Four months after Paris, climate action needs a push and financing

The world must move quickly to fulfill the promise of the climate change agreement reached in Paris four months ago and accelerate low-carbon growth, World Bank Group President Jim Yong Kim said on the opening day of the Spring Meetings.

More than 190 countries came together last December to pledge to do their part to halt global warming. The result was an unprecedented agreement to keep warming below 2 degrees Celsius over pre-industrial times, with the goal of limiting warming to 1.5° C.

With the formal signing of the Paris Agreement just a week away, it’s time to seize the moment and make the financial argument for a shift to renewables, Kim said.

“This is an absolutely critical issue. We have to move now, because the real losers will be every single one of our children and grandchildren,” said Kim.

He spoke at a livestreamed event, Turning the Paris Agreement into Action, with Canada’s Minister of Environment and Climate Change Catherine McKenna, France’s Minister of Ecology, Sustainable Development and Energy Ségolène Royal, Morocco’s Minister of Economy and Finance Mohamed Boussaid, and Mark Carney, the governor of the Bank of England and chairman of the G20’s Financial Stability Board.

France 24 Business Editor Markus Karlsson moderated the conversation about actions needed now to reduce carbon emissions, including accelerating the transition to renewable energy.

Boussaid said there is a worldwide awareness that the issue of climate change cannot be left to future generations. “We have to create an irreversible movement,” he said. Morocco will host the next climate meeting (COP22) in Marrakesh in November.

Royal said countries are feeling the impact of climate change without being responsible for it. There is a strong need to accelerate action and put a price on carbon, she said.

With the price of solar energy still higher than coal, the World Bank Group is working to find ways to help countries like Pakistan and Vietnam put together deals that would make renewable energy cheaper than coal, Kim said.

If countries put in coal-based electrical power, “that’s a 50-year investment. Once that gets started, we’re going to have that online for 50 years,” he said.

Carney said it’s very important to move toward market mechanisms to translate the momentum behind the climate agreement into action. But the financial sector needs information to act that it doesn’t have today to build the expertise needed to manage the financial aspects of carbon risk.

The cost of renewable energy infrastructure required over the next 30 years has been estimated by the International Energy Agency to be as high as $50 trillion, said Carney. The biggest risk is that banks, creditors, and investors get this information too late to make a smooth adjustment, he said.

Carney added that under the right conditions, huge amounts of capital can be shifted to renewables. He said there is about $100 trillion of fixed-income assets globally, but less than 1% is currently invested in renewables or green finance.

McKenna said Canada is committed to putting a price on carbon across the country — something the business community is seeking to provide certainty and foster innovation, she said.

The Bank Group has moved to increase climate financing from 21 to 28% of its portfolio by 2020 to mobilize as much as $29 billion a year for climate action, Kim noted.

The Bank’s new climate action plan, unveiled April 7, represents a major shift. It aims to help developing countries increase sources of renewable energy, decrease high-carbon energy sources, develop green transport systems, and build sustainable, livable cities. It will add 30 gigawatts of renewable energy — enough to power 150 million homes — to the world’s energy capacity, bring early warning systems to 100 million people, and develop climate-smart agriculture investment plans for at least 40 countries by 2020.

The case for climate action has never been stronger. The earth just experienced its warmest year on record in 2015. Temperatures were at record highs in the Arctic this winter. Weather extremes, such as storms, floods, and drought, are becoming more frequent and intense and are affecting millions of people across the world. Climate change is threatening global water and food security, agricultural supply chains, and many coastal cities.

According to the recent World Bank report, Shock Waves: Managing the Impact of Climate Change on Poverty, without rapid action, climate change could push an additional 100 million people into poverty by 2030.

Originally published by The World Bank’s Voices: Perspectives on Development Blog.