Climate Change Finance
at the World Bank Group
ITU Symposium on ICT, Environment
and Climate Change
Cairo, November 2-3, 2010
Sergio Margulis, The World Bank
World Bank’s ICT Sector Strategy (under preparation)
Three strategic themes
Use of ICT to
transform
delivery of public
and private
services
Connect
Connect
Transform
Innovate
Connectivity
infrastructure: Policy,
sector reform, and
investments
Use of ICT to
foster
innovation and
industry
development
across the
economy
ICTs larger impact lies in enabling energy efficiencies in
other sectors
Potential Impact - Other Sectors
Potential Impact- ICT Sector
ICT contribution to total Global
Greenhouse Gases (GHG)
ICTs impact enabling energy
efficiencies in other sectors
5 x’s
•
•
•
•
PCs and peripherals
Data centers
Telecoms infrastructure/devices
Other
≈15 - 20%
E.G.
• Smart grids
• Smart buildings
• Smart motors
• Other
Opportunities to reduce GHG and increase energy
efficiency - Mitigation
Financing Needs to Deal with Climate Change
Additional investment needs in
developing countries, by 2030
Climate finance covers
additional costs and serves to..
75-100
… to catalyze
“Baseline” sustainable
investments
Private &
Public
Investment
..enhance
capacity &
policy
… leverage
other sources
of finance
Climate Finance is a Catalyst
Climate finance can cover
additional cost to…
Sources
Emission
cap and trade
Auctioning of
emission rights
CDM & C offset markets
Carbon taxes
General taxes and other
taxes, special funds
“Baseline”
Private and public
investment
Catalytic
climate
finance
 Facilitate policies, regulatory
frameworks, institutions and
markets support adaptation and
mitigation
 Catalyze transformational
private and public investments
and programs
• low-carbon technologies
• terrestrial carbon
• climate resilience
 Support research, development
and deployment of new
technologies
Developing Countries are already taking action…
BRAZIL: Reducing
Amazon deforestation by
70% by 2020; biofuel
program, energy
efficiency
ETHIOPIA: Integrating
adaptation in sustainable
land management, social
protection, hydropower
development, building
capacity programs
CARIBBEAN ISLANDS:
Adaptation to increasing
hurricanes and storms, using
catastrophic risk bonds
CHINA: Energy efficiency,
20% reduction in energy
intensity from 2005 to 2010;
15% renewable energy target
by 2020; Clean technology
R&D; sustainable transport
INDIA: Adaptation (drought,
floods, cyclones, glacier
melting), energy efficiency,
hydro and new renewable
energy, solar energy R&D
MOROCCO: Integrated approach
to tackling CC in water,
agriculture, and urban sectors,
Mediterranean Solar Plan
Initiative
Financial and Investment Flows for Climate Action in DCs
Type of flow
Amount ($billion/yr)
climate non climate
Carbon markets
6.6
UNFCCC
0.4
Climate-specific
concessional
funds
ODA
Non-DAC donor
support
Philanthropia
Domestic
(core budget, fiscal,
and pricing reforms)
Underlying
finance
GFCF
FDI
• Multiple and confidential transactions
• Actual payment/investment flows ??
• Consistency and double-counting
• Additionality
~4
3.6
?
?
?
?
?
Monitoring issues
105
• Co-benefits
• MDBs do not report yet consistently
~7
• Non exhaustive coverage
• Purposes unclear
~ 49
• Non exhaustive coverage
• Purposes unclear
?
3,990
522
• Very scarce information, not
harmonized
• Non exhaustive coverage
• Purposes unclear
9
A growing menu of climate finance instruments
Adaptation
The
Adaptation
Fund
Special Climate
Change Fund
Least
Developed
Country Fund
(GEF)
Mitigation
Pilot Program
for Climate
Resilience
Global Facility
for Disaster Risk
Reduction &
Recovery
Risk
Instruments
Global
Environmental
Facility (GEF)
Carbon Funds
Clean Technology
Fund
Carbon
Partnership
Facility
Forest
Investment
Program
Forest Carbon
Partnership
Facility
Scaling Up
Renewable Energy
for the Poor
Mobilizing Finance: Climate Investment Funds
Clean Technology
Fund:
demonstration,
deployment, and
transfer of low
carbon
technologies.
Commitment:
$4.5 billion
Approved in July 2008, CIFs
have balanced and equitable
governance with equal
representation from
developed and developing
countries
Strategic
Climate Fund:
Programs to pilot
new approaches
and scale-up:
Commitment:
$1.9 billion
Clean Technology Fund
Thirteen investment plans endorsed with a total envelope of
US$4.5 billion, mobilizing $36 billion (leverage ratio 1:8 with all
other funding and 1:3 with private sector)
Example: Mexico
$500 million, leverages $6.2 billion
Aims to reduce 20% of national
energy consumption through energy
efficiency
 Enables shift to efficient, low
carbon bus rapid transit systems and
light rail, and to retire old buses
Develop renewable energy,
particularly wind power and minihydro installations
 Colombia, Egypt, Indonesia,
Kazakhstan, Mexico, Morocco
Philippines, South Africa, Thailand,
Turkey, Ukraine, and Vietnam
Regional Program for Concentrated
Solar Power in Middle East & N. Africa
Pilot Program for Climate Resilience (PPCR)
First operational program under the Strategic Climate Fund:
$1 billion in grants IDA-like grants
Purpose
Help highly vulnerable countries pilot
and demonstrate ways to integrate
climate risk and resilience into core
development planning
Participating countries:
Bangladesh, Bolivia, Cambodia,
Mozambique, Nepal, Niger, Tanzania,
Yemen, Zambia,
Regional Programs: Caribbean
(Dominica, Grenada, Haiti, Jamaica,
Saint Lucia, Saint Vincent and
Grenadines) and South Pacific (Papua
New Guinea, Samoa, Tonga)
Example: Cambodia
TA for mainstreaming climate resilience
Piloting vulnerability assessments and
investments on an ecosystem basis
Data collection on climate risks
Promoting participation of the private sector
and civil society
FIP & SREP
• Forest Investment Program launched 2009,
total pledges US$587 million – pilot countries
Brazil, Burkina Faso, DRC, Ghana, Indonesia,
Lao PDR, Mexico, Peru
• Program for Scaling up Renewable Energy in
Low Income Countries launched in 2010, total
pledges US$318 million – pilot countries
Ethiopia, Honduras, Kenya, Maldives, Mali,
Nepal
Carbon Market Development
10 Carbon
Funds: $2.5
billion
•Expanding the reach and boundary of carbon markets
•The WBG portfolio has more than 200 projects in 57
developing countries, spanning 23 technologies
•Africa accounts for one fifth of active projects in the
WBG carbon finance portfolio compared to 2-3%
share of projects in the CDM pipeline
Carbon
Partnership
Facility (CPF)
•Supporting programmatic and sector-wide
interventions
•Carbon Asset Development Fund – €7 million
•Carbon Fund - €100 million
•4 sellers participants, more programs in preparation
Forest Carbon
Partnership
Facility (FCPF)
•Supporting Country-readiness and piloting incentives
for reducing emissions from deforestation and forest
degradation - $160 million available
•37 participating developing countries
•11 Readiness grants signed
Innovation in Carbon Finance: Biocarbon Fund
Costa Rica: Coopeagri Forestry
Project
The project reimburses farmers for environmental
services of biodiversity protection as a result of
reforestation. Payments will be complemented
with the income from the carbon sales. The
project is expected to sequester around
0.56MtC02e by 2017.
China: Reforestation on Degraded
Lands in NW Guangxi (8,000 ha)
The project is blending three types of financing
from multiple sources: loans (World Bank,
commercial), private equity and carbon finance.
Carbon revenues (expected from 2011) serve as
a stable source of income up to 2017 that
contributes to the repayment of commercial bank
loans in the short-term, helping to bridge the gap
before revenues from timber harvesting are
produced.
Mobilizing Finance via Capital Markets
World Bank Green Bonds: $1.6 billion
raises through 22 issuances in 15
currencies since November 2008
Cool Bonds: $31.5 million
Eco Notes: $390 million
Example: Mongolia Index-based Livestock
Insurance Project
Products and Advisory Services for
catastrophe risk financing
 MultiCat Program
 Caribbean Catastrophe
Reinsurance Facility (2007,
2008, 2009)
 CAT DDOs
 Weather hedges
Livestock sector represents 87 % of GDP
and supports half of the population.
[999 and 2002] one-third of the national
herd was lost in successive harsh
seasons, showing extreme vulnerability.
This project introduces a new marketbased approach that spreads the risk
across herders, government, and the
private sector.
Example of Innovative use of ICT in
Arab Countries
•
•
•
•
•
•
How: Remote optimization of Load Sharing of Boilers
used for steam production in the region
Program of Activity (PoA): state of the art “Clean
Development Mecanism (CDM)”
Economy of scale, scalable and replicable, unlimited
potential
Production of Certified Emissions Reduction = Creation
of an asset (can be sold).
Increase the IRR of the underlying project
Rated best PoA by KfW
Thank you !!! 
smargulis@worldbank.org