Washington: Mobilising finances to mitigate climate change would require a “bold coordinated action” at country level, World Bank President Jim Yong Kim has said as he pitched for need to direct public finance to low carbon climate resilient investment.
The international community needs to put in place incentives for change such as carbon pricing and eliminating fossil fuel subsidies, he said.
Kim was speaking ahead of the One Planet Summit in Paris, organised by France, the UN and the World Bank to explore ways to finance climate projects. It would see the participation of some 4,000 people and 800 organisations.
One of the big topics in Paris next week, he said, is the need to scale up financing which is still not nearly enough to meet the Paris Agreement commitments.
The International Energy Agency has estimated that it will take an average of USD 3.5 trillion dollars a year for the next 30 years to contain the rise of global temperatures to a minimum of 2 degrees Celsius, he said.
Over the next 15 years as demand grows, the world would require about USD 90 trillion in new infrastructure, roads, energy, water and transportation systems and all of that needs to be climate smart, he asserted.
“The problem is we’re only on pace to meet half of that and this gap is not limited to low income countries,” Kim rued.
“More than 60 per cent of the financing gap is expected to be concentrated in middle income countries. Right now, there are trillions of dollars on the sidelines and a negative or low interest rate and investors are waiting for better investment opportunities with higher returns. We need to unlock some of this capital to meet that demand we know is there,” Kim said.
The summit will bring together heads of state and government and other public private and civil society climate leaders will showcase some of the high impact projects and initiatives which finance is already flowing, he said.
“Mobilising finances will take bold coordinated action at the country level. We need to direct public finance to low carbon climate resilient investment not just for low and middle-income countries, high income countries need to do this too, if we’re going to deliver on their commitments,” Kim said.
“We need to integrate climate international policy and put in place incentives for change such as carbon pricing eliminating fossil fuel subsidies,” Kim said.
The World Bank President said this is the opportunity to pull together leveraging and combining all the knowledge and finance mechanisms at the disposal to help move forward on these important climate commitments.
Observing that there’s a lot of positive news, he said the Paris agreement entered into force in record time and 170 countries have ratified it.
“We’ve seen the green bond market continue to boom with the market expected to exceed 130 billion dollars this year,” he said.
The World Bank Group is among the world’s leaders and largest issuers of green bonds, having raised over USD 16 billion in over 200 green bonds since 2008 for climate and environment related investments.
Multilateral developed banks including the World Bank Group continue to increase financing for climate action, he said.
The World Bank is one of the largest multilateral providers of finance for renewable energy and energy efficiency projects in developing countries, he added.
“We increase climate lending to 22 per cent of our portfolio up from 18 per cent two years ago, moving us closer to the target of 28 per cent of our portfolio by 2020,” he said.