The leader of the World Bank Group has the worthy challenge of protecting the world’s most vulnerable populations from the chaos created by climate change.
That means tackling two intertwined problems: ending extreme poverty and stopping climate change.
The first is daunting enough. As the Economist has pointed out, “a lot will have to go right” in order for the bank to achieve its goal of ending extreme poverty by 2030.
But stopping climate change and ending poverty at the same time is especially difficult, given that economic growth is directly linked to more carbon emissions.
This tension is not lost on World Bank president Jim Yong Kim, who spent part of yesterday morning speaking to students at Georgetown University as part of its Global Futures Initiative.
People living in poverty want the same benefits of economic growth as we do, said Kim. “We can’t ask poor people to forego electricity because the developed world has put too much carbon in the air,” he said.
The only way to stop climate change and end poverty at the same time is to end the relationship between economic growth and carbon emissions, he said. That means making it more expensive to burn carbon and less expensive to use renewable energy.
The World Bank has a five-point plan to make that happen:
- Put a price on carbon.
- Remove fossil fuel subsidies.
- Improve energy efficiency and renewable energy use.
- Focus on building low-carbon, resilient cities.
- Encourage climate-smart agriculture.
The first two points are directly related to de-coupling economic growth from greenhouse gases.
Putting a price on carbon is the most straightforward path to getting political leaders and companies to weigh the true cost of emissions before they pollute the air. It is also the most politically acceptable option on the table, as nearly 40 countries already have plans to put a price on carbon, said Kim.
Ending fossil fuel subsidies, on the other hand, is more contentious. Many people argue that subsidies protect poor people, but Kim said the reality is that the bottom 40 per cent receives only 18 per cent of the value from these programs.
“Fossil fuel subsidies are not at all about protecting the poor. We have to find ways to get rid of them,” he said.
To that end, the World Bank is working with several countries to design programs that will help governments phase out subsidies, while protecting the poorest members of society from the inevitable rise in fuel prices. It will also help governments reinvest the money into programs that will benefit society.
The Egyptian government has already saved $7 billion by eliminating fossil fuel subsidies and will reinvest $3 billion of it in health and education, said Kim.
The rest of the World Bank’s plan – building resilient cities, investing in renewable energy and encouraging climate-smart agriculture – depends on financing that doesn’t exist yet on the scale that’s required.
It is crucial that governments secure this funding, not only because battling climate change is expensive, but also because it could determine the success of the climate talks in Paris later this year, said Kim.
Governments at the United Nations Framework Convention on Climate Change in 2011 committed to raising $100 billion for the Green Climate Fund. This money is meant to help developing countries mitigate and adapt to the effects of climate change.
“We have to find creative ways to find that money because we don’t want that to be the reason we don’t get an agreement in Paris,” said Kim, adding that the bank is “laser-focused” on coming up with a robust financing plan.
Kim pointed to the massive growth in green bonds over the last year as evidence that creative funding solutions are possible.