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

elevant goals include GEF projects with goals to reduceGHGs, the Bonn Commitment to scale up renewableenergy and energy efficiency, and the carbon funds.But because development and climate change are so closelylinked, many development activities look like mitigationprojects, even if they were not so labeled. These offera wealth of lessons for a more climate-conscious future.In particular, they may hold lessons for the implementationand follow-up of the SFDCC and for the use of hoped-foradditional climate financing.The WBG has had limited objectives specificallyrelated to climate change, but manyof its activities look like mitigation projects.The SFDCC addresses national goals of sustainable developmentand global goals of climate mitigation. It putsparticular emphasis on the pursuit of no-regrets (win-win)actions that promote both goals and on the use of concessionalfunds (additional to development finance) thatpromote GHG reduction in a development context. TheSFDCC is an evolving, adaptive framework that stresseslearning. To increase its effectiveness, it is important tounderstand how development options compare alongdifferent dimensions of impact. To what extent are thereuntapped no-regrets options? If concessional finance islimited, which are the most attractive “climate-related economicopportunities”?The principal evaluation questions can be organized underthree themes. First, to what extent do GHG mitigation goalsoverlap with other development goals?Second, how and in what areas does the WBG have the largestimpact in promoting low-carbon development?• What instruments, in what contexts, have been mosteffective in promoting the development, adoption, anddiffusion of clean(er) technologies (looking across energy,transport, forestry, and carbon finance)?• What, in turn, is the impact of technology adoption onGHG emission and development outcomes?• What internal and external factors affect project outcomesand project mix?• To what extent and with what impact has the Bank’sCarbon Finance Unit (CFU) catalyzed the developmentof the carbon market and its institutions?A third emerging theme is the role of learning, feedback, andincentives:• To what extent, and with what rapidity, is the WBG ableto monitor the outcomes of its climate-related activities?• To what extent is feedback used to improve the design,mix, and targeting of interventions?Though it addresses related issues, thisevaluation does not assess the WBG’soverall impact on GHG emissions.Because of its focus on mitigation activities, the evaluationdoes not address the WBG’s overall impact on GHGemissions. It does, however, examine in detail the impactof WBG support for coal-fired power plants, which is emblematicof the wider issue.Evaluation FrameworkBarriers block adoption of low-carbon pathsWhy don’t people choose lower-carbon paths: wind powerinstead of gas, agroforestry instead of pasture, fluorescentlight bulbs instead of incandescents? Standard explanationscite barriers such as:• Cost-competitiveness: The low-carbon alternative isworthwhile from a social viewpoint that takes climateand other benefits into account, but it is not competitivewith high-carbon alternatives from the household,firm, or country viewpoint.• Credit bottlenecks: Renewable energy and energy efficiencyhave a big up-front capital component, so lendersand investors need confidence that they will be repaid.• Lack of information or attention: People don’t perceivethe opportunities, don’t know what to do about them,or overestimate the risks of action.• Unfavorable policies: Laws or regulations (for instance,fossil fuel subsidies) favor the higher-carbonalternative.The WBG seeks to overcome barriersthrough analytic and lending support forpolicy reform, technology transfer, andproject finance and implementation.Interventions can overcome barriers to technologyadoption• The WBG can deploy interventions that address thesebarriers at the site or sectoral level, unlocking carbonand economic benefits.• These interventions include analytic or lending supportfor policy reform; transfer, adaptation, and disseminationof technical and financial innovations (technologytransfer); and project finance and implementation.Adopted technologies yield economic, social, andcarbon returnsLow-carbon investments can promote development alongmany dimensions, in addition to mitigating GHGs. Ideally,one would want to assess each intervention’s impact on6 | Climate Change and the World Bank Group