A few years ago, this would have seemed a strange question, as debt management and climate policy have traditionally been regarded as unrelated fields. But at a workshop at the annual Debt Management Forum in Vienna on May 22, 2017, debt managers from 50 developing countries discussed the role of emerging debt instruments such as green bonds and blue bonds, in raising capital for climate-friendly projects that range from reforestation to renewable energy.
While green and blue bonds resemble more traditional debt instruments in terms of structure and returns, they represent a novel approach to climate finance. Created just ten years ago, the total value of green bonds has grown at a spectacular pace, reaching US$82.6 billion in 2016. By the end of 2017, the total value of green bonds will likely exceed US$100 billion.
Following the Paris deal on international climate change, governments are beginning to explore new financing mechanisms for investing in the growing low carbon economy. Over the next decade . Recognizing the untapped potential of SWFs, two key questions emerge: how can SWFs increase their exposure to green asset classes? And what are the constraints?
Investors and financial institutions are becoming increasingly aware of the risks associated with fossil fuel projects and are showing growing interest in green bonds and other financing tools that facilitate investment in low-carbon energy solutions.
Being patient investors, with longer term investment horizons than many others in the financial services sector, . In the November 2016 annual meeting of the International Forum of Sovereign Wealth Funds in Auckland, participants highlighted that SWFs are particularly well-positioned to become trailblazers in green investment. The majority of members are oil-based SWFs which are looking to economic diversification of their finite carbon wealth into industries and sectors that would yield broader societal, economic and financial benefits.
If ever there was a year to make significant progress on forest conservation and climate change, it was 2016. Coming on the heels of the historic COP21 Paris Agreement, 2016 was a year to demonstrate the commitment the World Bank Group has to support countries as they take forward their nationally determined contributions to address our global climate change challenge. It’s gratifying to look back on 2016 and feel that we contributed to harnessing this momentum and sense of urgency; especially in showing how sustainable land use, including sustainable forest management, is critical to achieving the ambitious targets set out in the Paris Agreement.
- capacity building
- forest action plan
- forest conservation
- sustainable land management
- Forest Carbon Partnership Facility
- climate finance
- Climate Change
- Climate Change
- South Asia
- Latin America & Caribbean
- Costa Rica
- Cote d'Ivoire
- Congo, Democratic Republic of
- Congo, Republic of
Presently, the average annual loss from natural disasters in cities is estimated by the UN at over $250 billion. If cities fail to build their resilience to disasters, shocks, and ongoing stresses, this figure will rise to $314 billion by 2030, and 77 million more city dwellers will fall into poverty, according to a new World Bank/GFDRR report presented at COP22.
The good news is that we have a window of opportunity to make cities and the urban poor more resilient. Over 60% of the land projected to become urban by 2030 is yet to be developed. Additionally, cities will need to build nearly one billion new housing units by 2060 to house a growing urban population. Building climate-smart, disaster-resilient cities and housing is thus an immediate priority, especially in the developing world.
To seize that opportunity, countries will need significant financing for infrastructure—over $4 trillion annually—and making this infrastructure low carbon and climate resilient will cost an additional $0.4 to $1.1 trillion, according to a CCFLA report.
Mobilizing private capital is the best bet for helping to close this financing gap.
Natural disasters—such as droughts, floods, landslides, and storms—are a regular occurrence, but climate change is increasing the frequency and intensity of such weather-related hazards. Since 1970, Africa has experienced more than 2,000 natural disasters, with just under half taking place in the last decade. During this time, natural disasters have affected over 460 million people and resulted in more than 880,000 casualties. In addition, it is estimated that by 2030, up to 118 million extremely poor people (living below $1.25/day) will be exposed to drought, floods, and extreme heat in Africa. In areas of recurrent disasters, this hampers growth and makes it harder for the poor to escape poverty.
Morocco, the host of COP22 happening this week and next in Marrakech, is an example of a country that is working closely with the World Bank and other organizations to shift its economy onto a low carbon development path.
It just submitted its official climate plan, or nationally determined contribution, NDC, where it pledges a 42% reduction below business-as-usual emissions by 2030. This is 10 percentage points more ambitious than it previously laid out, ahead of Paris, and we see the plan affecting a growing number of sectors in the economy. Morocco plans a $13 billion expansion of wind, solar and hydroelectric power generation capacity and associated infrastructure that should see the country get 42% of its electricity from renewable sources by 2020, ramping up to 52% by 2030.
The remarkable pace at which nations of the world have ratified the Paris Agreement on climate change gives us all hope. It signals the world is ready to take the actions we need to keep global warming below 1.5 degrees Celsius. We know, however, that delivering on Paris comes with a high price tag, and that we need to help countries not just transition toward renewable energy but unlock the finance needed to get there.
Amid the enormous challenge ahead, I want to emphasize .
First published by Capital Finance International.
Soon the world will celebrate the one-year anniversary of the historic climate agreement signed in Paris in December 2015. The agreement will be implemented through country-led greenhouse gas (GHG) emissions reduction commitments known as their intended Nationally Determined Contributions (NDCs), which to date have been submitted by 189 countries covering 95 percent of global GHG emissions.
Apart from signaling concrete commitments, these reduction targets also offer a clear signpost of the investment direction countries need to follow as the global economy steers towards a low-carbon, climate-resilient pathway. Estimates point to between $57 trillion and $93 trillion in new low-carbon, climate resilient infrastructure investment by 2030. How developing countries evaluate and respond to their infrastructure needs will greatly determine their ability to meet GHG reduction commitments.
- Intended Nationally Determined Contributions (INDCs)
- private sector investment
- LAC Climate Business Forum
- low-carbon development
- Clean energy
- climate investment
- climate-smart investments
- Private Sector Development
- Climate Change
- Latin America & Caribbean
- climate finance
It does not happen often that one of the finest actors of our time tweets about a World Bank supported project and invites all his fans to have a look at the impressive pictures taken from space. In fact, I can’t remember having seen that before.
But this is what Oscar winner and climate activist Leonardo DiCaprio did a few months ago when the Noor Concentrated Solar Plant (CSP) in Morocco—the largest CSP plant in the world - was opened. Once finalized, in two years, it will provide clean energy to 1.1 million households. I visited the plant two weeks ago and it is truly an impressive site. The indirect benefits of the project might even be larger: it has advanced an important and innovative technology, it has driven down costs of CSP, and it holds important lessons for how public and private sectors can work together in the future.
I am proud that the World Bank, jointly with the African Development Bank and a number of foreign investors, supported this cutting-edge solar energy project. But it was made possible thanks to the Climate Investment Funds (CIF), which put in US$435 million to “de-risk” the investment, playing an essential role to kickstart the deal.
Auctions are ubiquitous. On any given day, somewhere in the world, bidders compete for energy, wireless spectrum, used vehicles, agricultural products—the list goes on. Auctions can help resolve uncertainties in the market, convening buyers and sellers to help them achieve the best possible price for goods or services that are otherwise difficult to value.
Auctions can also resolve uncertainties in the development sector, identifying the projects most likely to succeed and determining the right level of funding. To test this hypothesis in the climate arena, the World Bank has been piloting an approach to incentivize green projects in developing countries. The Pilot Auction Facility for Methane and Climate Change Mitigation (PAF) held its second online auction earlier this month, allocating $20 million in funding directly to the private sector for projects reducing methane emissions.