World Bank increases funding for climate-related projects

The World Bank will increase funding for projects designed to reduce the impact of climate change in developing countries. Projects will aim to add 30GW of renewable energy to the global grid – enough to power 150m homes by 2020. The plan also outlines investment in "climate-smart" agriculture for 40 countries and early warning systems for 100m people. In addition, the bank is calling for a quadrupling of funding over five years to increase the resilience of transport systems to climate change. The International Finance Corporation, the section of the World Bank that serves the private sector, will support the proposals by increasing its climate investments from $2.2bn to $3.5bn per year. The World Bank also aims to direct $25bn of commercial investment into renewable energy over five years.

To maximize impact, the Action Plan focuses on transformational actions and policy changes that will make a major contribution to addressing climate change. Under the Plan, the World Bank plans to double its current contributions to global renewable energy capacity, aiming to add 30 gigawatts of capacity and to mobilize $25 billion in private financing for clean energy by 2020. The Bank Group will also quadruple funding for climate-resilient transport, integrate climate into urban planning through the Global Platform for Sustainable Cities, and boost assistance for sustainable forest and fisheries management.

To accelerate private sector investment, the World Bank Group will work with regulators, create ‘green’ banking champions and continue to promote development of the green bond market.

The International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused exclusively on the private sector in developing countries, aims to increase its climate investments from the current $2.2 billion a year to a goal of $3.5 billion a year, and will lead on leveraging an additional $13 billion a year in private sector financing by 2020. IFC will expand its climate investments in sectors including grid-connected renewable energy, green buildings, industrial/commercial energy efficiency, and climate-smart urban infrastructure. IFC will also continue to use innovative financial instruments and advice to grow its business in distributed renewable energy, off-grid energy access, and climate-smart agriculture. At the same time, IFC will continue to advise its clients on how to use resources like energy and water in a more cost-effective way with less environmental impact.

“The ingenuity and innovation of the private sector, along with government action, will be critical for transitioning to a climate-resilient and low-carbon global economy,” said Nena Stoiljkovic, Vice President of Global Client Services at IFC. “IFC will focus on increasing its climate-smart investments in developing countries and leveraging untapped sources of private capital for climate financing.”

The Action Plan recognizes the urgency of building resilience against climate shocks, including through natural disasters and impacts on farming and agricultural supply chains. Climate-smart agriculture investment plans will be developed for at least 40 countries, with 100 percent of agriculture lending to be climate-smart by 2020. Priority areas will include the use of climate resilient seeds, high-efficiency irrigation, livestock productivity, and risk management. The Bank Group also aims to bring early warning systems for natural disasters to 100 million people in 15 countries by 2020. Over the same time period, the Bank Group will work to extend social protection systems that can adapt to climate impacts to 50 million people.

“The key question is how to leverage the resources available to meet the ambitious goals set in Paris,” said John Roome, Senior Director for Climate Change at the World Bank Group. “With the Action Plan, we will be helping countries to integrate climate change into their national policies, planning and budgeting; and to mobilize financing and use it for maximum impact.”

Under the Action Plan, the Bank Group will consider the risks and opportunities created by climate change across its country partnership frameworks. Climate risk screening is already applied to projects supported by IDA, the World Bank’s fund for the poorest countries, and will be extended to other operations in early 2017.