World Bank calls for climate-smart development aid

OREANDA-NEWS. November 02, 2015.  All future overseas development aid has to help developing countries move on to a low-emissions trajectory and strengthen their ability to adapt to climate change, World Bank climate change special envoy Rachel Kyte has said.

"We need to mobilise considerable amounts of concessional finance for climate-smart development... to boost resilience and help countries move on to a low-carbon pathway," Kyte said.

But she would not be drawn on whether rich nations should commit to a post-2020 climate finance package under a new, global deal to be sealed in Paris in December.

Developing countries have said they will only sign a binding, post-Kyoto protocol agreement if industrialised parties offer continued support for climate change mitigation and adaptation.

High-profile figures, including French president Francois Hollande and UN secretary-general Ban Ki-moon, have called on rich nations to come forward with clear financial commitments, as they see this as crucial to securing a strong deal in Paris.

Although countries like France and Germany have recently announced new funding towards meeting industrialised nations' 2009 pledge to raise \\$100bn/yr by 2020, none have made any post-2020 commitments.

A recent OECD study cited finance flows of an estimated \\$61.8bn in 2014 as proof that developed countries are well on their way to meeting the pledge.

But the figure is hugely inflated, according to critics, as it includes non-concessional loans and overseas development aid (ODA).

Poorer countries questioned the report's veracity on the basis that it was commissioned by donor countries. Its accounting methodology lacks transparency, they said.

But Kyte rejected the claims, arguing that the OECD study amounted to "a solid job" of aggregating data and using the same criteria across all funding sources.

The OECD measures development finance flows every year, so it is probably best placed to establish whether money is leaving the ODA account and moving into climate finance, she said. There is no evidence that this is happening at the moment, she added.

But Kyte does envisage a future where the dividing line between climate finance and development aid becomes more blurred.

Poorer nations' climate finance needs — as outlined in their intended nationally determined contributions (INDCs) under the Paris deal — should be treated as investment opportunities, rather than funding requests, she said.

"Understanding INDCs as a first-generation prospectus is really important. The private sector and policy makers need to look at the INDCs as an investment pathway for each of the countries that filed them."

China's INDC equates to \\$6.5 trillion of required investment and could create 30mn jobs, according to Beijing. And India needs \\$2.5 trillion worth of investment to meet the targets in its submission.

"The question is, where does that finance come from? That is not a climate finance debate or a development debate, it is a global economic growth debate," Kyte said.

"We are going to have to provide substantial amounts of concessional finance to help the most vulnerable improve their resilience and keep pace with climate impacts," she said.

Kyte, who is also the bank's vice-president for sustainable development, was speaking on the side-lines of London-based think-tank Chatham House's Building Agreement Towards 2°C, Paris and Beyond conference.