World Bank Group Climate Change Action Plan April 7, 2016 ii TABLE OF CONTENTS EXECUTIVE SUMMARY .............................................................................................................................. vii Context and Rationale ................................................................................................................................ 1 Climate Change Action Plan: Structure and Drivers .............................................................................. 2 A Demand-Driven Plan ............................................................................................................................. 4 Building on WBG Comparative Advantage ............................................................................................. 6 Building on WBG Experience .................................................................................................................. 7 Meeting WBG Commitments ................................................................................................................... 8 Priority I: Support Transformative Policies and Strengthen Institutions ............................................. 9 Support Countries to Transform Climate Commitments and Priorities into Actions ............................. 10 Get Prices Right ...................................................................................................................................... 11 Priority II: Leverage Resources............................................................................................................... 12 Catalyze Private Capital .......................................................................................................................... 13 Optimize the Use of Concessional Finance ............................................................................................ 15 Priority III: Scale Up Climate Action ..................................................................................................... 18 Renewable Energy and Energy Efficiency ............................................................................................. 18 Sustainable Mobility ............................................................................................................................... 22 Sustainable and Resilient Cities .............................................................................................................. 24 Climate-Smart Land Use, Water, and Food Security .............................................................................. 24 Green Competitiveness ........................................................................................................................... 29 Leave No One Behind ............................................................................................................................. 29 Priority IV: Work with Others and Align Internal Processes and Organization ............................... 31 Work in Partnership with Others ............................................................................................................ 32 Global Advocacy on Key Issues ............................................................................................................. 32 Build the Knowledge Base and Create New Solution Packages ............................................................. 33 Align Internal Processes and Incentives ................................................................................................. 34 Organizational Capability and Collaboration to Deliver ........................................................................ 36 Appendix: Regional Plans and Integrated WBG Priorities .................................................................. 37 Africa ...................................................................................................................................................... 37 East Asia and the Pacific ......................................................................................................................... 38 Europe and Central Asia ......................................................................................................................... 40 Latin America and the Caribbean ........................................................................................................... 42 Middle East and North Africa ................................................................................................................. 44 South Asia ............................................................................................................................................... 45 iii ACRONYMS AFR Africa Region CAFI Climate Assessment for FI (Financial Intermediary) Investment CAGR Compound Annual Growth Rate CC Climate Change CCSA Cross-Cutting Solution Area CIF Climate Investment Fund COP Conference of Parties CPF Country Partnership Framework CPLC Carbon Pricing Leadership Coalition CREWS Climate Risk Early Warning System CSP Concentrated Solar Power CURB Climate Action for Urban Sustainability DESCO Distributed Energy Service Company DPF Development Policy Financing DPL Development Policy Loan DPO Development Policy Operation DRM Disaster Risk Management EAP East Asia and Pacific region ECA Europe and Central Asia region EDGE Excellence in Design for Greater Efficiencies ENSO El Niño–Southern Oscillation ESMAP Energy Sector Management Assistance Program FAO Food and Agriculture Organization of the United Nations FCPF Forest Carbon Partnership Facility FY Fiscal Year GCF Green Climate Fund GDP Gross Domestic Product GEF Global Environment Facility GFCS Global Framework for Climate Services GFDRR Global Facility for Disaster Reduction and Recovery GG Green Growth GGFRP Global Gas Flaring Reduction Partnership GHG Greenhouse Gas GIF Global Infrastructure Facility GP Global Practice GPSC Global Platform for Sustainable Cities GW Gigawatt IBRD International Bank for Reconstruction and Development ICT Information and Communication Technology IDA International Development Association IDFC International Development Finance Club IEG Independent Evaluation Group (WB) IFC International Finance Corporation IFC-CCCP IFC-Canada Climate Change Program INDC Intended Nationally Determined Contribution IO Investment Officer (IFC) IPCC Intergovernmental Panel on Climate Change LCR Latin America and the Caribbean region iv LDC Least Developed Countries MDB Multilateral Development Banks MIGA Multilateral Investment Guarantee Agency MNA Middle East and North Africa region MOU Memorandum of Understanding MP Montreal Protocol MW Megawatt NDC Nationally Determined Contribution NGO Non-Governmental Organization PforR Program-for-Results PPA Power Purchase Agreement PPCR Pilot Program for Climate Resilience PPP Public-Private Partnership PV Photovoltaic REDD+ Reducing Emissions from Deforestation and Forest Degradation (REDD), Conservation of Forest Stocks, Sustainable Management of Forests and Enhancement of Forest Carbon Stocks RISE Readiness for Investment in Sustainable Energy SAR South Asia Region SCD Systematic Country Diagnostic SE4All Sustainable Energy for All SIDS Small Island Developing States SIF Strategic Investment Fund SSA Sub-Saharan Africa Tcal Tera calories TRACE Tool for Rapid Assessment of City Energy TTL Task Team Leader (WB) UN United Nations UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change UNGA United Nations General Assembly VC Venture Capital WAVES Wealth Accounting and the Valuation of Ecosystem Services WB World Bank WBCSD World Business Council for Sustainable Development WBG World Bank Group v vi EXECUTIVE SUMMARY 1. Climate change is a threat to the core mission of the World Bank Group (WBG). Current weather extremes already affect millions of people, putting food and water security at risk, and threatening agricultural supply chains and many coastal cities. Without further action to reduce extreme poverty, provide access to basic services, and strengthen resilience, climate impacts could push an additional 100 million people into poverty by 2030. 2. Climate change presents enormous challenges and opportunities for development, making it essential that climate and development be tackled in an integrated way. The world needs to feed 9 billion people by 2050, provide affordable energy access to all, and extend housing and services to 2 billion new urban dwellers—and to do so while minimizing emissions and boosting resilience. 3. Recent global developments favor bold climate action by the WBG. At COP21, 140 World Bank client countries committed to implement their Nationally Determined Contributions (NDCs) as part of an agreement to limit global warming to less than 2°C by 2100, and make best efforts to limit warming to 1.5°C. At the same time, public and private actors have renewed their global commitments to increase investments and R&D, boost carbon pricing, and end wasteful energy subsidies. 4. This Climate Change Action Plan (CCAP) demonstrates how the WBG intends to meet these challenges and opportunities, by scaling up climate action, integrating climate change across its operations, and working more closely with others. It is driven by client demand, focused on activities that support the WBG’s core mission, and builds on the WBG’s comparative advantage. 5. Countries start from different points and have different emission levels, and therefore need differentiated actions and support. These