The Annual Meeting of the World Bank Group and International Monetary Fund came to a close in Lima, Peru, on Sunday (Oct. 11). Focus of the Meeting was addressing the obstacles to the World Bank’s twin goals: ending extreme poverty and boosting shared prosperity, considering global issues such as climate change, weak global growth and ongoing crises in fragile states.
On Friday (Oct. 9) France and Peru – the incoming and current UNFCCC COP Presidencies – organized a Climate Finance Ministerial meeting, aimed at evaluating the progress made by developed nations towards the USD 100 billion goal and at identifying the efforts needed to encourage and reorient further finance flows.
During the meeting, the World Bank Group pledged to increase climate-related funding from 21 to 28 percent in 2020. Part of this contribution will be composed by direct financing, which will scale up from the current USD 10.3 billion to USD 16 billion in 2020. An additional USD 13 billion a year of leveraged co-financing could be mobilized by that date. If realized in full, these contributions will reach a total of 29 billion.
“As we move closer to Paris, countries have identified trillions of dollars of climate-related needs. The Bank, with the support of our members, will respond ambitiously to this great challenge”, said the World Bank President Jim Yong Kim.
Kim added that besides the Bank’s contribution, he believed that there are politically credible pathways to deliver USD 100 billion a year in climate financing for developing countries by 2020. His statement comes just after OECD’s newly published estimates of global fiance mobilization from developed to developing countries. According to the institution, public and private flows totoaled USD 62 billion in 2014 – up from USD 52 billion in 2013. The OECD also found that multilateral development banks accounted for about 40 percent of the total, and that over three-quarters of it went to support mitigation activities, while only one sixth went to adaptation measures.
The role of financial support for adaptation measures was stressed by the Development Committee, a joint WB-IMF body. The Commiteee asked for an increase in the institutions’ support to the ‘Vulnerable Twenty’ – the countries most at risk from climate change, representing close to 700 million people. These countries are the ones that most need assistance in assessing climate risk, building resilience and obtaining technical and financial support as well as financial resources. Nevertheless, in 2014 only USD 2 billion, in the form of adaptation grants, was given to countries hit hardest by climate impacts, argues an article by Oxfam published just after the OECD’s report.
Other key issues were addressed in the ‘Conversation on Climate Change’, where the IMF managing director Christine Lagarde and the World Bank President Kim met the UNFCCC Executive Secretary Christiana Figueres and Lord Nicholas Stern, Co-Chair of the Global Commission on the Economy and Climate. The conversation put on the spotlight the need to phase out energy subsidies, whose coverage and effects were recently reviewed by the IMF, and the importance of increasing the momentum for carbon taxes, seen by the panelists as the most effective way to put into action the mitigation pledges made for Paris’ COP.
“The time is right to introduce carbon prices around the world, as well as to pursue complementary measures like reform for fossil fuel subsidies, which act like negative carbon prices,” said Lord Stern. Carbon taxes were assessed in a report recently released by the New Climate Economy showing that 40 countries already have or have planned carbon prices, covering about 12 percent of greenhouse gas emissions. While this momentum is encouraging, current price levels and coverage of emissions were found to be still very low, with around 85 percent of emissions priced at less than US$10 per tonne.
In order to support such momentum, World Bank Group, IMF and the OECD recently released a report on the FASTER Principles, a set of guidelines to help governments and business develop efficient and cost-effective instruments to put a price on the social costs of emissions.
(Image: October 10, 2015 – LIMA, Peru. 2015 World Bank / IMF Annual Meetings. Development Committee Meeting. Photo credit:World Bank Photo Collection on Flickr)