Climate change after the G8 summit:

opportunities for broader engagement

24 September 2005 | Minutes

chaired by: Pamela Najor, Greenwire (environment and energy daily)

Panel of participants: Warren Evans, WB environment department; Otavio Canuto, WB executive director for Brazil group; Frances Seymour World Resources Institute; Hans Verolme, Director of WWF-US climate change programme; Kate Hampton, Senior Policy Advisor on the implementation of G8 climate change, DEFRA, UK.

Warren Evans: The G8 communiqué will enable the Bank to broaden its partnership on issues of climate change beyond the Kyoto countries that it is already in dialogue with. The President is taking follow up actions very seriously. By the spring meetings they will have a proposed framework document, in partnership with other multi-lateral development banks and bi-laterals, in order to move forward “as a global community”. This will aim to identify:

  • Available technologies in developing countries, and what may constitute “reasonable technology transfer”.
  • Appropriate investments, technologies, timing and relevant countries, as well as how to finance the adjustments needed to develop infrastructure. It will address financing the “adaptation agenda”, in terms of capital and other costs, and will link with the UN dialogue.
  • Lending: How to get the right kinds of projects to address climate change?
  • The Bank (and the GEF) has financed more work on how to tackle climate change. It acknowledges that adaptation and mitigation is not an either or, rather both is needed. In Africa there are already regional initiatives taking place, under NEPAD, the African Union, and the Desertification initiative. They are working to address adaptation initiatives, the mitigation of greenhouse gases, and the affects of climate change on the rural poor.

    Otavio Canuto:

    • The international regime represented by the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto protocol outlines the differentiated responsibilities of states. This should be a starting principles of the Bank’s framework, and must not be over-ruled.
    • The new framework should look to enhance, not weaken the Clean Development Mechanism (CDM).
    • Unsustainable production patterns should be changed, including in the developing world.
    • Energy efficiency, renewables and bio-fuel should be carefully considered.
    • Heads of state should provide innovative technology transfer.
    • The first five countries (UK, UK, Germany, France, Japan) have established a common core of principles. However, other EDs must have their opinions heard in order for the dialogue to be meaningful. They must make sure that the agenda isn’t uni-lateral

    Frances Seymour:

    • the role of MDBs is key in order to identify the financing gap for climate friendly options. It is possible for the Bank to reposition itself to become part of the solution, but currently 80% of its energy lending does not consider climate issues. Wolfowitz needs to demonstrate his commitment to multi-lateralism and environmental sustainability.
    • World Resources Institute have written a report on how the Bank could actively mainstream climate into its work, at project and sector level (see below). Many commitments already exist, e.g in the management response to the EIR and environmental strategy.
    • The new push to infrastructure provides a huge opportunity for the Bank to mainstream climate change. However, the recent East Asia Infrastructure plan (by WB, ADB and JPIC) failed to address the issue both in terms of adaptation and mitigation.

    Hans Verolme:

    WB should stick to what it knows best: It can help in building a basis for dialogue. It also has a huge technical capacity in terms of giving advice, and presenting options to developing countries. So far it has not done this well. It could facilitate borrower driven action.

    Kate Hampton:

    • The dialogue to come out of the G8 agenda is not meant to undermine the UNFCC and Kyoto. It will address challenges in energy and adaptation
    • It will allow for a shared technical analysis, drawing on the Bank’s understanding of the IEA to create a robust post Kyoto regime.
    • China, India, Brazil, Mexico and South Africa represent a new paradigm for international co-operation.
    • Dialogue will begin on 1 November, with energy and development ministers
    • The mainstreaming of climate change will identify options, rather than forcing the options on others

    In the ensuing discussion looked at the following issues:

    • energy needs of emerging and middle income countries: Otavio Canuto said that Brazil will become self-sufficient in oil-production this year, and is also able to make use of ethanol and bio-fuels. Mexico is in a similar position. However, the energy needs of China and India will continue to rise, and we have no leverage over this. Warren Evans said that donors will not be able to meet the amount of money required for energy development in China and India. Hans Verolme said that J.P Morgan Chase has a climate policy, and is engaging with China on this issue. The Bank should use its informal power in a similar capacity.
    • hydro-energy: Otavio Canuto asserted that hydro may need to be part of the deal to ensure developing country engagement. Frances Seymour said that it is important not to prejudge the best kind of technology. Things should be looked at in an integrated way- what might be the best “climate friendly” option, may not be the best in terms of environmental and social safeguards. We should use the Bank’s resources for a comprehensive options assessment. Warren Evans said that renewables and hydro have a long way to go before they can realistically meet energy needs, whereas coal still plays a major role, especially in China. A new combination of technology development and targets is needed.
    • the financing gap: Kate Hampton said UNFCCC and Kyoto require that developed countries must bear the costs of financing. However, during the G8 discussions it was clear that there was not much money available. Who will pay for what in the next round of reductions is unclear, and civil society should pressure finance ministers to find the extra funds needed. Warren Evans implied that lending for clean technology development would not be concessional, but it is too early to have a substantive answer on this (assessment that clean energy is 20% more expensive than coal etc). Options will be presented at the spring meetings. Kate Hampton asserted that the finance sector does not like policy risk and clarity is needed in order to encourage investment.
    • The CDM: The CDM has an important role. Extra measures should be taken to make sure that it can deliver. The role of the EU is important for this. A Bank official working on transport asserted that it is unclear which transport projects qualify for CDM approval. The Bank’s internal bureaucracy and procedures do not make it easy.
    • Governance and safeguards: Transaction costs in relation to safeguards, regulatory sysgems and governance were debated. Canuto pointed out that developing countries are at different stages, and that the Bank should use country systems- countries are capable of doing things for themselves. Frances Seymour said that governance is critical, and that increased information disclosure and accountability mechanisms are needed. A track record of public involvement and oversight is essential.