (ODA) conservation in maize production systems. to the region's agriculture. Further illustrations of Knowledge and Capacity Development: the World Bank's work supporting low-carbon development include: · TerrAfrica as knowledge platform on approaches to sustainable land management and adaptation Energy: · Stand-alone analytical products on the · Improving efficiency of power generation, economics of adaptation to climate change distribution, and use; increasing use of (Ghana, Ethiopia, Mozambique), on the renewable energy (for example, solar); moving economic and trade implications of a carbon toward more climate-efficient transport and tax (South Africa), on the drivers of urban development patterns in South Africa deforestation (the Congo Basin), and on water resources (Zambezi, Uganda, the Nile), · Improving energy and gas in Nigeria ($600 as well as on the implications of climate million) change on fisheries, gender, youth, · Improving public transport in Lagos, Nigeria communities, coastal cities, migration, and ($150 million) health (in particular malaria) in selected African countries · Hydropower projects under preparation: Lom Pangar (Cameroon), Rusumo Falls (Rwanda) · Analytical work on the regional integration ($175 million) implications as related to climate change and water resources, climate change and land Land management as "double-dividend" in both management, and climate and transport mitigation and adaptation: · Support for urban land use/drainage/flood · Cameroon, Central African Republic, risk mapping in Lagos, Cotonou, Luanda, Democratic Republic of Congo, Ethiopia, and most recently Dakar, Senegal Equatorial Guinea, Gabon, Ghana, Kenya, · GEFRR training and capacity-building Liberia, Madagascar, Mozambique, Republic activities related to post-disaster recovery and of Congo, Tanzania, and Uganda construction in Burkina Faso, Central African participating in the FCPF Republic, Namibia, Senegal, Togo and · Ethiopia, Kenya, Madagascar, Mali, Niger, Uganda, including a regional study on the and Uganda with reforestation programs impact of the recent flooding in West Africa supported by the BioCarbon Fund · Support for ecosystems mapping in Darfur, · Regional approach to REDD under Sudan preparation with GEF support in the Congo · Analytical work on improved charcoal Basin management in Tanzania Stepping Up SUppoRt to Developing CoUntRieS 99 · Working with key African institutions (for Climate Change Portfolio: example, the African Union) on technical issues of interest to Africa in preparation for · About $2.1 billion committed in 73 projects the Copenhagen negotiations. (as of March 31, 2010) · Among 73 projects, 19 are IBRD/IDA, 33 Partnerships: are carbon finance, and 21 are GEF. · Geothermal Development Facility Project in A new database to track EAP investments that Rift Valley funded by the GEF ($35.5 million) address climate change is under finalization and should lead to a more comprehensive and · Adaptation to Climate Change in Arid accurate reporting soon. Lands in Kenya, jointly executed with the UN Development Programme ($6.5 million) Development Policy Lending: · Indonesia Climate Change DPL under eaSt aSIa anD paCIFIC preparation ($300 million) (eap) Supporting Activities Contributing to en h an cin g Resilience and Adaptation and Reduction of Climate Redu cin g Car bon intensit y o f Variability: De ve lopm ent · Philippines Climate Change Adaptation The region is highly diverse with regard to Project ($15 million) aims to develop and countries' climate change exposure and their demonstrate systematic diagnosis of climate- contribution to GHG emissions. Adaptation related problems and design of cost-effective takes precedence over mitigation in many adaptation measures, while integrating countries, particularly in the Pacific Islands, but climate risk awareness and responsiveness also in other countries having a large part of their into economic and operational planning population located in coastal zones (for example, (expected Board approval: June 2010); China, Vietnam). Country focus has been largely · Mainstreaming Adaptation in Irrigated on short-term mitigation of natural disasters, Agriculture Project ($5 million from the which places the integration of disaster risk GEF Special Climate Change Fund) seeks to management and longer-term adaptation integrate the effects of future climate change measures high on the Region's agenda. EAP is on the North China Plain (Board approval: also a region with high gross domestic product August 2008); growth rates, and associated increases in GHG · Two new Least Developed Countries Fund emissions. The EAP strategic framework calls (LDCF) concepts have been approved for for: (a) strengthening analytical and policy Solomon Islands and for the second phase of support to climate change challenges; and (b) the Kiribati Adaptation program. scaling up the impact of Bank assistance by taking a programmatic and strategic approach to enhancing resilience and reducing the carbon intensity of development. 100 D e v e l o p m e n t a n D C l i m at e C h a n g e Generating New Knowledge: · EAP Flagship on Energy: Meeting East Asia's Growing Energy Needs in a Sustainable · Primer on Climate-Resilient Cities (2008): Manner has progressed to deliver the following main messages: It is within the ­ First implementation in Vietnam, reach of the region's governments to followed by Indonesia and China maintain economic growth, mitigate climate (FY2010) change, and improve energy security. This ­ Objectives: (a) to build the capacity of requires the governments to take immediate cities in East Asia to be prepared for and action to transform the energy sector toward to respond to climatic and other natural much higher energy efficiency and hazards; (b) to reduce vulnerabilities in widespread use of low-carbon technologies. order to minimize loss from such events This shift to a clean-energy revolution and increase city competitiveness; (c) to requires major domestic policy reforms, and mainstream this approach into overall transfer of substantial financing and low- urban management and infrastructure carbon technologies from developed planning; and (d) to back this capacity countries. and "resilience strategies" with concrete local actions and investments on the Carbon Finance: ground that will form the city's Local Resilience Action Plan · Thailand: TSM Bio Energy Wastewater ­ "Workbook" developed on methodology Management and Methane Capturing for and design of templates/spatial mapping Electricity Project (Spanish Carbon Fund) guides Expected total emission reductions: 150,000 tCO2e per year · Indonesia Country Environmental Analysis focusing on climate change (November · China: Facilitating Reforestation for 2009): Guangxi Watershed Management in Pearl River Basin (BioCarbon Fund) Expected to ­ Analysis prepared using Indonesian sequester 0.34 MtCO2e by 2012 and around expertise in a consultative process and in 0.46 MtCO2e by 2017 coordination with the Asian Development Bank · China Hubei Provincial Biogas Program developed in coordination with IBRD China · Study on Climate Change Impacts and Eco-farming Project (Board approval: Adaptation in the Bangkok area: The December 2008, for $120 million), for the CPF Governor of Bangkok recently announced a major plan, "Bangkok--Getting Ahead," · One additional CPF program under which includes flood protection measures, development in China, and one each in with reference to this World Bank study: Indonesia and Vietnam ­ Objectives: (a) assess climate change · Indonesia working with the FCPF and scenarios until 2050 and their social and UN-REDD to support readiness and prepare economic consequences; (b) quantify the for possible future payments through REDD likely magnitude of social, · Thailand has signed a participation environmental, and economic damage; agreement with the FCPF. and (c) analyze appropriate interventions. Stepping Up SUppoRt to Developing CoUntRieS 101 Climate Investment Funds: euRope anD CentRal · Working with the IFC and ADB on large- aSIa (eCa) scale CTF-based programs, with the in c re a s i n g R e s i l i e n c e t o Cl i m a t e Philippines, Thailand, and Vietnam CTF Ch a n g e a n d R e a p i n g m i t i g a t i o n investment plans already approved by the TF Committee; the Indonesia CTF plan was Co - b e n e f i t s approved in March 2010. Identification mission for the operations under the Thailand The ECA region is actively supporting client CTF was conducted in March 2010. countries in addressing climate change opportunities and risks. From a business perspective, the region · PPCR update: (a) Cambodia: joint donor focuses on building strong partnerships with the mission October 2009, implementation of European Union, as well as multilateral, regional, policy framework addressing climate change and national institutions, and emphasizes leveraging expected from June 2010. Identification of of carbon finance and new Climate Investment investments to follow; and (b) Samoa: Fund resources, while scaling up renewable energy scoping mission in December 2009 and and energy efficiency investments. Working with formal joint donor mission in April 2010. partner countries, the region is mainstreaming climate-resilience improvements in an increasing Other Innovative Financing: number of sector investment and policy loans. Examples include leveraging CTF resources in Philippines Chiller Energy Efficiency Project: Kazakhstan, Turkey, and Ukraine; promoting CF in Designed on the financial partnership that includes the Czech Republic, Latvia, Russia, Ukraine, and three international financial instruments (GEF, MLF, Uzbekistan; and scaling up RE and EE in Armenia, and CDM), with the Bank as an implementing Bulgaria, Croatia, Macedonia, Poland, and Turkey. agency of the GEF and MLF and KfW as the In the area of adaptation, ECA follows a three- Carbon Fund buyer (Total financing: $53.89 million). tiered approach that builds on the Region's adaptation flagship report and a series of analytical Knowledge Management and Capacity- products that help clients understand the range and Building Activities: likelihood of climate impacts and incorporate them in client and WBG investment portfolios and · PoA Training Workshop in Bangkok country partnership and assistance strategies. An (September 2009) updated comprehensive Climate Change Business Plan for the Region will be prepared in ­ In partnership with WBI CF-Assist FY2010­2011. Program, the World Bank Carbon Finance Unit, and Thailand Greenhouse Gas ECA's portfolio in FY2009 and the first three Management Organization. 198 CDM quarters of FY2010 includes 38 climate change experts from 25 developing countries as investment and advisory activities on adaption and well as EAP/SAR staff attended mitigation, with financing from IBRD/IDA, the · CIF partnerships meeting in Manila with GEF, and Carbon Finance totaling $873.6 million. strong EAP representation · Indonesia: Inputs to national low-carbon growth study 102 D e v e l o p m e n t a n D C l i m at e C h a n g e sup po Rti ng loW- ca Rbon GEF: gR o W th · Programs with climate elements in Armenia, Investments with Mitigation Co-benefits: Bulgaria, Croatia, Macedonia, and Poland, totaling $173 million · Development Policy Lending: The proposed Turkey Environment Sustainability and Analytical and Advisory Work: Energy Sector DPL ($800 million)--the second project in a programmatic series that · Technical assistance to financing wholesale started with 2009 Programmatic Electricity emission reduction projects through sale of DPL (PEDPL1) operation Assigned Amount Units in Czech Republic, · Energy Efficiency Montenegro ($15.7 million) Latvia, and Ukraine · Energy Efficiency Belarus ($125 million) · Technical assistance on Southeastern Europe Regional Energy Efficiency and Renewable · Private Sector Renewable Energy and Energy study, which will formulate an EE Turkey ($500 million) intervention strategy for the Western Balkans · Montenegro Institutional Development and with country-specific sections for Albania, Agriculture Strengthening (MIDAS) ($15.7 Bosnia and Herzegovina, Kosovo, million) Macedonia, Montenegro, and Serbia · Water Supply and Sanitation Project Belarus Knowledge Sharing and Capacity Building: ($60 million) · CF-Assist National Training Workshop on Climate Investment Funds: Joint Implementation/GIS in Serbia · CTF resources in Turkey to leverage public · Assist Outreach Workshop in Turkey and private investment to improve energy efficiency as well as overall generation s up p oRt i n g cl iM at e - R e s i l i e n t capacity "cleanly" with a focus on d e v e l o pM e n t environmental sustainability by reducing GHG emissions ($100 million) Investments directly contributing to climate · CTF investment plans were endorsed for change adaptation reaching approximately $175.5 Ukraine ($350 million) in March 2010 million: Carbon Finance: · Hydromet strengthening in Russia ($80 million) · Rosneft Gas Flaring Reduction Project · Armenia Irrigation Rehabilitation ($30 Russia ($150 million), Moldova Community million); Uzbekistan Ferghana Valley Water Forestry Project ($13.6 million) Resources Management ($65.5 million) · Carbon finance programs in Uzbekistan ($2 · A regional hydro meteorological project for million) Central Asia planned for end FY2011, which will finance management systems, data gathering, equipment, and so forth Stepping Up SUppoRt to Developing CoUntRieS 103 Investments directly contributing to DRM/ and will include analytical work and reduction of current climate variability: investments to integrate climate resilience in sector and cross-sector programs. · Croatia and Moldova Disaster Risk/ Adaptation ($36.3 million and $10 million Other Innovative Financing: respectively) The Southeastern Europe and Caucasus Climate Analytical and Advisory Work: Change and Catastrophe Risk Insurance Facility, also under preparation, will create a specialized · The regional energy flagship "Lights Out? regional reinsurer to enable a rapid expansion of The Outlook for Energy in Eastern Europe and climate change and catastrophe insurance Central Asia" (launched in March 2010) penetration among homeowners and small and outlines significant needs in building energy medium enterprises in participating countries. security while exploring policies and instruments to also take advantage of enhancing energy efficiencies, reducing lAtin AmericAn And the GHG emissions, and furthering global efforts to address climate change; cAriBBeAn region (lcr) S u p p o r t i n g ne w D e v e l o p m e n t · The regional flagship report "Adapting to Ch a l l e n g e s t h ro u g h Climate Change in Europe and Central pa r t n e r s h i p s , K n o w l e d g e , Asia" launched at Bonn climate discussions in June 2009, with rollout in ECA beginning and Finance in November 2009 alongside the WDR; LCR countries were among the first to partner with · Analytical work to assist client countries the WBG in addressing climate change. Starting understand range and likely impacts from with analytical work to better understand the climate variability and change on vulnerable physical nature of the impacts, assistance has grown subsectors in sensitive subregions, and to to a strategic compact that aims to use the full suite develop candidate adaptation approaches to of WBG products, instruments, capabilities, and mitigate impacts in a cost-effective manner. experiences to help with a new and complex This includes AAA efforts to improve the development challenge. The LCR portfolio includes resilience of the energy sector in Albania and 183 climate change activities in adaptation and Uzbekistan; ensuring climate-resilient mitigation totaling $7.3 billion and encompasses agriculture in Albania, Macedonia, Moldova, regional studies, country assessments, IBRD and Uzbekistan; developing a water sector investment, and development policy lending. Other adaptation plan for the Sava River Basin in products include innovative catastrophic insurance Southeast Europe, and assessing livelihood schemes; GEF grants and carbon finance; and TA and income impacts in Tajikistan. and new concessional finance, such as the CTF. Climate Investment Funds: Building Knowledge at the Country and Regional Levels: LCR's analytical and advisory assistance · The Pilot Program for Climate Resilience program ($5 million) consists of analytical work, (PPCR) for Tajikistan--Phase I started with development of models and toolkits, capacity a Joint Mission held October 12­22, 2009, building, and high-level policy seminars. 104 D e v e l o p m e n t a n D C l i m at e C h a n g e · Regional flagship study on climate change, of Renewable Energy policies/law/funds, "Low Carbon, High Growth: Latin American Energy Efficiency policies/law/funds, and Responses to Climate Change, an Overview," Mass Transit/Urban Transport regulations/ published in 2008 and launched institutions/funds. simultaneously at the Poznan COP, in Washington, DC, and in Bolivia. A second Investments Directly Contributing to Climate technical volume, "Low Carbon Change Adaptation: Development," released at the IMF/WBG Annual Meetings in Istanbul · Nicaragua National Seed System · Low-carbon growth studies for Brazil and Strengthening helps to sustainably increase Mexico agricultural production in the medium term. Operation strengthens seed producer · Program of analytical work on clean energy organizations, provides technical assistance, and climate change develops seed-storage capacity, improves seed · Regional study on social impacts of climate certification, develops a revolving fund to change finance seed production, strengthens · Country/sector studies on climate change production of basic seed, and enhances seed impacts on fisheries, agriculture, tourism, testing facilities. and hydropower · Natural Disaster Mitigation in Honduras · Amazon Dieback study with technical identifies and takes measures to replace lost collaboration of the University of Exeter, the incomes from climate change impacts and to Remote Sensing Technology of Japan reduce risks of flooding and droughts. (RESTEC), and the Potsdam Institute for Climate Impact Research. Identified and Investments Directly Contributing to DRM/ evaluated the long-term options that would Reduction of Current Climate Variability: be required to maintain the integrity of the Amazon Basin, and locally delay the impacts · OECS Disaster Vulnerability Reduction of Amazon forest mortality. Project finances disaster vulnerability reduction investments for selected public Supporting Policy Development: infrastructure. The project will seek to climate-proof public infrastructure in · Mexico Climate Change DPL ($500 million) selected priority sectors: water, housing, is supporting the government's commitments health, and education. under the UNFCCC outlined in their 3rd · Colombia Rio Bogota Environment National Communication, and the Special Infrastructure Project includes a large flood Climate Change Program. Assistance to control component that will raise flood Argentina to formulate its Third National standards from a 25-year return period to Communication to the UNFCCC. 100-year return period. · Green infrastructure DPL--Mexico ($1.5 · Argentina Province Infrastructure billion). The Framework for Green Growth Sustainable Investment includes a large- DPL provided a framework, via the country's scale flood prevention project in the province Special Climate Change Program (PECC), of Buenos Aires. for emission reductions by way of a trisection Stepping Up SUppoRt to Developing CoUntRieS 105 · Agriculture Insurance for Vulnerability seeks to transform urban transport in Reduction and Climate Change Adaptation. Mexican cities into a lower-carbon one. The objective is to reduce vulnerability of · The Colombia Investment Plan was approved small and medium agricultural producers in by the CTF Trust Fund Committee in LCR to adverse systemic weather events. The Manila. The $150 million plan (of which project supports the transfer of capacity on $40 million will be linked to World Bank financial agriculture risk management, policy operations) focuses on urban transport and dialogue, and the dissemination of knowledge energy efficiency. and skills on design and implementation of index-based risk management tools for low- · The first missions to Chile to help prepare income agriculture producers. the CTF Investment Plan were held in November 2009. The list of priorities Climate Investment Funds--PPCR: determined by the government at that time is being re-evaluated in light of the recent earthquakes and will be included in the · Bolivia has presented its initial draft for "building better" program. Phase I activities to the Pilot Program for Climate Resilience Trust Fund in an informal session in Manila. Financing with Mitigation Co-benefits amounts to over $6.2 billion and includes: · The Regional Program for the Caribbean is also moving ahead, with scoping missions for · Regional Air Quality and Sustainable all of the four OECS countries completed, the Transport (Argentina, Brazil, Mexico, and a Haiti program proposal well integrated in its regional project) earthquake recovery plan. For those countries where IDB has the lead (Jamaica and the · Supporting introduction of compact Regional component), World Bank staff have fluorescent lighting, appliances, air- participated in their scoping missions. conditioning, new building codes (Argentina, Brazil, Mexico) Climate Investment Funds--Clean · Reducing losses in transmission (Honduras, Technology Fund Uruguay) · Technical Assistance to reform policy and · One of the first investment plans endorsed in regulatory framework to encourage energy January 2009 was for Mexico. At $500 efficiency (Argentina, Dominican Republic, million, it focuses on renewable energy and Ecuador, Guatemala, Honduras, Nicaragua, urban transport. In May 2008, Mexico Uruguay) became the first country with a private sector (wind farm) project prepared by the IFC for · Mini-hydro power plants, off-grid rural CTF financing of $15 million. electrification in Central America, Peru; wind in Colombia · The first investment operation to be financed under the CTF in LCR was approved by the Leveraging Private Sector Investments in RE/ Board in March 2010. The $150 million EE: In FY2005­2009, IFC net investments Multi Stakeholder Partnership for the Urban (including large hydropower) reached over $641 Transport Transformation Project (UTTP) million. More than 25 percent of these commitments (around $179 million) were 106 D e v e l o p m e n t a n D C l i m at e C h a n g e provided in FY2009, marking a clear increase in · Yemen: CAS includes addressing climate the IFC's engagement over the last five years. change as one of its main objectives; Investments include eight renewable-energy · Morocco and Tunisia: CPSs focus on projects in Argentina, Brazil, Chile, Colombia, enhancing climate change resilience and Guatemala, Honduras, and Nicaragua, and five promoting low-carbon growth; energy efficiency projects in Brazil, Colombia, Mexico, and Paraguay. A carbon mitigation · Over 40 percent of projects in FY2009 and project was also approved for Nicaragua. pipeline contain one or more climate actions. Carbon Finance: The region is also benefiting Investments Directly Contributing to from opportunities for emission reductions and Adaptation: has 36 agreements signed to a value of $126.3 million, for a total reduction of 20.3 MtCO. · Yemen: Agrobiodiversity and Adaptation ($4 million) Forest Carbon Partnership Facility: Out of 37 · Morocco: Support Plan Maroc Vert ($100 participating countries, 15 are from LCR. In million); Climate Adaptation in Agriculture addition, Peru has been selected as one of the six and Water ($5 million) pilot countries for the Forest Investment Program · Regional Coordination on Improved Water under the CIF. Resources Management and Capacity Building in Cooperation with NASA ($5.64 million) middle eAst And Contribution to Reduction of Current Climate north AfricA (mnA) Variability: i nt e grat ing Clim at e Chan g e i n Ban k Bu siness and Scaling Up · Tunisia: Water Sector Investment (FY2009) Cli m at e - Related a ctivities in the amount of $30.6 million · Yemen: Water Sector Support (FY2009) in MNA's Climate Change Strategy was one of the the amount of $90 million first to be developed in the World Bank, · Yemen: Groundwater and Soil Conservation preceding the SFDCC. Work is under way to Add; financing (FY2009) in the amount of update the regional strategy in line with the $15 million SFDCC and to reflect recent country dialogue. MNA seeks to fully integrate the objectives of · Lebanon: Greater Beirut Water Supply reducing climate vulnerability and GHG (pipeline) in the amount of $100 million emissions into the Bank's development assistance · Egypt: On-Farm Irrigation (pipeline) in the to the region. The business plan of lending amount of $100 million activities is organized around two dimensions: (1) IBRD and IDA projects that will serve as a · Syria: Coastal Rivers & Orontes River "vehicle" to deliver the mitigation or adaptation Basins (pipeline) in the amount of $3.4 assistance; and (2) additional activities that would million help MNA countries reduce GHG emissions or · Regional: Strategic Action Plan for Red Sea enhance their resilience to climate. and Gulf of Aden II (pipeline) in the amount of $3 million Stepping Up SUppoRt to Developing CoUntRieS 107 Knowledge Products: · Energy sector: one energy efficiency program in Yemen, two renewable-energy projects in · The GFDRR ($1.1 million) contributes to Yemen (first of its kind in Yemen, the creation of a DRM center of excellence, 60-megawatt wind farm) and Tunisia (34- enhancing regional risk assessment, and megawatt wind farm), energy efficiency supporting the development of national- and national program in Egypt (household level), city-level CCA and DRR policy frameworks energy efficiency of pumping systems for in priority sectors (2009­2010). irrigation and drainage in Egypt; · MENA Regional flagship report on Climate · Citywide carbon finance program to address Change in MENA (2010­12). all GHG sectors (that is, energy efficiency, renewable energy, transport, and sanitation) · MDTF for Addressing Climate Change in for Amman, Jordan for the CPF; MENA ($5 million). The five current ongoing studies are: · Livestock and poultry manure biogas program in Yemen; ­ Regional: Technical Assistance in Support of Downscaling Climate · Transport program (vehicles scrapping, bus Change with Some Application of Case rapid transit) in Cairo, Egypt; Study · Egypt, Morocco, and Tunisia among the ­ Regional: Improving Food Import earliest launched programs under CF-Assist, Supply Chains in Arab Countries completed in 2009. Focused capacity- building programs were completed in Syria ­ Sub-regional (Jordan, Lebanon, and and Yemen during 2007­2008, in Jordan and Syria): Vulnerability to Climate Change Lebanon during 2009. Capacity-building in Agricultural Systems Sub-regional activities to scaling up of carbon finance (Algeria, Egypt, Jordan, Morocco, Syria, activities (a) through programmatic approach Tunisia, West Bank/Gaza): Economic and (b) in urban areas are under way. Analysis to Assess the Potential for CSP in MENA and Evaluate the Derived Climate Investment Funds: Benefits of Large Scale Renewable Development · MNA Regional CTF Investment Plan for ­ Egypt: Cairo Congestion Study Concentrated Solar Power ($750 million), ­ Syria rural strategy in a changing Morocco CTF Investment Plan ($150 climate (2009­2012) million) and Egypt CTF Investment ($300 million); Carbon Finance: · Yemen as one of the pilot countries selected for PPCR; Proposal for Phase I to be · Five municipal solid waste (MSW) projects submitted to CIF April 2010 ($30­$60 (two stand-alone carbon finance projects in million); Egypt; two lending projects blended with · Morocco has expressed interest in being carbon finance in Tunisia, and one blended considered for funding under the FIP. project in Jordan); one national MSW program (Morocco DPL) under preparation for the CPF (post-2012 program); 108 D e v e l o p m e n t a n D C l i m at e C h a n g e Integrated Financing Packages: with challenges of climate variability and change, food security, and rural poverty · Morocco Solid Waste Sector DPL: alleviation. Launch planned for the FAO Programmatic series of two DPLs designed to annual conference in November 2009; provide budget support and sustain · Sub regional study of implications of climate implementation of reform program of solid change in water and agriculture sectors in waste sector. DPL promotes (through Yemen and Djibouti, including downscaling programmatic use of carbon finance) of climate models; reduction of methane emissions as part of the broader support to sector reform. Morocco · Conference on economic implications of climate MSW Carbon Finance Program amounts to change was held in Morocco in February 2009. 100 million (FY2009); The meeting resulted in a request by the government to assist in the development of an · Yemen: Conservation and Utilization of integrated Climate Change Strategy. Agro-biodiversity for Adaptation to Climate Change in the Rainfed Highlands. Used a pilot window in the GEF under Strategic Priority of Adaptation (FY2010); South aSIa RegIon (SaR) · Morocco: Integrating Climate Change in en h a n c i n g Cl i m a t e R e s i l i e n c e Development Planning and Disaster a n d R e d u c i n g C a r b o n e mi s s i o n s Prevention to Increase Resilience of Agricultural and Water Sectors. Approved A high population density, combined with a large under the SCCF (pipeline); concentration of poverty, a degraded resource base, and a variable climate all combine to make South · Yemen: Climate Resilient Integrated Coastal Asia especially vulnerable to the consequences of Zone Management. Approved under the climate change. SAR emissions have risen faster than Least Developed Countries Fund (pipeline); any other region except the Middle East. India has · Tunisia: EE and Cogeneration Investment emerged as the sixth largest emitter of GHGs, Scale-Up and Biomass Pilot-Project (pipeline). although per capita emissions in the region are among the lowest in the world. The climate-smart Knowledge Sharing and Client Capacity Building: development approach in the region affirms the overall objective of assisting client countries in · MENA, in partnership with AFR, building climate resilience while promoting more developing Africa climate scenario portal to sustainable growth. Activities are guided by five key help decision makers internalize the pillars: (1) promoting "no-regrets" approaches, given evolution of climate in investment design and the uncertainty of impacts; (2) focus on building other development choices; resilience of the climate-vulnerable poor; (3) investment in knowledge to address critical · Regional forum on agriculture, climate information gaps; (4) regional cooperation to deal change, and food security designed in with cross-border climate-related challenges; and (5) partnership with the Food and Agriculture maintaining the integrity of environmental services to Organization of the United Nations (FAO), ensure that development is rendered more resilient. the International Fund for Agricultural Similarly, in the first instance low-carbon Development, and the World Food development and growth are guided by three key Programme, assisting ministers of agriculture pillars: (1) harnessing the low-hanging fruits of Stepping Up SUppoRt to Developing CoUntRieS 109 win-win policies and investments, (2) enabling access · An international conference on Bangladesh's to greater finance for clean development strategies, climate strategy and action plan in and (3) assisting with clean technology transfer. September 2008 that led to a multi-donor trust fund for Bangladesh, the first of its Strengthening the Knowledge Base and kind in the world, with the Bank as trustee Contributing to the Development of Regional Programs: Supporting adaptation-related activities: Ongoing activities include: · Nepal and Bangladesh nominated for the PPCR · From Kathmandu to Copenhagen, a high- · Extending analytical services to assist clients profile conference that focused on the risks to better evaluate the magnitude and of climate change in the Himalayas and the distribution of climate change impacts in a gains and opportunities from regional number of sectors cooperation. This was the first time participating SAR countries agreed to a joint · Three major reports on the impact of climate conference statement; change on agricultural performance in Bangladesh, India, and Pakistan supporting · Pioneering analytical work on trade and these countries in developing adaptation climate change that would develop a global strategies for agriculture index on the climate sensitivity of trade, beginning with SAR countries as a pilot; · Two analytical reports on understanding and addressing the risks of India's large coastal · South Asia Water Initiative (SAWI) regional cities, vulnerability reduction, and adaptation water program focusing on climate change to climate variability. A major study on the concerns; environmental challenges of rapid growth · Numerous studies that identify future under preparation climate threats and possible adaptive · Technical assistance to India on economic responses in India and Bangladesh, with development and adaptation of the Sunderbans, ongoing work for several other countries. and to Andhra Pradesh to pilot interventions for enhancing drought adaptation capacity of Supporting Policy Development: affected communities and reducing their vulnerability to drought in the long term · Technical assistance to Pakistan on developing a · Technical assistance on damage needs strategy on national environment policy that is assessment, disaster management, and climate resilient through an ongoing non- adaptation for cyclone recovery in Bangladesh lending TA program and preparation of a TA project · Non-lending technical assistance for Pakistan with support on adaptation programs · Ministry of Finance TA on Climate Change Issues in India that has provided policy and · Report for Nepal on the Ganges strategic strategic support on climate change water assessment · Analytical work on the effects of climate · FY2009 and FY2010 Q1&2: Investments change on water resources in Nepal and the directly contributing to climate change Ganges Basin helping affected countries adaptation formulate response strategies 110 D e v e l o p m e n t a n D C l i m at e C h a n g e ­ Pakistan Water Sector Capacity · Carbon finance funding along with a GEF Building (FY2008), recognizing major grant and the Montreal Protocol mechanism climate change impacts on water support the India Chiller Efficiency project, resource management improving energy efficiency, lower GHG emissions in the chiller industry and reduce ­ High-impact investment for the ozone-depleting substances; Maldives through an IDA-financed Environmental Management Project and · Lahore Composting Project in Pakistan assistance to the government in promises to be a model for the substantial establishing a climate change trust fund reduction of landfill waste, environmental and health hazards and GHG emissions by ­ Hydrology Project Phase II (India) applying composting technology and recycling; ­ A coastal adaptation project in · Three carbon finance investments in the Bangladesh under preparation pipeline: Himachal Pradesh watershed management, bio-carbon livelihoods in India, Financing with Mitigation Co-benefits focuses and a bio-carbon forestry project in Nepal; on reducing the carbon intensity of the region's growth, and promoting the transition to · India Rampur Hydropower Project--Carbon low-carbon development. A majority of the Finance (pipeline). activities focus on energy efficiency, reduction in energy intensity, and renewable energy: Knowledge Management and Capacity- Building Activities aimed at building · Major investments are under way for the partnerships and deepening knowledge among energy sector, including: countries in the region: ­ India Punjab High Voltage Distribution · SAR Climate Change Web site as key to System (pipeline) knowledge management and partnership ­ Pakistan Community-Based Renewable development, with new postings released Energy Development in Northern Areas during and ahead of important global events and Chithral (ongoing) · A training program for Bank staff under ­ Bangladesh Brick Kiln Efficiency development with CCDP Project (pipeline) · SAR-wide or global workshops sponsored by · Future focus on developing programmatic GDLN in cooperation with Asia Learning approaches and leveraging resources through · Collaboration with the WBI to deliver CIFs climate change training programs to · India Low Carbon Growth study identifies countries in SAR and EAP some of mitigation wins-wins for development · Regional CCDP Training Workshop on The Economics of Climate Change and Carbon Finance: Many of the investment activities Development (May 12­13, 2009), with more involve carbon finance. The proposed and ongoing than 40 participants attending, including Bank investments cover the major polluting sectors staff from Afghanistan, Bangladesh, Nepal industry, urban, and transport and are projected to Pakistan, and Sri Lanka lead to a total reduction of 14.7 MtCO2. Stepping Up SUppoRt to Developing CoUntRieS 111 anneX 4. ClIMate InVeStMent FunDS The Climate Investment Funds, including the to bridge the financing and learning gap between Clean Technology Fund and the Strategic now and a post-2012 global climate change Climate Fund, were approved on July 1, 2008, agreement. A sunset clause enables their closure and represent a balanced partnership of once a new financial architecture has become contributor and recipient countries implementing effective under the UNFCCC regime. To date innovative climate financing through the MDBs over $6.3 billion has been pledged. Clean technology Fund (~$4.4 billion)13 Strategic Climate Fund (~$1.9 billion) Finance scaled-up demonstration, Targeted programs with dedicated funding to pilot new approaches with deployment, and transfer of low- carbon potential for scaling up technologies Country Investment Plans Pilot Program for Forest Investment Program for Scaling Up pRogRamming Climate Resilience Program ($558 million) Renewable Energy in ($967 million) Low-Income Countries($292 million) egypt, mexico, morocco, mna Regional help build climate Reduce emissions from Support transformational Concentrated Solar power, philippines, resilience into core deforestation and forest change in using South africa, thailand, turkey, vietnam, development degradation (ReDD) renewable energy Colombia, indonesia, Kazakhstan, planning (operational) (operational) Ukraine endorsed Under preparation: (operational) Chile and nigeria CtF trust Fund Committee SCF trust Fund Committee australia, Brazil, China, egypt, France, Bolivia, guyana, indonesia, Kyrgyz Republic, maldives, Senegal, tunisia, germany, india, Japan, morocco, Yemen, australia­United Kingdom, Canada, Denmark-Switzerland**, nigeria, South africa, Spain, Sweden, germany, Japan, netherlands, norway, United States (program Sub- goveRnanCe turkey, United Kingdom, United States Committees with different composition) CtF tFC active observers SCF tFC active observers UnDp, geF, Unep, UnFCCC four civil UnDp, geF, Unep, UnFCCC four civil society, two indigenous peoples, society, two private sector two private sector *Committee members and observers for civil society, indigenous peoples and private sector "self-select." ** Within the contributor country group, it was agreed that countries may partner in a "twinning" arrangement to share one seat. the two partnering countries will agree how to rotate representatives as member for the seat. 13. as of September 15, 2009 112 D e v e l o p m e n t a n D C l i m at e C h a n g e Thirteen investment plans have been endorsed Board in May 2009 and the loans have recently for CTF co-financing as shown below: been declared effective. The objective of the IBRD ($500 million) and CTF ($100 million) · Egypt wind power, urban transport: CTF loans is to provide lines of credit through two $300 million local development banks for increased lending for wind, solar, small hydro, biomass, and geothermal · Mexico energy efficiency, urban transport, projects, as well as industrial energy efficiency. wind power: CTF $500 million There are two other projects approved: the · Morocco electricity generation, energy Mexico Urban Transport Transformation Project conservation, urban transport: CTF $150 ($200 million CTF concessional loan co-financed million by a $150 million IBRD loan) and the Mexico · MNA Concentrated Solar Power (CSP) Private Sector Wind Development Project expansion programs: CTF $750 million (IADB/IFC). CTF-cofinanced IBRD operations are under preparation for South Africa and Egypt · Philippines energy efficiency, renewable energy, for submission to the Board in FY2010, while solar and urban transport: CTF $250 million other MDBs are also developing projects. · South Africa solar power (CSP), wind energy, solar water heaters, energy efficiency: Investment plans endorsed by March 2010: CTF $500 million Colombia, Indonesia, Kazakhstan, and the Ukraine; under preparation are the CTF plans for · Thailand energy efficiency, renewable energy, Chile and Nigeria. and urban transformation: CTF $300 million · Turkey renewable energy, energy efficiency: Work is under way in the Pilot Program for CTF $250 million Climate Resilience (PPCR) to identify and start · Vietnam energy efficiency, transmission and activities in Bangladesh, Bolivia, Cambodia, distribution, renewable energy, and urban Mozambique, Nepal, Niger, Tajikistan, Yemen, transport: CTF $250 million and Zambia, and in two regional programs for the Caribbean and the Pacific. Countries of · Colombia sustainable transport systems and special focus in the two regional programs: in the energy efficiency: $150 million Caribbean Region, Dominica, Haiti, Jamaica, St. · Indonesia geothermal power, energy efficiency Lucia, St. Vincent and the Grenadines, and and renewable energy: $400 million Grenada (OECS); and, in the Pacific Region, · Kazakhstan renewable energy development, Papua New Guinea, Samoa, and Tonga. associated gas flaring reduction and fuel switching to gas, district heating system Country-based actions under the Forest Investment modernization, demand side management and Program (FIP) and Scaling-Up Renewable Energy end-user efficiency in SME: $200 million Program in Low Income Countries (SREP) are expected to begin in calendar year 2010. The FIP · Ukraine energy efficiency and renewable Sub-Committee had its first meeting on October energy, smart grids and zero emissions power 29, 2009, and has approved a work program to from gas network: $350 million make the FIP fully operational. The Scaling-Up Renewable Energy Program in Low Income The first CTF-co-financed IBRD project-- Countries (SREP), with now $292 million in Turkey: Private Sector Renewable Energy and pledges, was declared operational at COP-15. Energy Efficiency Project--was approved by the Stepping Up SUppoRt to Developing CoUntRieS 113 anneX 5. MaIn ClIMate FInanCe InStRuMentS uSeD by the Wbg Global Environment Facility m Finances mitigation activities, mainly capacity building, technical (GEF) $1 billion over 2007­2010 assistance for barrier removal and piloting for climate change a Supports pilot and demonstration projects that address local adaptation needs and generate global environmental benefits in all geF focal areas Least Developed Countries a helps in the preparation and financing of implementation of national Fund $195 million adaptation plans of action to address the most urgent adaptation needs Special Climate Change Fund a Supports adaptation and mitigation related projects in all developing (SCCF) $130 million countries, with emphasis on adaptation The Adaptation Fund $53.09 a provides grant-financed adaptation resources through national and million, expected to grow to multilateral implementing agencies; iBRD is accredited as a $254-$443 million by 2012 from multilateral implementing entity CeR monetization plus possible contributions Carbon Funds managed by the m ten funds: prototype Carbon Fund, Bio Carbon Fund, Community World Bank $2.5 billion from Development Carbon Fund, Spanish Carbon Fund, italian Carbon which S$215 million remain Fund, Carbon Fund for europe, Danish Carbon Fund, Umbrella available Carbon Fund, the netherlands CDm Facility, the netherlands european Carbon Facility Forest Carbon Partnership m Supports country readiness by piloting mechanisms that provide Facility (FCpF) Readiness Fund: incentives for reducing emissions from deforestation, forest $115 million degradation and improved forest management (ReDD-plus) Carbon Fund: $55 million Carbon Partnership Facility m Supports programmatic and sector-wide interventions; new (CpF) methodologies, and advanced technologies Carbon asset Development Fund: 7 million Carbon Fund: 100 million Climate Investment Funds m Finances demonstration, deployment, and transfer of low-carbon (CIF) $6.3 billion comprising: technologies at a transformative scale The Clean Technology Fund a helps build climate resilience in core development plans (CTF) $4.4 billion m Finances enabling investments for reducing emissions from Strategic Climate Fund (SCF) deforestation, forest degradation, and improved forest management $1.9 billion comprising: m (ReDD-plus) Pilot Program for Climate Resilience (PPCR)--$967 million Supports transformational change in using renewable energy for development Forest Investment Program (FIP)--$558 million Scaling Up Renewable Energy in Low-Income Countries (SREP)--$292 million Global Facility for Disaster a Builds adaptive capacity for climate risk management and resilience to Reduction and Recovery climate-related natural disaster (GFDRR) $27 million provided for adaptation-related activities Various Trust Funds and a Finances knowledge products, capacity building, upstream analytical Partnerships (for example, work and project pilots eSmap, bilateral initiatives) m note: a=adaptation; m=mitigation aBBReviationS anD aCRonYmS aDB asian Development Bank iCt information and communication technology aFR africa Region iDa international Development association bcm billion cubic meters iea international energy agency BRt bus rapid transit iFC international Finance Corporation CaS Country assistance Strategy iFi international financial institution Cat-DDo Catastrophe Deferred Drawdown option iUCn international Union for Conservation of nature CCDp Climate Change for Development professionals lCR latin america and the Caribbean Region CCmg Climate Change management group leD light-emitting diode CCS carbon capture and storage mDB multilateral development bank CDm Clean Development mechanism mDg millennium Development goal CeiF Clean energy for Development investment miga multilateral investment guarantee agency Framework mna middle east and north africa Region CeR certified emissions reductions nama nationally appropriate mitigation actions CF carbon finance oDa official development assistance CFl compact fluorescent lamp oeCD organisation for economic CgiaR Consultative group on international Co-operation and Development agricultural Research ppCR pilot program for Climate Resilience CiF Climate investment Fund pRem poverty Reduction and economic Co2 carbon dioxide management network Cop Conference of the parties R&D research and development CpF Carbon partnership Facility RBtC rapid bus transit corridors CpS Country partnership Strategy RDB regional development bank CReSp China Renewable energy Scale-Up program Re renewable energy CSp concentrated solar power ReDD reduce emissions from deforestation CtF Clean technology Fund and forest degradation DaC Development assistance Committee RF results framework DfiD Department for international Development (UK) RmS results measurement system Dpl Development policy loan Rta Reimbursable technical assistance Dpo Development policy operation SaR South asia Region DRm disaster risk management SCCF Special Climate Change Fund DSm demand-side management SDlp Sustainable Development eaCC economics of adaptation to Climate Change leadership program eap east asia and pacific Region SDn Sustainable Development network eCa europe and Central asia Region SFDCC Strategic Framework for ee energy efficiency Development and Climate Change eeCi energy efficient Cities initiative Sme small and medium-size enterprise eRpa emission reductions purchase agreement SRep Scaling Up Renewable energy program eSmap energy Sector management assistance program SWap sector-wide approach eU european Union ta technical assistance Fao Food and agriculture organization tF trust fund FCpF Forest Carbon partnership Facility tna technology needs assessment FeC Fonds d'equipement Communal Un United nations Fip Forest investment program UnDp United nations Development programme geF global environment Facility Unep United nations environment programme get-CCa global expert team on adaptation to UnFCCC United nations Framework Climate Change Convention on Climate Change gFDRR global Facility for Disaster Uttp Urban transport transformation project Reduction and Recovery WB World Bank ggFR global gas Flaring Reduction WBg World Bank group ghg greenhouse gas WBi World Bank institute iBRD international Bank for Reconstruction WDi World Development indicators and Development WDR World Development Report The World Bank Group 1818 H Street, NW Washington DC, 20433 USA Tel: 202-473-1000 Fax: 202-477-6391 Web site: www.worldbank.org/climatechange Help desk: climatehelp@worldbank.org Blog: http://blogs.worldbank.org/climatechange