‘Entire Economies Could Be Held Hostage by Climate Change’ | The Development Podcast (worldbank.org)
“If we don’t tackle climate change, over 130 million people will be pushed into poverty over the next 10 years and entire economies will be held hostage to the worst impacts,” says World Bank Manager for Advisory and Operations in the Climate Group, Genevieve Connors.
First up, Raka reviews what we know about climate change and what’s at stake.
We then speak to Carolina Schmidt, Chile’s Minister of the Environment, about the threats her country is facing and what her government is doing to address them.
Finally, we speak to Gen Connors about the World Bank Group’s new agenda on addressing climate adaptation and mitigation over the next decade.
Transcript
Paul Blake:
Hello and welcome to The Development Podcast coming to you from the World Bank Group in the United States and around the world. I'm Paul Blake alongside Raka Banerjee.
Raka Banerjee:
Today, climate change. As the global community unites to tackle this historic challenge, the World Bank is treading a path forward.
Genevieve Connors:
Well if we don't tackle climate change, over 130 million people will be pushed into poverty over the next 10 years, and entire economies will be held hostage to the worst impacts of climate change.
Paul Blake:
And from Santiago, we hear how Chile is doing its part to address climate change from the Andes to the Atacama.
Carolina Schmidt:
Today, for developing countries, the urgency east on adaptation. Climate change is really, really, very, very strong today affecting peoples and countries all over the world.
Raka Banerjee:
All that and more over the next few minutes. But first, let's take a look at the data.
Speaker 5:
Alright Raka, before we jump into the Climate Change Action Plan, let's go back to basics. We hear about climate change all the time, but can you give me some data to help me get a sense of what it really looks like?
Raka Banerjee:
So 132 million people expected to be pushed into poverty over the next 10 years because of climate impacts. That's data from the World Bank. 4.2 million people dying every year due to outdoor air pollution. That's data from The World Health Organization. In fact, as of the most recent data, which is from a few years back, 91% of the world's people lived in places where the air pollution actually exceeded The World Health Organization's guidelines for safety.
Paul Blake:
I mean, those numbers don't sound good at all. And when we talk about climate change, it's not just air pollution or poverty necessarily, we're also talking about a whole range of other possible impacts, right?
Raka Banerjee:
Yeah. We're talking about everything from people being forced to leave their homes because it's too hot, too dry, too wet and flooded. We're talking about people facing food insecurity through drought or famine. We're talking about global impacts of biodiversity loss and deforestation. And that's just a start. If you think about the cost of natural disasters alone, in terms of the damage that they're doing to power generation and transportation infrastructure, so everything from power lines to roads and bridges, the yearly cost of those damages in low and middle-income countries is estimated at $18 billion. And then looking at the larger costs to households and businesses, the cost jumps to a staggering $390 billion.
Paul Blake:
I mean those are huge costs. And I remember the Paris Climate Agreement back in 2015, to what extent did that agreement put us on the path to addressing climate change?
Raka Banerjee:
Yeah, that was a huge milestone, bringing in the leaders of all countries to the table to really formally recognize that climate change is a huge problem. Each country defined their own targets to help mitigate impacts and reduce the amount of damage being done to the environment. And in the run up to Paris, you also saw businesses and the private sector stepping up. But as impressive as that was, we're now in the much harder phase, because countries have to not only achieve those targets that were set then, but have to revise them to address the causes and effects of climate change. So this is particularly difficult for low income countries, which are both more vulnerable to climate change and at the same time, they have fewer resources to deal with the impacts of climate change, right? And on top of all of that, they emit the least. So they're far less responsible for the climate impacts that we're seeing today.
Paul Blake:
And making these changes, achieving the goals of the Paris Agreement, that's going to take a lot of money I imagine, to make investments in emitting less carbon or helping people deal with the effects of climate change.
Raka Banerjee:
So that's where the bank is trying to play a supportive role in this process by making financing available in order to implement these changes, especially for low and lower middle income countries. And when you're talking about emitting less carbon or helping people deal with the effects of climate change, they're actually technical terms for those...emitting less carbon is where we're talking about climate change mitigation projects that are working to slow climate change by reducing emissions. So one example of that is green public transportation like the new buses that I don't know if you've been seeing in DC...
Paul Blake:
And that's mitigation?
Raka Banerjee:
Right, exactly. And then the other is climate change adaptation. So projects that help people deal with the effects of climate change that are already here, or that are inevitable, like building seawalls to protect people and cities from rising sea levels and dangerous hurricanes, stuff like that.
Paul Blake:
Okay. So I understand what adaptation and mitigation are, but what is the World Bank itself doing to take climate action as it's called?
Raka Banerjee:
So the World Bank is actually the biggest multi-lateral funder of climate action projects around the world. Since the Paris Agreement was signed, about five years ago, the bank delivered $83 billion in climate financing for low and middle income countries. And this new Climate Change Action Plan is going to lead to even more investment going forward.
Paul Blake:
Alright, well thanks for all the background and context.
Raka Banerjee:
My pleasure.
Paul Blake:
In a few minutes we'll be talking to the World Bank's Genevieve Connors about the Climate Change Action Plan. But first, let's get the view from South America, specifically from the country of Chile.
Raka Banerjee:
Home to some of the world's most stunning natural landscapes from the Andes mountains in the east, the Atacama desert in the north, and it's famously long Pacific coastline, Chile faces unique threats from climate change.
Paul Blake:
Well just what are those threats and how is the country tackling them? Raka recently spoke to the Minister of the Environment of Chile, Carolina Schmidt.
Raka Banerjee:
I was wondering if you could tell us about the threat that climate change poses to Chile and what are some of the key environmental challenges that the country is facing?
Carolina Schmidt:
Well, Chile is a very vulnerable country to climate change. We meet seven of the nine vulnerability criteria established by the UNFCCC. That means that we have low coastal areas, we have arid zones, we have mountain areas, we have urban zones with atmospheric pollution. So we are really very vulnerable and we are feeling today the effects of climate change, especially because of the reductions of rain. For 14 years, we are facing a drought that is very, very, very strong and increase of temperatures, we are already feeling. So our main problems really are on water management. We need to adapt to climate change and we need to do it very, very fast because people are suffering the effects and impact, especially regarding the reduction of water availability.
Raka Banerjee:
I wonder if you can speak to some of the regional issues that... what are some of the key investments that beyond Chile that other countries in the region will be needing to make in the coming years, looking forward to transition to, hopefully, a greener future?
Carolina Schmidt:
Well, we are developing an ambitious climate agenda that is... our main issue and it's something that is very important is to have a climate agenda that transcends government and became a state policy, that boosts the basis of our growth and developing a sustainable way in Chile. So we have developed a strong tools in that area.
Carolina Schmidt:
First we present the climate change framework law that established the goal of to be carbon neutral in our country, to reach carbon neutrality by the latest in 2050. We also present very ambitious NDC, updated NDC, last year in the middle of the COVID pandemic with all our goals at 2030. We are developing now our longterm climate strategy, which demands all sectors of our economy to transform, to strongly reduce emissions now to change and decarbonize our energy matrix. We will have 65% of all of our coal plants that will be phased out, closed by 2025.
Carolina Schmidt:
We have this plan to be carbon neutral. And this is based in mitigation, in investment in five areas. First, as I was telling you the change of our coal matrix closing all our coal power plants, 87% of all our private investment today in Chile is on renewable energy plants. So we are changing very fast our energy matrix.
Carolina Schmidt:
Secondly, we are investing strongly in the clean fuel of the future, green hydrogen. We are planning to be the cheapest producers of green hydrogen, the green fuel to the world by 2030. And this is one of the big basis of our carbon neutral plan. Also, investments are very strong in sustainable development.
Raka Banerjee:
I wonder, what do you see that the global community can do to address these challenges?
Carolina Schmidt:
Global community must do a lot. We need to understand this is a global issue. It's not possible that one country do a lot and the other one is not doing enough, especially big amateurs must understand that this is the biggest, biggest challenge that we are facing in this century as humanity. So we need to understand also that climate change already arrive, that the mitigation is as important as adaptation. We cannot still think that we have to focus the global action in mitigation and leave adaptation in a position that is not as urgent. Today, for developing countries, the urgency is on adaptation. Climate change is really, really, very, very strong today affecting peoples and countries all over the world. So we must understand that these two things, mitigation and adaptation, are equally urgent and equally important to implement right now. So all the different instruments that we can use to really foster action in both mitigation and adaptation is urgent.
Paul Blake:
Minister Carolina Schmidt detailing the threats that climate change poses to Chile and how the country is taking action. She spoke to us from Santiago.
Raka Banerjee:
Well Chile is just one government taking climate action and addressing these issues head on.
Paul Blake:
But building a sustainable future requires massive investment. And that's where the World Bank Group is stepping up.
Raka Banerjee:
To hear more about the investments and actions that the bank group is making and planning to make over the next decade and supportive governments and climate action, we recently sat down with Genevieve Connors, the bank's manager for advisory and operations on climate change.
Paul Blake:
And we started by asking her to tell us, in her own words, what exactly is the Climate Change Action Plan?
Genevieve Connors:
So let me maybe explain three aspects of CCAP that I think would help describe it to answer your question. So first we've really tried to focus on ways to better integrate climate and development. So why do we do that? Well, if we don't tackle climate change, over 130 million people will be pushed into poverty over the next 10 years, and entire economies will be held hostage to the worst impacts of climate change. How do we do this? Well, we describe a lot of ways in the CCAP, but I think the real game changer will be the new country climate and development reports or what we call the CCDRs, which will become a core diagnostic for the World Bank Group and inform our engagements with clients in the future. So what is inside a CCDR? It's essentially a tailored blueprint for every country to think about climate and development together, to factor in issues such as what are the trade-offs, what are the transition costs, what are, for example, the political economy challenges in the country? And so on.
Paul Blake:
It almost sounds like when you go to the doctor's office and they sort of tell you, here's some of the issues you face. Here's the ways we can treat it. It's like a custom kind of report card in a way.
Genevieve Connors:
Well, that's a good analogy because the World Bank has other core diagnostics that it produces in consultation and with our partners and our client countries. But what's different about the CCDR is it's a diagnostic for climate, and for climate and development alone. And I think the fact that this is now one of these core diagnostics that the World Bank Group will undertake with all our client countries is really a paradigm shift and will really change the way that all of us in the World Bank Group, in country units, in policy engagement teams, will think about climate in everything that we do.
Raka Banerjee:
I was wondering if you'd clear up another thing. I was a little confused about one of the headlines from the plan is that the goal of increasing the level of financing that has climate co-benefits. So I saw the co-benefits word, I was wondering what you meant exactly by that.
Genevieve Connors:
Sure. Co-benefits is the word we use, the phrase climate co-benefits, internal to the World Bank Group. What is it? So put very simply, it's the share of financing that's dedicated to climate change adaptation or mitigation in operations financed by the World Bank. So it's for actions that support climate change. And it's really important in the new CCAP that we've made a very seminal commitment to increase the amount of climate finance. In the last CCAP, we had a target of 28% of our total finance for climate finance or climate co-benefits over the last few years, the tail end of the sea cap. But we achieved 26% on average, over those last five years. We've already announced our new target. But to reach 35%, which is our new target, on average, over the next five years, is going to be really quite a different ball game altogether.
Paul Blake:
So to understand here, so the climate co-benefits, that's looking at, if the bank is going to go do like a project in a country that's going to involve working on bridges or roads or something like that, looking at how much of that project, what percentage of that project will address climate change issues as well?
Genevieve Connors:
Correct. It's the share of a total project that counts according to a methodology that we abide by and that we've developed with other MDBs that very strictly defines what share of that project is actually supporting mitigation outcomes, according to a list of projects or categories of investments that would count. Or, what share of that project is actually supporting the investments associated, for example, with a bridge that make the bridge more resilient to climate change.
Raka Banerjee:
So basically more than a third of World Bank financing is dedicated...the target is to have more than a third of World Bank financing dedicated to addressing the climate.
Genevieve Connors:
Correct. And for the world bank, it's also important to say that we've made a further, a second commitment, that at least 50% of our total climate finance, this is for IDA and IBRD, will be for adaptation specifically.
Paul Blake:
Can you explain that, and forgive me as one of the less technical members of staff, can you explain that difference between 35 and 50%? What is the difference between those two goals?
Genevieve Connors:
Basically, to put it simply, it's that over a third of total World Bank Group climate financing will be for, sorry, World Bank Group financing will be for climate. Whereas what we're saying for the World Bank is that we want half of that to be for adaptation. Essentially, we want to commit to parity in our objectives between mitigation and adaptation. And we think that's especially important for our countries, some of whom are extremely poor, not just in our IDA countries, and that we want to support them, for example, in protecting them from coastal erosion or the impacts of devastating cyclones.
Paul Blake:
And so just to hammer this home, cause I'm trying to just, so you're saying of the IBRD and IDA funding, 50% will go towards, at least 50% will go towards adaptation to climate change. Is that across the board for all financing or for climate financing?
Genevieve Connors:
No, sorry. It's just climate. So of our climate finance, half will be for mitigation and at least half will be for adaptation.
Paul Blake:
Got it.
Raka Banerjee:
So I wanted to shift a little bit to the Paris Climate Accords that were signed in late 2015. Most people are pretty familiar with those, I would say. And you've talked about... I've heard that the World Bank is sort of aligning itself with the Paris Agreement. I was wondering if you could share a bit more about what exactly that means. How is the bank aligning with the Paris Climate Accords going forward?
Genevieve Connors:
Sure. That's a good question. And it's probably the question that we get the most often. As you will have seen for the World Bank, we have committed to a hundred percent alignment starting in July 1st, 2023. And our sister organizations in the IFC and MIGA will follow pretty soon after us to reach a hundred percent as well. But what does that mean? This is the question we get all the time. So I do want to say how we define Paris alignment so far. And I say so far because it absolutely is a journey over the next few years to become more and more specific as to what it means for sector X or sector Y and what it means for country X or Country Y when those countries are in different pathways towards de carbonization or a resilient future. So I want to tell you how we define it in the CCAP briefly, and I want to quote this, that we define Paris alignment as the provision of support to clients in a way that is consistent with low-carbon and climate-resilient development pathways aligned with the objectives of the Paris agreement and consistent with client countries' national climate commitments.
Paul Blake:
So how does that work for specific projects? Is that sort of saying, okay, we're not going to do this type of project and we are going to do that type of project?
Genevieve Connors:
Yeah. So let me put it in really practical terms. There are some projects, or some sectors I should say, that are absolutely considered non-aligned. And I'll give you some examples: mining of thermal coal, coal is really incompatible with climate objectives, electricity from coal, extraction of peat, electricity from peat, et cetera.
Paul Blake:
Definitely got question in a minute about those for you, but we'll get there.
Genevieve Connors:
Okay. And there's some projects that are really obviously aligned and investment in renewable energy. For example, there's also a lot of projects that we would pour sectors again, or investments that we would consider do no harm, which are aligned with the goals of the Paris agreement, but don't actively advance its attainment, for example, educational reform, but there's a sizable gray area, and this is where it gets thorny and tricky. And if you probe deeply into all our sister and partner organizations on their definitions of Paris alignment, this is where everyone is investing their energy right now is how to unpack what that gray area is. There might be something that is needed from a development perspective, but that doesn't really add up for de carbonization or resilience.
Paul Blake:
So would that be something like an education reform? Like we need to increase literacy of elementary school students, but it doesn't really touch the...
Genevieve Connors:
No, because that's a do no harm category, and a do no harm category doesn't actively advance the goal, but it doesn't detract from it. I'll talk about maybe more complicated or controversial matters like what do we do in natural gas? So we haven't financed upstream oil and gas for two years. We made the announcement in 2017 and we haven't financed anything in the last two years. And we have not looked at coal for many years, for 10 years. But we do consider natural gas. There's a pretty high bar to pass to be able to do natural gas if we want to align with the Paris Agreement but there may be certain circumstances in which this is important.
Paul Blake:
And on the coal point, I was looking through some of the materials that are out there about the Climate Change Action Plan, and there's often this talk of supporting a just transition out of coal. Help me understand why that is so tricky. Why can't coal just be abandoned? Say today we're banding in it all together. And what does that phrase just transition, what does that mean exactly?
Genevieve Connors:
That's a good question. And again, I think along with Paris alignment, I think for me personally, it's one of the most interesting and informative and transformational parts of CCAP going forward is our commitment to work on just transition. So, I mean to start with it's... to come back to what I said before, I mean, coal is just really incompatible with climate objectives and the objectives of the Paris Agreement. We know that. But we also know that there are many of our client countries where even if we no longer finance coal, they rely on coal and entire communities or economies, local, regional economies are dependent on coal. So we have workers and fossil fuel industries who are... individuals with families, homes, plans for the future. This happens in my country as well, and not just in our client country, but if we don't manage that transition well, not only are we going to have the stranded assets, for example, of these coal power plants that can no longer be used or are no longer compatible with the country's climate objectives, but we also run the risk of stranding entire communities.
Genevieve Connors:
So just transition is really about supporting approaches that integrate people, integrate communities into the low carbon transition so that they're not left behind or ignored. And that the jobs just don't go to other parts of countries and other areas and other sectors and leave people behind. Because you'll just never have the political support to undertake the transition.
Paul Blake:
So you're not just blowing up people's livelihoods very rapidly?
Genevieve Connors:
You need everyone to be a part of the new climate economy of the future. And this is a discussion that is live all over the world, in every single country. What does that look like? And how can they be involved? I mean, one of the areas that we work in as the World Bank is, for example, in social safety nets. So how can we use our social protection programs and engagement in labor programs or social safety net programs, for example, to support people to find new jobs or to build new skills so that they're ready for the green economy?
Raka Banerjee:
You'll be looking at countries and the people who are currently working in sectors like coal or looking at the economic cost for them, the job loss? all of that is going to be included?
Genevieve Connors:
That will certainly be part of it, yeah absolutely. But the idea is that we look across the landscape of climate and development in that country. So just transition is not the only thing. We also look for... For example, the CCAP talks a lot about systems transitions and that's something we can come to in a minute. But for example, if we're talking about transitions that need to happen in the agriculture and food sector, these will absolutely be part and parcel of the CCDRs.
Paul Blake:
And on those systems, in some of the materials I was looking at about the CCAP and preparing for this conversation, if I'm not mistaken, there were five systems mentioned: energy, agriculture, sorry, energy is the first one, agriculture food and land being the second, cities, transportation, and manufacturing. And as I understand it, what you're saying is that these different systems need green transitions. How did you arrive at these topics and why these topics? And I guess, what do you mean by a transition? What does a transition look like?
Genevieve Connors:
So these are indeed five systems. You're right. Let me just add that for the agriculture food and land that you mentioned, we do call it the agriculture food, water, and land, because we think those sectors are really deeply integrated and so many nexus solutions are needed to achieve the transition.
Genevieve Connors:
Why these five? We chose them because collectively they add up to over 90% of global greenhouse gas emissions, and they also face significant climate impacts. And so what do we mean by transition? Well, we think that over time, these five systems, these five sectors, hold the key to unlocking and supporting a green, resilient and inclusive recovery from the pandemic. Changes in how we grow food, for example, or how we transport our people or our goods and our services, or how we use water and our water security. And of course, how we generate energy and produce energy are going to be absolutely fundamental for us to achieve the goals of the Paris Agreement well before 2050. Without transformation in these, there will be really no possibility of attaining the goals of the Paris Agreement, given the predominance of these sectors as sources for greenhouse gas emissions.
Raka Banerjee:
That's really interesting. So you said between those five systems, they make up 90, 95%...
Genevieve Connors:
Over 90%.
Raka Banerjee:
Over 90%. And is there one of the five systems in particular that is the most significant or you're looking at it all to altogether, more holistically?
Genevieve Connors:
We look at it all together. We look at it all together. I mean, there are huge emission sources from agriculture, from the way we grow food, from the way we raise our livestock and grow rice, all of these. And of course, you could say ostensibly manufacturing is also maybe smaller as a source because it's really a huge utilization of many of these sources, but it's an absolutely important business line for our clients and as they grow and develop as well as for our sister organizations and the IFC and MIGA. So we don't treat one as more important than the other, and we really genuinely think they are all fundamental. I mean, land use in cities, for example, as cities grow, as the world continues to urbanize, these things will be fundamental to changing the trajectory of greenhouse gas emissions.
Genevieve Connors:
And let me just say on the basis of recovery, I think this is important, you know, for many of our client countries, the pandemic is nowhere near over or done with. It still poses really clear and immediate threats to people, to health, to livelihoods. So there's no question that our focus will be on supporting our clients with meeting those immediate needs. But now is the time to think about green recovery for all our clients.
Raka Banerjee:
Yeah, absolutely. Thank you so much for joining us and sharing all of this with us. It's been really fascinating.
Genevieve Connors:
It's been a pleasure. Thank you very much, Paul and Raka.
Paul Blake:
That's it for this edition of The Development Podcast.
Raka Banerjee:
As always, we want your feedback. If you'd like to get in touch with us, please send us an email at thedevelopmentpodcast@tworldbank.org.
Paul Blake:
Until next time, goodbye.
Raka Banerjee:
Goodbye.
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