World Bank

The World Bank, which was established in 1944 by a conference of 44 governments in Bretton Woods in New Hampshire, aims to reduce poverty worldwide by promoting growth to create economic opportunities; and helping poor people to take advantage of these opportunities.¹ The mission of the organization is to 'fight poverty with passion and professionalism for lasting results, to help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and private sectors.² The World Bank Group consists of five organizations: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID).

Background

In response of a request at the Group of Eight (G8) Summit in Gleneagles, Scotland in 2005, the World Bank developed the Clean Energy Investment Framework (CEIF) intended to help scale up investments in clean energy and integrate climate change into development work. The CEIF focused on three strategic areas: 1) energy for development and access for the poor; 2) energy for a low-carbon economy; and, 3) climate change adaptation. ³

At the October 2008 World Bank Annual Meetings, the donor countries adopted a Strategic Framework for Development and Climate Change, which follows up on the CEIF. The Framework provides guidance to the five World Bank Group institutions to better support to their clients in developing countries to facilitate both growth objectives and poverty reduction goals while recognizing the added costs and risks of climate change. The Framework is based on six action areas, each addressing both adaptation and mitigation:

"Support climate actions in country-led development processes;
Mobilize additional concessional and innovative finance;
Facilitate the development of market-based financing mechanisms;
Leverage private sector resources;
Support accelerated the development and deployment of new technologies; and
Step-up policy research, knowledge and capacity building."⁴

Activities

The World Bank conducts a great variety of activities to implement the Strategic Framework for Development and Climate Change. Climate Change activities are implemented throughout all units of the Bank, and are coordinated by the Environment Department. The World Bank's 2010 World Development Report "Developing in a Changing Climate" will focus on climate change in the context of poverty alleviation and development.

Carbon Finance

The World Bank Carbon Finance Unit (CFU) uses money contributed by governments and companies in industrialized countries to purchase project-based greenhouse gas emission reductions in developing countries and countries with economies in transition. The emission reductions are purchased through one of the CFU's carbon funds on behalf of the contributor, and within the framework of the Kyoto Protocol's Clean Development Mechanism (CDM) or Joint Implementation (JI).⁵ The Prototype Carbon Fund (PCF), which became operational in April 2000, was the first carbon fund worldwide. Its mission was to pioneer the market for project-based greenhouse gas emission reductions while promoting sustainable development and offering a learning-by-doing opportunity to its stakeholders. The Climate Investment Funds (CIFs) were approved in July 2008 by the World Bank Board, and in September 2008, donors from ten countries pledged $6.1 billion for the CIFs, US ($2 billion), the UK ($1.5 billion) and Japan (up to $1.2 billion). The CIFs include two funds: the Clean Technology Fund (CTF) and the Strategic Climate Fund (SCF). The CTF invests in projects and programs that contribute to demonstration, deployment and transfer of low carbon technologies with a significant potential for long term greenhouse gas emissions savings.⁶ The SCF is broader and more flexible and supports a variety of programs that tackle climate change, including a pilot program on climate resilience and a forest investment fund. ⁷

Adaptation

The Bank's work on adaptation spans project and analytical work, development of tools for climate data dissemination and mapping as well as screening for climate risk to projects, and pilot insurance programs for protection against weather climate. The Bank is increasing collaborative efforts on adaptation with other multilateral development banks (MDBs) and is working with the IFC on exploring ways to involve the private sector. Recent activities on adaptation include the development of a computer-based screening tool, 'ADAPT' (Assessment & Design for Adaptation to Climate Change: A Prototype Tool) and the Kiribati adaptation project.⁸

Mitigation

The Bank's activities in the area of mitigation of climate change are spread across a wide spectrum of interventions in the energy, urban, transport and forestry sectors. As experience with the projects grows, and as costs of some clean technologies decline, such projects are increasingly being mainstreamed into Bank operations.⁹ Examples of mitigation projects are the Philippines Ethanol Plant Wastewater Biomass Project and the China Ecofarming Project. ¹⁰¹¹

Reactions

The G8 and United Nations Framework Convention on Climate Change (UNFCCC) Parties have given the World Bank an important role in mitigation and adaptation of the climate change impacts in the developing countries and countries in transition. The 2007 Bali Action Plan, which sets out a road map for international negotiations of a post-2012 post-Kyoto Protocol agreement, emphasizes the role of the World Bank and other multilateral development banks in supporting developing countries to identify appropriate national actions to address climate change.¹²

While there is widespread support for the work of the World Bank on climate change, various environmental groups as well as some representatives from developing nations have also condemned the World Bank for attempting to set climate policy while continuing to fund large fossil fuel-burning projects. A report of the World Resource Institute, for example, indicates that: "As late as 20¹³07, nearly 50 percent of World Bank lending for the sector made no mention of climate change, and over the last three years less than 30 percent of its ﬁnancing has comprehensively integrated climate change considerations."¹⁴