World Bank pronounces on climate change: WDR 2010, published today

September 15, 2009

     By Duncan Green     

This year’s World Bank flagship publication, the World Development Report 2010, is on climate change – a significant departure from the tradition of devoting turn of the decade WDRs to an overview of poverty. It’s an unabashed bit of climate change advocacy, remorselessly upbeat and optimistic (even when the story it tells suggests rather more gloom is in order) and much like the UN report I blogged on last week, it seeks to square the development – climate change circle: how can we ensure the global response to climate change strengthens, rather than undermines, development?

It has the usual World Bank strengths and weaknesses – strong on analysis, killer facts, regional impacts, the science of climate change and policy solutions; flimsy on politics and ‘drivers of change’ – e.g. who’s blocking progress, why and what to do about it.

Some highlights:

‘Climate change policy is not a simple choice between a high-growth, high-carbon world and a low-growth, low-carbon world—a simple question of whether to grow or to preserve the planet. Plenty of inefficiencies drive today’s high-carbon intensity…. For example, existing technologies and best SUVs v electricitypractices could reduce energy consumption in industry and the power sector by 20–30 percent, shrinking carbon footprints without sacrificing growth. In Africa, mitigation opportunities are linked to more sustainable land and forest management, to cleaner energy (such as geothermal or hydro power), and to the creation of sustainable urban transport systems. So the mitigation agenda in Africa is likely to be compatible with furthering development. Nor do greater wealth and prosperity inherently produce more greenhouse gases, even if they have gone hand in hand in the past.’

All true, but I have a problem with this exclusive focus on ‘win wins’, which verges on the Panglossian at times. Sure, there are plenty of cases where you can save money and save carbon, but suggesting that this can all be pain-free may get you a hearing in terms of advocacy, but is surely not preparing the ground for difficult discussions on limits to growth (where? How much?) that I increasingly think will have to form part of the response.

The most interesting aspect of the report is the way it frames the challenge in terms of ‘inertia’ -‘Inertia is the defining characteristic of the climate challenge—the reason we need to act now.’ It sees inertia at all levels:

in the science of climate change: a series of lag effects means that temperatures and sea levels rise long after (i.e. for centuries) carbon emissions start to come down

in investment: once countries invest in eg coal-fired power plants, it’s very hard for them to decide to mothball them until their useful life has expired – several decades

in research and development: ‘New energy sources have historically taken about 50 years to reach half their potential’ in the behaviour of individuals and organizations

But when it comes to suggesting how you overcome that inertia, the report (in common with most discussions on climate change, to be fair) is pretty thin. The Bank calls for ‘new pressures, new instruments, and new resources’. On pressures it argues that ‘in the absence of a global enforcement mechanism, the incentives for meeting global commitments are domestic.’ – i.e. public pressure and good leadership at national and city level (big plug for the role of sub-national governments in the US and elsewhere).

On instruments it calls for an equitable global deal (who could disagree with that?) and learning from the mistakes of the aid system (more on that in Oxfam’s report ‘Beyond Aid’ due out tomorrow). It intriguingly also calls for ‘A long-term goal of per capita emissions converging to a band could ensure that no country is locked into an unequal share of the atmospheric commons.’

But then it heads rapidly for the Bank’s comfort zone of technological and policy solutions: ‘known technologies and practices can buy time—if they can be scaled up. For that to happen, appropriate energy pricing is absolutely essential. [eg cutting subsidies and increasing fuel taxes] … Prices help explain why European emissions per capita (10 tons of CO2e) are less than half those in the United States (23 tons). Global energy subsidies in developing countries were estimated at $310 billion in 2007, disproportionately benefiting higher-income populations. Rationalizing energy subsidies to target the poor and encourage sustainable energy and transport could reduce global CO2 emissions and provide a host of other benefits. But pricing is only one tool for advancing the energy-efficiency agenda, which suffers from market failures, high transaction costs, and financing constraints. Norms, regulatory reform, and financial incentives [eg feed in tariffs] are also needed.’[sorry, free market fundamentalists, the Bank (at least its climate change part) is now a lost cause] [but current technology isn’t enough] ‘every energy model reviewed for this Report concludes that it is impossible to get onto the 2°C trajectory with only energy efficiency and the diffusion of existing technologies. New or emerging technologies, such as carbon capture and storage, second-generation biofuels, and solar photovoltaics, are also critical.’

[And feeding a world population peaking mid century at 9 billion will be hard:] ‘Producing more and protecting better in a harsher climate while reducing greenhouse gas emissions is a tall order…. agricultural productivity will have to increase, perhaps by as much as 1.8 percent a year compared to 1 percent a year without climate change… This must be done in a harsher climate with more storms, droughts, and floods. And it has to incorporate agriculture in the mitigation agenda—because agriculture drives about half the deforestation every year and directly contributes 14 percent to overall emissions.’

Other useful stats:

‘developing countries will bear most of the costs of the damages—some 75–80 percent.’

‘Mitigation finance needed in developing countries could be around $400 billion a year by 2030. Current flows of mitigation finance averaging some $8 billion a year to 2012 pale in comparison. And the estimated $75 billion that could be needed annually for adaptation in developing countries dwarfs the less than $1 billion a year now available.

[$400bn] is equivalent to 0.2 percent of projected world GDP in 2030, or 3 percent of today’s global investment spending.’

September 15, 2009
Duncan Green