By Joelle Chassard
Manager, Climate Finance Unit, The World Bank

The future looks a little brighter in Senegal following a unique agreement last month between the Senegalese Rural Electrification Agency and the World Bank to provide some 1.5 million compact fluorescent lamps to tens of thousands of rural households. While half a world away in northern Russia, estimated emissions of 6.7 million tons of CO2 equivalent are set to be avoided, following an agreement with the Bank for the recovery and utilization of the associated petroleum gas at the Komsomolskoye oil field.

The two activities, Senegal’s first CDM ‘programme of activities’ to reduce greenhouse gases, and Russia’s first Joint Implementation activity of such scale targeting gas flaring reduction, are two recent examples of World Bank efforts to find innovative ways to leverage investment and catalyze climate action.

Over the years, the World Bank Group has acquired substantial experience in mobilizing and leveraging finance to support development projects with climate benefits, most notably through its carbon finance activities (a key channel to catalyze low-carbon investment in developing countries and economies in transition), and through the GEF (critical to develop a knowledge base for adaptation).

As a pioneer of the carbon market, its efforts encompass the following:

Today, the challenge before us is to scale up the carbon market, reduce the transaction costs, and expand from a project by project approach to approaches that promote and reward lower emission trends. Critical here is the need to strengthen certainty around carbon markets after 2012, building on the endorsement given by Parties at the United Nations Climate Change Talks in Bangkok earlier this year to continue the market-based mechanisms under the Kyoto Protocol beyond 2012.

Progress at the upcoming climate negotiations in Poznań in this respect is critical.

In the meantime, a group of industrialized nations recently pledged more than US$6.1 billion to the Climate Investment Funds (CIF), a pair of international investment instruments designed to provide interim, scale-up funding to help developing countries in their efforts to mitigate increases in greenhouse gas emissions and adapt to climate change.

The Clean Technology Fund will invest in projects and programmes in developing countries that contribute to the demonstration, deployment and transfer of low-carbon technologies. The Strategic Climate Fund will serve as an overarching fund for various programmes to test innovative approaches to climate change.

The funds, to be disbursed as grants, highly concessional loans and/or risk mitigation instruments, will be administered through the World Bank Group and other multilateral development banks.

In designing the funds, and in support of the Bali Action Plan, the World Bank in consultation with developed and developing countries took care to recognize the primacy of the UNFCCC in global climate negotiations. The countries are equally represented in the governance structure. All funds and programmes under the CIF have a sunset clause in order not to prejudice UNFCCC deliberations regarding the future of the climate change regime.

The climate change debate is changing rapidly. Not long ago, the issue was the domain of environment ministers. They helped us to understand the challenge as a development issue, and our efforts to help countries address climate change are now captured in the Development and Climate Change Strategic Framework for the World Bank Group.

The stories from countries as different as Senegal and Russia show what can be achieved when there is a will and a way; yet such actions need to be repeated across the globe. Innovative financing in the fight against climate change is needed now, more than ever, if we are to confront what has emerged as the major threat to the development priorities of the poorest countries and communities.