World Bank Urges Industrial Nations To
Take Lead On Gases

December 8, 1997

The World Bank today called on industrialized countries, and those with transition economies, to take the lead in reducing the impact of climate change by curbing their discharges of greenhouse gases, and not to expect developing countries to immediately follow suit, in a speech to the UN Framework Conference on Climate Change in Kyoto.

The World Bank's Managing Director for Operations, Caio Koch-Weser, told delegates, who are negotiating binding limits on greenhouse gas emissions, that while all countries must eventually play their part in reversing climate change, developed nations must be the first to cut discharges of gases that contribute to global warming and climate change.

'The Bank believes that much stronger, more concerted action on climate change must be taken now, and that the developed countries must take the lead,' says Koch-Weser.

'First, because in the near-term, developing countries will need to increase their production and consumption of energy to meet basic development goals, and to alleviate the crippling poverty with which many are burdened; second, because developed countries have a greater economic, technical, and institutional capacity to address climate in a cost-effective manner; and third, because developed countries emit much greater accumulations of greenhouse gas into the atmosphere than do the developing countries.'

Combating Climate Change Needs Universal Commitment

However, with developing countries such as Brazil, China, India, and Mexico, expected to collectively overtake emissions by the industrialized world by 2025, Koch-Weser says developing countries will also need to cut their emissions in the long-term, in order to promote a successful global solution to climate change.

Koch-Weser later told journalists that global climate change is no longer the sole concern of scientists and environmentalists, or the sole responsibility of one particular group of countries. Collective action is required to find real solutions to global warming, he said, since no one country is responsible for causing the problem or could eliminate its threat single-handedly.

'Addressing global climate change can no longer be viewed as a fringe activity, nor can it be considered the agenda of the industrialized North,' said Koch-Weser. 'It is central to the development agenda and the plight of millions of the world's poorest people.'

Developing Countries Most at Risk from Climate Change

According to the Intergovernmental Panel on Climate Change, the UN's principal scientific authority on global warming, developing countries, most of them World Bank clients, will suffer most of the damaging effects of climate change.

These could include tens of millions of new cases of malaria and dengue fever in the tropics and neighboring regions; destruction of forests and coral reefs; loss of farm land for growing crops and raising livestock; more drought in Sub-Saharan Africa as well as parts of Southern India and Latin America; and the relocation of tens of millions of people in countries such as Bangladesh, China, and Egypt as rising sea levels submerge low-lying coastal regions, and threaten the very existence of many small island states such as the Maldives in the Indian Ocean.

Consequently, the World Bank is highly concerned about how climate change could affect the sustainable development of its clients.

'The World Bank sees climate change as linked to our central mandate of poverty reduction and sustainable development,' says Koch-Weser.

'Continued global warming is in no-ones interest, but there is no question that it will hit developing countries hardest. Adverse effects on health, food production, and water resources will hurt poor people and poor countries most.'

Joint Cooperation Key to Countering Global Warming

As delegates to the Climate Change Convention in Kyoto negotiate the first binding limits on greenhouse gases, the World Bank believes that the challenge for developed countries is to reduce their domestic emissions as cheaply as possible, while also helping developing countries produce and consume energy in a much-more climate friendly way, even if in the short-term they have no specific obligations to cut their emissions.

The Bank recommends two measures that would promote greater partnership in this area between developed and developing countries, and also boost the effectiveness of the Climate Convention:

Generous replenishment of the Global Environment Facility (GEF), the interim financial arm of the UN Climate Change Convention, which funds projects in developing countries to safeguard the global environment. Replenishment of at least US$ 2.5 billion would allow the GEF to expand its funding of new projects; and

Development of a Bank-sponsored Carbon Investment Fund (CIF) which, in the event of binding curbs being imposed on them in Kyoto, would allow industrialized countries, and others with transition economies, to lower their national emissions by investing money and technology in developing countries to make their industries more efficient and less polluting. In this way, developed countries could both help reduce global emissions of greenhouse gases and also credit those reductions towards reducing their own national obligations. The Bank would be willing to set up such a Fund if signatories to the Convention find the proposal useful.

'The Carbon Investment Fund would work like a closed-end mutual fund, which industrialized countries and the private sector could pay into, and which the Bank would then invest for them in reducing carbon emissions in projects in the transitional economies of Eastern Europe, and potentially in developing countries,' says the World Bank's Environment Director, Doctor Robert Watson, who also serves as chairman of the Intergovernmental Panel on Climate Change.

'It's a win-win proposition because everyone benefits. Industrialized countries could help meet their own carbon limitation commitments by investing in reduced emissions in the developing world, which in turn, acquires the money and technology to make its industry more climate -friendly without having to pay the extra costs involved. In fact, the Fund is designed to generate surpluses from carbon trading which can be used to finance the development needs of the poorer countries.'

Surpluses arise because it is considerably cheaper to reduce carbon emissions through investments in developing countries than in industrialized economies, and the Bank believes it is only fair these savings to developed countries be shared with their counterparts in the developing world.

Addressing Climate Change in World Bank Projects

Given that developing countries are expected to significantly increase their production and use of energy in the next few decades, using predominantly fossil fuels, the World Bank is devising an environmental blueprint for its energy sector activities that will help Bank clients meet their energy needs while limiting local, regional, and global environmental damage.

The Bank's strategy will: invest heavily in low or non-carbon renewable energy sources (such as solar, wind, and biomass), as well as improvements in the efficiency of energy use. And, among other measures, the World Bank Group will strengthen economic policies for energy sector management, allied with sound regulatory frameworks and encourage private sector investment; help developing countries take more account of the economic costs of environmental damage; and help them limit greenhouse gas emissions by using fossil fuels more efficiently.

The Challenge in Kyoto

In his concluding remarks to the Kyoto conference, Caio Koch-Weser, said he was hopeful that the delegates would address the pressing challenge now facing the world over global warming:

'I share the view of many here today that the actions and achievements since the Rio Earth Summit in 1992 have been too meager. Certainly, with respect to greenhouse gas emissions, we have fallen well short of the decisive action that was sought five years ago in Rio. I am hopeful, however, about this weeks outcome, because I am sure you know, as do I, that the world cannot afford to wait. No less than the future of the planet is at stake.'