The Challenge of Low-Carbon Development - World Bank Internet ...

attention. In a couple of decades, countries that spent largesums on urban infrastructure—such as big roads, sparselypopulated cities, and homes with high heating or cooling requirements—willfeel that they wasted resources—just likethose who spent their money on copper telephone lines. TheWBG should help tilt the building of long-run infrastructurein a carbon-lean direction: shipping rather than airfreight, rail rather than road, virtual communication ratherthan physical, and so forth. Thus, urban planning, buildingdesign, modern and climate-adapted systems for transport,forestry, energy portfolio, and infrastructure could be thecritical structural factors in pursuing low- carbon developmentpathways by developing countries. The WBG shouldaim to incorporate a low-carbon paradigm shift in thosestructural areas.Though reliable data are not readily available, economicloss caused by traffic congestion in most developing countrieswould range from three percent to six percent of GDP,particularly in urban areas. Thus, investment in mass transitcould not only save carbon but could also reduce economiclosses in developing countries. The WBG should aim to incorporatea low-carbon paradigm shift in these structuralareas.In almost all developing countries, the transport sector, inparticular mass urban transit, chronically suffers from underinvestment.The historical trend of developed countriesclearly shows that it is the transport sector that will be themost difficult in which to curb the soaring increase of carbonemissions. The bulk of future emissions from developingcountries will come from the transport sector. Thismust be forestalled by massive investment in infrastructure,rapidly and through a paradigm shift toward comfortableand accessible low-carbon mass transit, which willbe a critical component of low-carbon development. TheWBG, in particular the International Finance Corporation,should engage in mapping out an ambitious strategy ofpromoting low-carbon mass transport systems in developingcountries. This is consistent with the large-scale energyefficiency scale-up recommendation. As with other energysectors, it is crucial to complement these investments witha sound price and tariff policy. In this case we recommendtax reform, shifting more of the burden of taxation awayfrom goods used by the poor and onto environmentallyunsustainable goods such as fossil fuels. Without high fuelprices, grand schemes for urban transit cannot competeand will merely fall into disrepute.Coal-fired powerWe appreciate the care that the IEG report has taken indiscussing the thorny issue of support to coal-fired powerplants. The report recommends assistance to countriesto find alternatives to coal power and raises fairly formidablebarriers to coal projects by requiring adherence toguidelines that include optimal use of energy efficiencyopportunities as well as restricting coal projects to caseswhere there is a compelling argument for poverty or emissionsreductions impacts that would not be achieved withoutWBG support.However, the report stops short of fully banning engagementin the sector for fear that the Bank would lose influence overand contact with the sector where such investments will goahead without even the advantage of the WBG guidelines.The report gives an example of a country that urgently needsbase load power and where a new efficient coal-fired plant replacesa number of older and highly inefficient plants— alsowithin a context of overall system optimization. Althoughit appreciates the latter argument, this panel would want toemphasize the signaling value that the WBG has both whenit chooses to finance and when it chooses not to. It is hardto envisage situations where the arguments in favor of WBGsupport to coal power outweigh the arguments against. Thisapplies particularly if sufficient concessional carbon fundingcan be leveraged. The argument against a complete ban may,however, have some validity.It is necessary to make sure that coal is used in a most prudentmanner, but it is better to focus on improving the energyportfolio as a whole rather than focusing only on coalat the project level. The WBG should be able to advise andoffer a strategy of diversifying and scaling up renewable energysources in order to shift toward a low-carbon energyportfolio.Forestry, land, and other resource useIn addition to access to carbon finance in energy-related investment,one of the potential advantages of the WBG is itssuperior overview of such issues as global externalities andthe related politics of negotiations. In the shorter run, therapid depletion of forests and other land-based carbon storagesystems (for example, peat lands and agricultural soils)represents a stock of assets that can rapidly be exhausted. Immediateopportunities to prevent the continuation of longstandingresource exploitation practices in these sectors areabundant. Substituting degraded lands, themselves the consequencesof inefficient resource use, for the further loss ofprimary stocks can allow national development of timber,pulp and paper, oil palm, agroforestry, agropastoral, andfishery economies that are currently promoted in an unsustainablemanner by exploitation of natural areas. Food securityconcerns in many developing countries are equally opento better management through productivity increases usingintensive techniques instead of simply extending traditionalproduction by plowing under more forests or throwingout more nets. Because these newer techniques are usuallymore capital and knowledge intensive than what has beendone under business as usual, the WBG is in a particularlystrong position to support national agricultural and forestryStatement of the External High-Level Review Panel| xxix