The Challenge of Low-Carbon Development - World Bank Internet ...

Technology. As a general observation, in recent years theWBG has been becoming much more involved in the promotionof efforts to develop and transfer new energy technologies.These efforts build on donor-funded programs,particularly the Global Environmental Facility (GEF) andmore recently the Clean Technology Fund (CTF), but alsoinclude significant on balance sheet investments by IFC’sclean tech unit and funds department. The combined resourcesof the WBG, GEF and CTF, if leveraged, can helpscale up advanced technologies including concentratingsolar power (CSP) and carbon capture and storage (CCS)in developing countries. IEG should have recognized theWBG’s efforts in this regard, including the establishment ofthe CCS Capacity Building Trust Fund in 2009. The WBG’sproactive approach to CSP and CCS is helping to considerablychange the Bank’s role in supporting advanced technologytransfer.Carbon finance. There are significant differences betweenthe views of management and the IEG report with regardto the exit strategy, knowledge transfer, and technical assistanceprovided through the Bank’s involvement in carbonfinance. The report does not differentiate between carbonmarkets (e.g., the market for allowances in Europe and theClean Development Mechanism market), and fails to understandthat withdrawal by the Bank in 2005 from the carbonmarkets where its Carbon Finance Unit operates wouldhave been catastrophic to the long-term stability of thesemarkets. Management also believes that the report shouldhave acknowledged that a major goal of carbon marketswas to bring in private capital as per United Nations negotiations,and that the unpredictable nature of carbon flowsposes a fundamental problem in using carbon financing inthe Bank and elsewhere. Management feels that the reportmisses the knowledge transfer and technical assistanceprovided through instruments such as the Prototype CarbonFund Plus, Community Development Carbon Fund(CDCF) Plus, or Forest Carbon Partnership Facility (FCPF)Readiness Fund, and by the World Bank Institute’s CF Assistprogram, all of which help increase the availability ofcarbon finance to potential projects inside and outside theBank. Finally, the report argues that “carbon finance needsto be redirected away from hydropower, where it has minimalimpact on project bankability.” Here, management believesthe report should have discussed alternative financingavenues, in particular for Africa, where hydro remains avast and largely untapped reservoir of clean energy.Management would have liked to see a stronger emphasisin the report on the potential role the Bank may play in promotingcarbon finance reform, so as to facilitate transitiontoward programmatic and ecosystem based approaches,and speedier and simplified administrative processes.Agriculture. IEG’s review made the decision to exclude theagriculture sector, while acknowledging its contribution togreenhouse gas (GHG) emissions. Management believes,however, that given this sector’s importance (together withForestry it accounts for 30 percent of GHG emissions andmore in many developing countries), the report shouldhave recommended that management pay more attentionto the role of agriculture, including livestock and land andwater management, in low-carbon growth in the future.In this regard, the report and its recommendations wouldhave benefited from using a broader perspective. The evidenceis that many of the “causes of deforestation” lie outsidethe forestry sector (for example, forest fires related toland clearing for agricultural intensification), and in theuse of biomass energy (for example, wood and charcoal)for cooking and heating.III. IEG RecommendationsManagement welcomes and in general agrees with the IEGrecommendations. These recommendations largely fit withwhat the WBG is doing at present, and are relevant to theEnergy and the Environment Strategies currently underpreparation. Management’s specific responses to IEG recommendationsare outlined in the attached draft ManagementAction Record.xviii |Climate Change and the World Bank Group