A Climate for Change in East Asia and the Pacific 51682 Key policy advice from World Development Report 2010 Development and Climate Change Act Now, Act Together, Act Di erently © 2009 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org This booklet is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. It draws on World Development Report 2010: Development and Climate Change and resources prepared by the staff of the World Bank's East Asia and Pacific Region. The findings, interpretations, and conclusions expressed in these pages do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. Acknowledgments This booklet was edited by Flore de Préneuf and Florian Kitt, designed and desktopped by Roula Yazigi of the World Bank's Development Economics Vice Presidency; under the supervision of Marianne Fay and Rosina Bierbaum, Directors, World Development Report 2010: Development and Climate Change, and guidance of Magda Lovei, Sector Manager, Social, Environment and Rural Development, Sustainable Development Department, East Asia and Pacific Region, The World Bank. Photos © Chau Doan (cover), © Flore de Préneuf / World Bank (family),© Flore de Préneuf / World Bank (three girls), © Chau Doan (sluice gate and bridge), © Pham Thuan Thu (flooded road), © David Llorico Llorito / World Bank (wind turbines), © iStockphoto / Zhang Bo (buildings in fog), © Dang Than Lan (stormy sea), © Evelyn Ng (Kiribati aerial view), © Thien Giao (planting trees), © Guo Hua (explaining the principle of PV). The Case for Action C limate change threatens all countries. Yet developing countries everywhere--from Asia to Africa to Latin America--will be disproportionately affected by the climate crisis. The World Development Report (WDR) 2010: Development and Climate Change notes that they will bear 75­80 percent of the costs of damage caused by the chang- ing climate. Economic growth alone will not be fast or equitable enough to counter threats from climate change, particularly if it remains carbon intensive and accelerates global warming. So climate policy cannot be framed as a choice between growth and climate change. Instead, climate-smart policies are those that enhance development, reduce vulnerability, and finance What we do today shapes the climate of tomorrow and imposes limits on the choices that are the transition to low-carbon growth paths. available to future generations. technologies. Once greenhouse gases are emitted, they This booklet focuses on policy recommendations and steps remain in the atmosphere for decades or even centuries, already being taken in East Asia and the Pacific to reduce the trapping heat and affecting climate patterns for a very sources of greenhouse gases (mitigation), adapt to changing long time. Power plants, new urban communities and weather (adaptation), and develop financial and technolog- reservoirs that we build today will last for many decades. ical partnerships in the face of a pressing global challenge. Climate change will depress agricultural yields in most developing countries. New technologies and climate- The WDR 2010 argues that the East Asia and Pacific resilient crop varieties that are piloted today could region and the rest of the world must act now, act together, determine the future energy and food sources of their and act differently, before costs go up and people suffer growing populations. unnecessarily. Act together Act now Rich countries must take the lead by reducing The world has a brief window of time in which their own carbon footprints at home and by help- to find the technologies and the funds to combat ing developing countries to finance adaptation to climate climate change. What we do today shapes tomorrow's climate change as well as mitigate further global warming. and limits the choices that are available to future generations. Actions by rich countries to adopt ambitious emission Staying close to 2°C warming above preindustrial tem- reduction targets could free up some "pollution space" for perature levels--likely to be the best that can be done the unmet energy needs of millions of people in devel- --requires a global energy revolution with the immediate oping countries. According to the WDR, replacing 40 deployment of energy efficiency and available low-car- million SUVs with fuel-efficient passenger cars in the bon technologies, and massive investments in new United States would nearly offset the emissions from 2 providing electricity to 1.6 billion more people in devel- Planning ahead oping countries who currently lack access. Strong action by rich countries would stimulate inno- vation and demand for green technologies that can be rapidly scaled up. This would also help create a sufficiently large and stable carbon market. New technologies would enable developing countries to grow along a lower car- bon trajectory while expanding access to energy services. National and international support is essential to pro- tect the most vulnerable people through social assistance programs, to develop international risk-sharing arrange- ments, and to promote the exchange of knowledge, technology and information. Act differently In Vietnam, adapting to sea level rise, floods and changing irrigation requirements already factors in the cost of building infrastructure such as the sluice gate pictured here. Instead of planning for yesterday's climate, policy makers must heed a variety of climate The costs of adapting to climate change in developing futures and promote innovation on many fronts. countries will be in the order of US$75­100 billion a year for the period 2010 to 2050--roughly the same order of In the next few decades, the world's energy systems must magnitude as current overseas development assistance, be transformed so that global emissions drop 50­80 according to preliminary findings from a global study on percent. Infrastructure must be built to withstand new the economics of adaptation to climate change. The high- climate extremes. Agricultural productivity and water est costs will be borne by the East Asia and Pacific region, management need to improve to feed 3 billion more followed by Latin America and the Caribbean and Sub- people without further threatening already stressed Saharan Africa. ecosystems. Only long-term, large-scale integrated management The Economics of Adaptation to Climate Change is a multi- and flexible planning can satisfy increased demands year, multi country study designed to help decision makers on natural resources while conserving biodiversity and in developing countries better understand and assess the maintaining terrestrial carbon stocks. risks posed by climate change, so that they can better Adaptation should be based on new information about cost, prioritize, sequence and integrate adaptation strat- changing patterns of temperature, precipitation, and egies into their development plans and budgets, all while species. dealing with economic uncertainty, competing needs and Current financing for adaptation and mitigation is less limited resources. The study, funded by the governments than 5 percent of what may be needed annually by 2030. of the Netherlands, Switzerland and the United Kingdom, Mobilizing the shortfalls will require major efforts. places particular emphasis on understanding the vulner- A major challenge is to convince people and institu- ability of the poor. Vietnam and Samoa are among seven tions to rally behind change and seize the opportunity countries assessed in depth. For more information, visit: to achieve climate-smart growth. http://www.worldbank.org/eacc. 3 Climate Change: A Threat to Growth and Well-being T he East Asia and Pacific region, home to about 2 bil- lion people, has come a long way in its fight against poverty. The proportion of people living on less than $1.25 a day was cut by 70 percent between 1990 and 2005. Much of this decline was in China, where 475 million people were lifted from poverty through remarkable growth. However, this progress has come at a high environmental cost. East Asia and Pacific doubled its energy use and carbon diox- ide emissions in the same period. Although average per capita emissions remain low in the region, China and Indonesia are now among the world's largest emitters of greenhouse gases, due to high energy consumption in China and land- use changes and deforestation in Indonesia. A typhoon transformed this road in Hanoi into a river in 2008. The Philippines experienced catastrophic flooding the following year. The dominant challenge in the region is to balance growth magnitude of Indonesia's emissions is subject to uncertainty and mitigation measures that would put the region on a less and yearly fluctuations. Deforestation across the region as perilous trajectory. The WDR 2010 cites examples of strong a whole is being partly offset by high levels of reforestation action to combat climate change in the region. The climate in China. is ripe for change. Vulnerable coastal populations. Over half the countries in Tackling climate change through innovation is a priority the region are Pacific Island nations. A large number of peo- in East Asia and the Pacific because of several acute ple live along the coast and on low-lying islands--for example, climate change factors and vulnerabilities: over 130 million people in China, roughly 40 million in Vietnam, and around 2 million Pacific Islanders. Rising sea Growing demand for energy. The demand for energy will levels coupled with the subsidence or sinking of delta land continue to increase with further economic development. In threaten coastal areas throughout the region. East Asia and the Pacific, most countries need massive expan- sions in energy, transport, urban systems and agricultural Water availability, floods and disease. Climate change is production. Sustaining growth using current high-carbon expected to threaten water availability for 270 million peo- technologies will produce more greenhouse gases, hence ple in western China. Extreme events (floods and droughts) more climate change. are expected to increase, and natural habitats will be at risk. Changes in land use and deforestation. Land-use changes The last 20 years have seen an increase in the frequency of represent 34 percent of the region's greenhouse gas emis- short duration heat waves in China, increased occurrence of sions, followed by electricity and other power, industry, and extreme rains causing landslides and floods in the Philippines agriculture. In Indonesia, logging, forest fires and peatland and more intense cyclones as well as sea level rise in the degradation is thought to contribute more than 80 percent Pacific Islands (IFRC, 2006). Already, policy makers are of the country's CO2 emissions (WRI, 2007)--although the devoting an increasing amount of their development budget 4 to cope with weather-related emergencies. Rising tempera- and land degradation are expected to reduce productivity. tures will change the distribution of pests and disease. Substantial decreases in cereal production are expected as a consequence of climate change in Asia over the next decades. As pressures on land, water, and forest resources increase--as Net cereal production is projected to decline by at least 4­10 a result of population growth, urbanization, and environmen- percent under the most conservative climate change projec- tal degradation caused by rapid industrialization--greater tions by 2100 and up to 40 percent in some of the key grain variability and extremes will complicate their management. producing zones (IPCC, 2007). In the Mekong River basin, for example, the rainy season may see more intense precipitation, while the dry season may Off the coast, the value of well-managed coral reefs is about lengthen by two months (Snidvonds et al., 2003). $13 billion in Southeast Asia. The reefs, already stressed by industrial pollution, coastal development, over-fishing, and Economic impact. Agriculture, one of the sectors most at runoff of agricultural pesticides and nutrients, are highly vul- risk, contributes about 13 percent to the region's GDP, but nerable to increases in sea temperature that cause bleaching. as much as a third in some countries. Around 60 percent of Coastal areas, fisheries and marine resources are particu- the population lives in rural areas and some 50 percent of the larly vulnerable with important impacts on food security land is dedicated to agriculture. Severe droughts, flooding and livelihoods. A region at risk The EAP region is home to many of the top dozen countries worldwide in terms of vulnerability to climate-related threats, especially floods and storms (highlighted in the table below). The human toll of environmental damage in the region is already significant and will rise if not checked urgently by investment and policy measures. Drought Floods Storms Sea level rise Malawi Bangladesh Philippines All low-lying Island States Ethiopia China Bangladesh Vietnam Zimbabwe India Madagascar Egypt India Cambodia Vietnam Tunisia Mozambique Mozambique Moldova Indonesia Niger Laos Mongolia Mauritania Mauritania Pakistan Haiti China Eritrea Sri Lanka Samoa Mexico Sudan Thailand Tonga Mynamar Chad Vietnam China Bangladesh Kenya Benin Honduras Senegal Iran Rwanda Fiji Libya Note: The typology is based on both absolute effects (e.g., total number of people affected) and relative effects (e.g., number affected as a share of GDP). Source: World Bank, Sustainable Development Network, Environment Department, 2008. 5 Promoting Climate-Smart Growth M eeting the growing energy needs of people and busi- nesses in East Asia and the Pacific in the coming years while enhancing energy security, sustaining economic growth and reducing greenhouse gas emissions is a tough challenge for policy makers in the region. Although recent years have seen a surge in energy consumption, driven mainly by heavy industry in China, many countries are adopting measures that are good for both development and the environment. Energy efficiency measures have the largest potential to save energy both on the energy supply side (as in the burning of coal, oil, and gas and the production, transmission and dis- tribution of electricity) and the demand side (use of energy in Renewable energy investments, backed by international carbon trading, can help reduce buildings, transport and manufacturing). The second largest emissions of greenhouse gases. source of emission reductions could come from low-to-zero emission fuels for power generation--particularly renewable Invest in renewable energy energy. In the Philippines, a 33 MW wind farm managed But putting the world on a sustainable, low-carbon trajectory by NorthWind in Ilocos Norte covers half the prov- will be impossible without new technologies such as carbon ince's energy needs. Support from the Bank through its capture and storage that still require enhanced research and Prototype Carbon Fund enables the company to gener- technology transfer. ate more resources through the sale of carbon emission credits. The Philippines is also home to a large grid-con- Many countries in East Asia and the Pacific are starting nected photovoltaic installation. to forge clean energy paths. Indonesia is studying options for reducing its carbon foot- print without compromising growth. Like the Philippines, Reduce energy intensity Indonesia has strong geothermal potential. Highly dependent on imported energy, Thailand has The Chinese government's target of a 20 percent reduc- been pursuing renewable energy as a means to improve tion in energy intensity from 2005 to 2010 would reduce energy security. The country hopes to increase the share annual CO2 emissions by 1.5 billion tons by 2010. This of renewable energy consumption nationwide from 1 per- is the most aggressive emission reduction target in the cent today to 20 percent by 2022. world, five times the 300-million-ton reduction commit- China's goal is to install 30 GW of wind power by 2020, ted by the European Union under the Kyoto Protocol. compared with about 12 GW in 2008 (and about 120 The World Bank has supported the development of a mar- GW worldwide). But given the needs of its growing econ- ket for energy efficiency services in China (see box) and omy where energy use is driven by heavy industry and is building capacity in financial institutions to manage increasing household consumption, finding fossil fuel further investments in key energy-intensive sectors. alternatives is a formidable challenge. 6 Protect forests Build climate-smart cities Indonesia has nearly 100 million hectares (ha) of tropi- Urban areas are expected to increase faster in East Asia cal forests (the world's third largest area) that continue than in other regions in the next 20 years. This means to be rapidly logged. The country is actively seeking to that city planners need to act fast to avoid the kind of develop the market potential of Reduced Emissions from growth that fosters heavy and inefficient use of energy Deforestation and Degradation (REDD). and resources. Under the recently launched Eco2 Cities Estimates from the Indonesia Forest Climate Alliance program, the Bank plans to help countries develop strat- indicate that Indonesia could earn US$500 million to $2 egies for economic and ecologically efficient cities. billion per year in carbon credits if the REDD market Half of China's building stock in 2015 will have been comes to fruition. There are at least 20 demonstration built in the past 15 years, providing an opportunity to projects under various stages of development from Aceh raise building energy efficiency standards. Making these in the west to Papua in the east. Collectively, these would buildings more energy efficient would add 10 percent protect 5­22 million ha of forests and avoid the emission to construction costs but save more than 50 percent of of at least 60 million tons of CO2 per year. This is roughly energy costs. equivalent to the annual emissions from Sweden, New In Rizhao, a city of 3 million people in northern China, Zealand or Israel. skyscrapers are built to use solar power, and 99 percent Protecting such a large area of forest would also have co- of households use solar heaters. In total, the city has over benefits in terms of conserving biodiversity, watersheds 500,000 square meters of solar water heating panels. As and other environmental services. a result, energy use has fallen by nearly a third and CO2 emissions by half. Financing energy efficiency in China efficiency of motors and boilers used in energy-intensive industries--offer a low-cost opportunity to reduce emissions while saving money. But the investments require up-front cash against less tangible future savings and are judged more risky than asset-based energy-supply deals. Energy service companies (ESCOs), backed by loan guaran- tees and a decade of capacity building supported by the World Bank, have taken off in China in recent years and helped com- panies generate impressive energy savings. The market for ESCOs has gone from three companies in 1997 to more than New construction in China offers an opportunity to increase energy efficiency standards. 400, with $1 billion in energy contracts in 2007. Energy sav- ings from investments made in 2007 totaled about 53 million Investments in energy efficiency measures--improving, for tons of standard coal equivalent; associated CO2 emissions example, the way buildings are insulated and heated, or the were reduced as a result by about 38 million tons. 7 Reducing Vulnerability to Climate Change A lthough there is considerable uncertainty about the specific risks associated with climate change in the future, the impact of increased climate variability and extremes is already being felt across East Asia and the Pacific. Taking measures now to adapt to a range of different scenar- ios should help minimize the cost of catastrophes and create more climate-resilient communities. Some of the existing risk management practices may be as simple as using more diverse seeds and promoting the use of varieties that are more tolerant to heat and drought. Many of the steps the region should adopt will be useful under any climate scenario. They can be financed through emerging special adaptation funding and by integrating adap- Being prepared to cope with extreme events is critical. tation concerns into financing that is already being used for development. key resources at a time when climate change and population growth will put agriculture under stress. Countries in the region have begun investing in adaptation measures to protect their populations and development Transferring responsibility for managing irrigation services to from climate change. groups of farmers, improving cost-recovery for surface water irrigation, and introducing modern water monitoring tech- Prepare for extreme events. Coastal cities such as Bangkok, niques can help reduce water consumption while improving Manila, and Ho Chi Minh City will be increasingly exposed farmers' livelihoods. China's experience in the Hai Basin, part to extreme weather events. Combined with sea level rise of the North China Plain, is a good example of such progress. and land subsidence, the impacts can be severe. Peak river But additional steps should be taken to make agricultural discharges in South and Southeast Asian river basins are investments more resilient. The Mainstreaming Adaptation projected to increase with climate change, requiring greater in Irrigated Agriculture project ($5 million from the Global upstream efforts to protect urban centers downstream. Local Environment Facility Special Climate Change Fund) seeks to city governments can promote risk reduction and risk-based integrate the effects of future climate change on the North planning. China Plain. Although this area currently produces about half the country's wheat, stream flows and groundwater recharge Risk can never be eliminated, so being prepared to cope with are expected to decrease in the future while irrigation water extreme events is vital. Warning systems and response plans demand will increase with higher temperatures. save lives and prevent other avoidable losses. Engaging com- munities in preparedness and emergency communication Invest in information. Because climate change introduces protects their livelihoods. a vast source of uncertainty, decision makers need to switch from a world view in which the future is predictable to an Integrate climate change risk management into devel- assessment of strategies under a wide range of possible opment plans. Better water management can help protect futures. Playing safe, often at low cost, favoring reversible 8 and flexible options, preparing for changes that may prop- Mongolian insurers. A social insurance program through the agate over long distances, and periodically reviewing (and government bears the losses associated with catastrophic live- correcting) investments are becoming critical management stock mortality that would overwhelm herders and insurers practices. alike. More broadly, governments need to set up financial planning for catastrophic climate impacts and restoration of Impact studies such as the World Bank climate change study essential services after disasters. of the Bangkok Metropolitan area can help assess various flood scenarios and formulate policy recommendations. Consider alternatives. "Hard" adaptation measures such as coastal defense walls, river embankments, and dams to con- Share the risk. Risk management should be based on lay- trol river flows all present threats to biodiversity. Adaptation ered responsibilities. In Mongolia, livestock herders, the goals can often be achieved through better management of national government, and insurance companies developed ecosystems rather than through physical and engineering a scheme to manage the financial risks arising from severe interventions. For example, coastal ecosystems can be more winter-spring cold episodes (dzuds) that periodically kill effective as buffer zones against storm surges than sea walls large numbers of livestock. In this scheme, herders retain and generate societal benefits. In Vietnam, restoration of the responsibility for smaller losses that do not affect the mangrove forests at the mouth of the Mekong delta provides viability of their business or household. Larger losses are cov- shoreline protection from storm surges as well as increases ered through commercial livestock insurance provided by biodiversity, boosts fishing yields and helps sequester carbon. Adaptation in Kiribati is only 450 meters, making it hard to retreat in the face of rising sea levels. Following a World Bank study in 2000 that found that several atolls could all but disappear by 2050, the country embarked on a dedicated adaptation program sup- ported by several donors including the World Bank, the GEF, Australia, New Zealand, Japan, the European Union and the Asian Development Bank. The first phase of the Kiribati Adaptation Program raised the country's public awareness and support for adaptation policies at government and community levels. The second phase, cur- Most of Kiribati is less than 3 meters above sea level. rently under implementation, strengthens the government's ability to assess climate risks, integrates climate risk aware- The Republic of Kiribati is one of the most isolated countries ness and responsiveness into the country's economic and in the world, consisting of 33 atolls spread out over thousands operational planning, and pilots the implementation of cost- of kilometers in the central Pacific Ocean. Most of the atolls effective adaptation measures for coastal resilience (including are low-lying and vulnerable to periodic storm surges and mangrove planting) and increased sustainability of water and droughts. In urban Tarawa, the average width of the island groundwater resources. 9 Scaling Up Climate Change Financing H ow will countries in East Asia and Pacific raise and with the regulatory period of the Kyoto protocol coming enough finance to reduce emissions, cope with the to an end in 2012, greater emphasis is now being placed on impacts of unavoidable climate change and deploy larger scale government policy reforms and investments that new technologies, while continuing to grow and reduce have long-term emission reduction potential. The Bank's new poverty? Carbon Partnership Facility is designed to support this shift. For example, Indonesia's Ministry of Energy and Mineral Worldwide, mitigation and adaptation will require mas- Resources is working toward integrating carbon finance to sive annual investments. Rich countries must take the lead enhance the viability of Indonesia's nascent geothermal sector in developing effective mechanisms to help bring the world to meet the country's sustainable energy development target. within a reasonable temperature range. Although devel- In Vietnam, the Facility helps the government administer oping countries have historically contributed very little to programs that support commercial lending and investments climate change, their growing contributions make low-car- bon development imperative for the future. Climate-smart The gap is large: Estimated annual incremental climate costs required for a 2°C development will also have important benefits in reducing trajectory compared with current resources pollution at the local level. Constant 2005$, billions 200 But current levels of climate finance fall far short of foresee- Mitigation: $139 billion­$175 billion able needs (see chart). Compounding the shortfalls in climate 175 finance are significant inefficiencies in how funds are gener- ated and deployed. Looking forward, the WDR argues that 150 pricing carbon (whether through a tax or through a cap- and-trade scheme) is the optimal way of both generating 125 carbon finance resources and directing those resources to Adaptation: places where the mitigation costs are lowest and the adap- $28 billion­$100 billion 100 tation needs greatest. In the near future, however, the Clean Development Mechanism (CDM) and other performance- 75 based mechanisms for carbon offsets are likely to remain the key market-based instruments for mitigation finance in developing countries and are therefore critical in supplement- 50 ing direct transfers from high-income countries. Funding for adaptation and 25 mitigation Creative approaches to climate finance are emerging in $9 billion the region. 0 2008­2012 2030 Expanding carbon finance. Investments facilitated by the Sources: See WDR 2010, Overview, page 23. Note: Mitigation and adaptation costs for developing countries trade of carbon emission reduction credits have been made only. Bars represent the range of estimates for the incremental costs of the adaptation and mitigation efforts associated with a in thousands of successful individual projects but have not 2°C trajectory. Mitigation financing needs associated with the resulted in massive emission cuts so far. As the limitations of incremental costs depicted here are much higher, ranging between $265 billion and $565 billion annually by 2030. the project-based approach have to come to be recognized, 10 in a large number of small hydropower plants by private sec- World Bank portfolio tor developers. The Bank allocated about $500 million to climate change Tapping all sources of financing. Beyond alternative projects and programs in EAP in fiscal year 2008. Projects energy options, Indonesia is considering a wide range of in China got the largest share, with an emphasis on energy mitigation measures, from reducing energy intensity to devel- efficiency and renewable energy. China also accounted for oping carbon credits from reduced deforestation through the most of the region's carbon finance commitments, followed REDD initiative. The country is therefore working to mobi- by Indonesia, the Philippines, Malaysia and Thailand, with lize financing and create the right environment for change. an overall focus on energy efficiency in power and indus- Indonesia rationalized energy pricing by reducing fossil- try, industrial gas emissions reduction, waste management, fuel subsidies in 2005 and 2008. It is reducing deforestation and reforestation. through improved enforcement and monitoring programs, and provides incentives for import and installation of pol- The Bank manages Climate Investment Funds--to lution control equipment through tax breaks. The Finance which donors have pledged over US$6.1 billion--jointly and Development Planning Ministries have established a with regional development banks such as the Asian national blueprint and budget priorities for integrating cli- Development Bank. These funds include the recently mate change into the national development process. And the launched $5.2 billion Clean Technology Fund, which Finance Ministry is examining fiscal and financial policies to provides low-interest loans to support investments in stimulate climate-friendly investment, move toward lower- large-scale mitigation projects in energy efficiency, power carbon energy options, and improve fiscal incentives in the generation and transport; and the Strategic Climate Fund, forestry sector. which provides dedicated funding to scale up activities or pilot new development approaches such as the Pilot Creating environmental synergies. Climate-friendly proj- Programs for Climate Resilience. ects often respond to several environmental, economic and social objectives. Examples include improving energy effi- instruments are a powerful force to transform the market ciency while eliminating ozone depleting substances in for climate-friendly solutions. industrial chillers; reducing air pollution in cities to address both global and local environmental issues; or pursuing mit-Responding strategically. Because the East Asia and Pacific igation and adaptation goals simultaneously by restoring region is highly vulnerable to the impacts of natural disasters, responding quickly and strategically when disaster strikes is coastal mangrove forests. Such projects reflect the intercon- nectedness of natural systems in a sustainable world and canvital. When floods, tsunamis or earthquakes take their toll, help attract wider financial resources. governments work with international development partners to help assess the extent of damage and work on long-term Linking up. The integration of carbon finance with other reconstruction plans that aim to "build back, better" what financing sources is essential to accelerate the deployment was destroyed. The Global Facility for Disaster Reduction of low-carbon technologies. For instance, the GEF may fund and Recovery (GFDRR)--a partnership of 24 countries policy work and provide risk coverage; low-interest loans and international organizations coordinated by the World from the Clean Technology Fund along with regular lend- Bank--supports long-term risk reduction and rapidly pro- ing and equity may finance physical investments; and carbon vides resources to assist countries in sustainable recovery and credits may create an income stream that sustains a proj- reconstruction planning, such as recently in Samoa, Tonga, ect's long-term financial viability. In combination, these Indonesia and the Philippines. 11 Inventing and Diffusing Climate-Smart Technologies G lobal greenhouse gas emissions can be drastically reduced by accelerating the deployment of existing mitigation technologies in high-carbon countries. But to stabilize the world's climate will require breakthrough technologies, technology transfer and capacity building. Although climate-smart innovation is concentrated mostly in high-income countries, developing countries are start- ing to make important contributions. Developing countries accounted for 23 percent ($26 billion) of the new investments in energy efficiency and renewable energy in 2007, up from 13 percent in 2004. Eighty-two percent of those investments were concentrated in three countries--Brazil, China and India (UNEP, 2008). In 2005 China was seventh in overall High quality requirements can help market renewable energy alternatives to fossil fuels. The renewable energy patenting and second only to Japan in geo- approximately 400,000 households in ruralProgram supported the sale of solar systems to Bank's Renewable Energy Development China. thermal and cement inventions, two major potential sources of emission reduction (OECD, 2008). financed by the Bank in 1999 helped Chinese producers of photovoltaic systems meet high standards that would increase The WDR 2010 calls for increased investments in research consumer confidence and make their products competitive and development and identifies policies that can stimulate in international markets. Today China is the world's largest innovation and entrepreneurship. exporter of solar panels. Research institutes in developing countries can help gov- An attractive investment climate for foreign direct invest- ernments better prepare for the consequences of climate ment is critical to accelerating technology transfer and change. In Indonesia and Thailand, for example, NASA sat- absorption. However, weak enforcement of intellectual prop- ellites are used to monitor environmental characteristics erty rights can deter technology transfer in some cases. affecting malaria transmission in Southeast Asia, such as rainfall patterns and vegetation status. Regulations can provide firms with niche markets to develop new technologies and allow countries to gain a competitive Building absorptive capacity in developing countries so edge. A ban on gasoline-propelled motorbikes in several that decision-makers identify challenges and adopt appro- urban cities in China in 2004, coupled with technological priate technologies is also key. The Bank's Urban Hub in improvements, faster urbanization, higher gas prices and Singapore provides training on sustainable cities. Another increases in purchasing power, boosted the electric bicycle program on Climate Resilient Cities trains local governments market from a mere 40,000 in 1998 to 21 million in 2008. in adaptation planning. E-bikes are cleaner and now cheaper than other motor- ized modes of transportation including buses, and China is Quality requirements are essential to market renewable exporting these low-carbon vehicles to developed countries. energy sources as reliable and affordable alternatives to tra- ditional fuels. A Renewable Energy Development Program 12 World Development Report 2010: Development and Climate Change The report can be purchased online or downloaded free of charge at: http://www.worldbank.org/wdr2010 Join the Conversation: Development in a Changing Climate: http://blogs.worldbank.org/climatechange/ East Asia & Pacific on the Rise: http://blogs.worldbank.org/eastasiapacific/ Learn More: The World Bank's work on climate change: http://www.worldbank.org/climatechange Toward a Greener China: http://www.worldbank.org/china/results Environment in East Asia and Pacific: http://www.worldbank.org/eapenvironment Asia Sustainable and Alternative Energy Program: http://www.worldbank.org/astae To Order: World Bank Publications · www.worldbank.org/publications · By phone: +1-703-661-1580 or 800-645-7247 By fax: +1-703-661-1501 · By mail: P.O. Box 960, Herndon, VA 20172-0960, USA · Questions? E-mail us at books@worldbank.org "Many people are taking action to protect our environment. I think that only by working as a team will we succeed in making a difference. Even children can join together to help because we are the next generation and we should treasure our own natural environment." --Adrian Lau Tsun Yin China, age 8 Giselle Lau Ching Yue, China, age 9 http://www.worldbank.org/wdr2010 http://blogs.worldbank.org/climatechange