Environment

Background

Climate risks and the World Bank

11 April 2014 | Minutes

Sponsor: World Resources Institute (WRI)

Panelists:  Milap Patel (World Resources Institute), Nezir Sinani (Bank Information Center), Nicole Ghio (Sierra Club), Habiba Gitay (World Bank) CHAIR: Sara Aviel (US Executive Director, WBG)

*partial notes*

Sinani

  • restructuring, climate cross cutting issue, global practices, IDA and safeguards discussions
  • WRI research shows WB not doing good on climate, Kim recognised
  • How to engage constructively, one window the safeguards discussion
  • NGOs working on climate safeguard submission
  • Identified what could be introduced as instruments at the safeguards level
  • Still waiting for management to publish their views
  • Submission to EDs yesterday
  • Climate change risk assessment, ensuring policy architecture
  • Difficult in terms of how to structure the submission
  • Link to country partnership framework
  • Hope the submission will help WB’s overall engagement on climate change

Ghio

  • looking at project side at WB, eg coal projects
  • not just climate, but social and environmental impacts
  • excited by WB energy strategy, first step to address the role coal play
  • WB will be judged on implementation
  • Kosovo coal power plant, working with Daniel Kammen, to study situation and alternatives
  • Issue of peak vs base power
  • Looking at debt issue, labour etc
  • Other things about strategy, eg India Tata Mundra coal power plant impact on local communities – eg loss of fishing grounds
  • CAO investigation, action plan that was not a power plan – Kim not taking it seriously, despite background as health practitioners
  • Financing coal through FIs and DPLs, eg Indonesia project – delayed twice due to local opposition
  • Infrastructure lending, important for development, concern where only exists to serve coal fired power plants, eg transmission lines – also creating displacement, corruption, local health impact
  • Still new policy huge step, now moving beyond coal as focus
  • 100% energy access, need investment in mini and off grid
  • dedicated funds vs mainstream to ensure it is not overlooked
  • huge issue with energy access, there are options
  • clean energy is so much cheaper, timing and economics – the solution is there

Aviel

  • WB so dependent on country ownership and demand, how do you create this for climate policy and projects?

Gitay

  • given the WB can only provide so much support, need development planning process, bringing in climate risk – then country can work with other donors and funders
  • you won’t get rid of the risk, but you can minimise it
  • owned by countries
  • this is not just to generate demand, but to analyse the need
  • upstream analysis of all the risks, part of the country ownership process – estimate will take 3-6 months

Q: In relation to sub Saharan Africa and carbon credit, how much is this playing a role?

Q: Co-benefits question for WB? And on Global Infrastructure Facility being discussed by the governors?

Ghio

  • Can’t take climate out of the equation, on the social side it is a climate solution
  • Carbon credits, can be an incentive, we have concerns how they can be misused on projects – a tricky area
  • Saying that there has been a lot of excellent projects – there are some creative financing options

Sinani

  • 75% of WB projects do not assess climate impacts, 88% not GHG emissions etc
  • huge policy loopholes, what will happen, will WB step out of projects

Patel

  • Recommendations in the report, eg for Country Partnership Framework level
  • Cost of the options, assess against other options – real costs analysis would lead to sustainable projects

Gitay

  • carbon credits, a new tranche called the BioCarbon Fund, which has just started
  • part of the focus is in Africa, eg Zambia
  • Have been doing climate co-benefits since 2011
  • New work on short term climate pollutants, ‘black carbon’ – report to be produced at some stage this year
  • GHG accounting starting systematically in July this year

Aviel

  • GIF, still under discussion, proposal has been evolving and taking shape, lots of different views
  • US is very supportive to increase infrastructure finance, but still concerns on how it is structured, eg safeguards etc, and should be part of WB structure in that sense

Q: Mixed message, renewable energy is very costly and is very cheap – when fossil fuel is cheap, is env and social costs included?

Q: WB could help mobilise climate finance, by helping align the incentives of all the private banks.

Q: Technology or approach to make communities more resilient?

Q: Are the indicators you are developing on co-benefits, will they be available for public review? Why we aren’t able to impose more conditionality to ensure we make development worthwhile?

Q: Power plant in Singrauli in India, confused there is a commitment to oppose finance, but at the same time financing the transmission link. Will travel 5000 km across the country, including Tata Mundra. Also a place in India that exist only on paper. How do we hold the Bank accountable to finance transmission lines or not?

Gitay

  • Along with IDB, working with many coastal communities in Caribbean against salt intrusion for agriculture, roads, livelihoods (fisheries)
  • Indicators, WB has a scorecard that is regularly revised, new in place by July – will never be perfect
  • Resilience indicator at an early stage, commitment from IDA, working with MDBs and other stakeholders
  • GHG accounting, how much from any operations

Patel

  • cost differences, think depends on time length – eg fossil fuels maybe some advantage short term
  • conditionality’s not an approach people are comfortable with, work collaboratively

Sinani

  • need to keep below 2 degree
  • Kosovo example, where a new coal power plant will be built
  • Criteria to screen coal power plants, panel assessed and came up with conclusion that coal was cheaper – but hadn’t looked into alternatives or externalities
  • CSOs did alternative study with ex WB staff, incl social and environmental costs

Ghio

  • cost of coal and infrastructure, transport
  • financing not there to deal with the upfront costs of renewables, when these have been dealt with it is cheap
  • financing model is the problem, and the resistance to deal with this
  • coal is not cheap – it is a risky investment, projects have severe financial problems

Aviel

  • US taken public stance against financing of coal, also integrated into WB strategy
  • Of course there is a grey area with FIs, etc – we often oppose projects that finance coal indirectly

Gitay

  • Don’t work on coal projects, I work climate resilience
  • Energy access, Lighting Africa
  • Energy access has changed the lives of many
  • Challenge is to scale it up

Q: Oxfam getting into the energy space now, coal is a no brainer – conventional gas is the difficult one, views?

Q: Structural issue of not addressing the externalities – seems like a big disconnect, how do we reconnect this?

Q: WB doing some positive things, can this be scaled up. In REDD projects, CIF response, but only in trust funds – prospect for WB investing more in that?

Ghio

  • external costs can be dealt with in many ways
  • one is better regulation
  • a coal fired power plant is dirty, can’t do anything with this
  • even if they pay to communities, but can’t be fully addressed
  • need to do studies, where externalities are priced up and build into assessments
  • natural gas, also need to look at the costs – at the end of the day we have to keep fossil fuels in the ground
  • natural gas a bit easier, but renewable energy technologies exist
  • but still very real health impacts

Sinani

  • Loopholes, need to look at cumulative impact assessments, etc
  • Natural gas, in Kosovo gas better than gas, need to look from different perspectives

Patel

  • no answer to question on REDD plus, others at WRI can answer this better