A year after its inaugural meeting, the Board of the Green Climate Fund (GCF) left its fifth meeting in Paris earlier this month with a collective sense of urgency. The GCF is expected to become the main vehicle for disbursing climate finance to developing nations, so the decisions made at this most recent meeting significantly impact the future of climate change mitigation and adaptation. Encouragingly, Board members stepped up to the important task before them, making progress across several key issues. Their decisions made it clear: The GCF’s inception phase (referred to officially as "the interim period") is over—the focus now is on funding it and launching its operations.
Under the new leadership of Dr. Jim Yong Kim, the World Bank Group continues to reinvent itself to meet the challenges of global development. That reinvention will continue this Saturday, when the Board of Governors is expected to endorse a new strategy for the institution. If properly implemented across the Group, the strategy could help boost the institution’s contribution to equitable and sustainable development. Two areas of focus will be especially important, including how the Group handles its work on climate change and selects its investments.
Communities across the world continue to experience weather-induced food shortages due to drought, floods, devastating wildfires, and other climate change impacts. This week, the Board of the Green Climate Fund (GCF)is meeting to discuss how the GCF will receive and disburse money through various financial inputs and instruments.
Expectations are running high as the Board of the Green Climate Fund prepares for its fifth meeting in Paris this week. The GCF must make progress towards five key issues at next week’s meeting in Paris.
The last in a series of expert workshops and consultations under the UNFCCC’s work-programme on long-term finance concluded late yesterday. This 2013 extended work programme on long-term climate finance is designed to “identify pathways for mobilizing the scaling up of climate finance to USD 100 billion per year by 2020 from public, private, and alternative sources” and inform “enabling environments and policy frameworks to facilitate the mobilization and effective deployment of climate finance in developing countries.”I had the opportunity to participate quite actively in this year’s series, as WRI is working with co-chairs from the Philippines and Sweden to facilitate discussions on how to mobilize scaled-up finance for climate action.
A social entrepreneur invests the little working capital she has to bring solar electricity to a community that –like 1.2 billion people worldwide– lacks access to electricity. The community used to use dirty, expensive and choking kerosene for light to cook by and for children to learn by. The entrepreneur knows she can recoup her costs, because people are willing to pay for reliable, high-quality, clean energy – and it will be even less than what they used to pay for kerosene. Sounds like a good news story, right?
Three months later, the government utility extends the electrical grid to this same community, despite official plans showing it would take at least another four years. While this could be good news for the community, one unintended consequence is that this undermines the entrepreneur’s investment, wiping out their working capital, and deterring investors from supporting decentralized clean energy projects in other communities that lack access to electricity.
Few countries are unaffected by China’s overseas investments. The country’s outward foreign direct investments (OFDI) have grownfrom $29 billion in 2002 to more than $424 billion in 2011. While these investments can bring economic opportunities to recipient countries, they also have the potential to create negative economic, social, and environmental impacts and spur tension with local communities.
To address these risks, China’s Ministry of Commerce (MOFCOM) and Ministry of Environment (MEP)—with support from several think tanks—recently issued Guidelines on Environmental Protection and Cooperation. These Guidelines are the first-ever to establish criteria for Chinese companies’ behaviors when doing business overseas—including their environmental impact. But what exactly do the Guidelines cover, and how effective will they be? Here, we’ll answer these questions and more.
While reactions to President Obama’s newly announced climate plan have focused on domestic action, the plan actually has potentially significant repercussions for the rest of the world. These repercussions will come in part through his commitment to limit U.S. investments in new coal-fired power plants overseas. If fully implemented, the plan will help ensure that the U.S. government channels its international investments away from fossil fuels and toward clean energy. The move sends a powerful signal—and hopefully, will inspire similar action by other global lenders.
Developing countries will need about $531 billion of additional investments in clean energy technologies every year in order to limit global temperature rise to 2°C above pre-industrial levels, thus preventing climate change’s worst impacts. To attract investments on the scale required, developing country governments, with support from developed countries, must undertake “readiness” activities that will encourage public and private sector investors to put their money into climate-friendly projects.
WRI’s six-part blog series, Mobilizing Clean Energy Finance, highlights individual developing countries’ experiences in scaling up investments in clean energy and explores the role climate finance plays in addressing investment barriers. The cases draw on WRI’s recent report, Mobilizing Climate Investment.
The development of Indonesia’s geothermal energy sector—and the starts and stops along the way—provides an interesting case study on how to create readiness for low-carbon energy. By addressing barriers such as pricing distortions and resource-exploration risks, the country has begun to create a favorable climate for geothermal investment.
The History of Geothermal Power in Indonesia
Indonesia holds the world’s largest source of geothermal power, with an estimated potential of 27 GW. However, less than 5 percent of this potential has been developed to date. Indonesia began to explore its geothermal resource in the 1970s, with support from a number of developed country governments. The country made some progress in advancing geothermal development by the 1990s. However, development stalled during the Asian financial crisis in 1997-98 and was slow to recover.
In the early 2000s, a number of barriers limited investment in the sector, including a policy and regulatory framework that favored conventional, coal-fired energy over geothermal. Plus, the high cost and risk associated with geothermal exploration deterred potential investors and made it difficult to access financing from banks.
The Indonesian government took a number of steps to try to advance geothermal development and received support from a wide range of international partners, including multilateral development banks and developed country governments. In 2003, it passed a law to promote private sector investment in geothermal, establishing a target of 6,000MW installed capacity by 2020.
The world’s two largest greenhouse gas emitters—the United States and China—have been forging a growing bond in combating climate change. Just last week, President Obama and President Xi made a landmark agreement to work towards reducing hydrofluorocarbons (HFCs), a potent greenhouse gas. And both the United States and China are leading global investment and development of clean energy. The United States invested $30.4 billion and added 16.9 GW of wind and solar capacity in 2012. China invested $58.4 billion and added 19.2 GW in capacity.
U.S.-China cooperation on clean energy was the topic of discussion at an event last week at the Woodrow Wilson International Center’s China Environment Forum. Experts from the World Resources Institute and the American Council on Renewable Energy (ACORE) looked at this cooperation from a seldom-discussed viewpoint – China’s renewable energy investments in the United States.
China’s Growing Overseas Investments in Renewable Energy
As new WRI analysis shows, Chinese companies have made at least 124 investments in solar and wind industries in 33 countries over the past decade (2002 – 2011). The United States is the number one destination of these investments, hosting at least eight wind projects and 24 solar projects. The majority of the investments went into solar PV power plant and wind farm development, while a few investments went into manufacturing or sales support.
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