5 Ways to Reduce the Drivers of

Climate Change
March 18, 2015

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Bus rapid transit has reduced traffic and increased connectivity in Guangzhou, China.

Benjamin Arki / Creative Commons

We have to decouple economic growth from greenhouse gas emissions, World Bank Group
President Jim Yong Kim told students in a lecture at Georgetown University on March 18, 2015.
He spoke about development challenges created by climate change and actions to reduce the
drivers of climate change and the impact.

Climate change is fundamentally a development issue. It threatens to exacerbate poverty and hurt
economic growth. At the same time, how countries grow and the investments they make to meet the
energy, food and water needs of an expanding population can fuel climate change, raising risks
worldwide, or contribute to solutions.
In a lecture to students at Georgetown University in Washington, D.C., on March 18, World Bank
Group President Jim Yong Kim laid out five key areas where policies and growth choices can help
reduce the drivers of climate change.

“We have to keep the economy growing – there is no turning back on growth,” President Kim told
the student audience. “What we have to do is decouple growth from carbon emissions.”

Put a price on carbon

Cutting emissions starts with clear policy signals.

Carbon pricing systems – such as emissions trading systems that cap emissions or carbon taxes that
charge per ton – send a long-term signal to companies by creating an incentive to reduce polluting
behaviors and to invest in cleaner energy choices and low-carbon innovation.

Close to 40 countries and more than 20 cities, states and provinces now have or are preparing to
implement carbon pricing through emissions trading systems or carbon taxes, and their numbers are
growing. Korea launched the newest carbon market in January. China, with seven pilot carbon
markets in cities and provinces, saw its emissions drop last year and plans to launch a national
emissions trading system as early as 2016.

“A price on carbon is the single most important thing we have to get out of a Paris agreement. It will
unleash market forces,” President Kim said when asked about expectations for the international
climate agreement expected in December 2015 in Paris.

End fossil fuel subsidies

Fossil fuel subsidies send a different signal – one that can encourage waste and discourage low-
carbon growth. By phasing out harmful fossil fuel subsidies, countries can reallocate their spending
to where it is most needed and most effective, including proving targeted support for the poor.

Nearly $550 billion went into direct fossil fuel subsidies worldwide in 2013, taking up large
percentages of some countries’ GDP to artificially lower energy prices. Yet, “the evidence shows that
fossil fuel subsidies are not at all about protecting the poor,” President Kim said. Studies show the
wealthiest 20 percent of the population captures six times the benefit from fossil fuel subsidies as the
poorest 20 percent.

Reforming subsidies is never easy. Often, the population is unaware of the true costs of energy, and
support for the poor must be phased in as the subsidies are phased out. The World Bank is providing
support for fossil fuel subsidies reform through a $20 million facility that will help countries design
and implement subsidy reform and accompanying social protection systems.

Build low-carbon, resilient cities

Getting prices right is one part of the equation. Another piece is building a sustainable future,
because all development happens in the context of climate change.

There will be more infrastructure built in the next 20 years than in the past 6,000, the president told
the audience. Cities are growing fast, particularly in the developing world. Just over half the global
population is urban today; by 2050, cities are expected to hold two-thirds of the world population.

With careful planning of transportation and land use, and the establishment of energy efficiency
standards, cities can build in ways that avoid locking in unsustainable patterns. They can open up
access to jobs and opportunity for the poor and reduce damaging air pollution.

Financing that growth to be sustainable can be a challenge, though. Data show that only about 4
percent of the 500 largest developing countries cities are deemed creditworthy in international
markets. The World Bank Group is helping cities improve their strategic planning and fix the
financial fundamentals that can prevent them from accessing finance.

Increase energy efficiency and use of renewable energy

When we talk about energy, we have to talk about access. Worldwide, about 1.2 billion people lack
access to electricity and 2.8 billion rely on solid fuels for cooking, such as wood, charcoal, and coal,
which cause harmful indoor air pollution.

Through the Sustainable Energy for All initiative, the World Bank Group supports three goals for
2030: to achieve universal access to modern energy, double the rate of improvement in energy
efficiency, and double the share of renewable energy in the global energy mix.

Energy efficiency improvements are crucial. Every gigawatt saved is a gigawatt that didn’t have to
be produced. Globally, energy use is about one-third lower today than it would have been without the
past 20 years of energy efficiency improvements.

Renewable energy, meanwhile, is becoming increasingly affordable as prices fall. In many countries,
developing utility-scale renewable energy is now cheaper than or on par with fossil fuel plants.

Implement climate-smart agriculture and nurture forest landscapes

The fifth area for action takes in both mitigation and adaptation. Climate-smart agriculture
techniques help farmers increase their farms’ productivity and resilience to the impacts of climate
change, such as droughts, while also creating carbon sinks that help reduce net emissions. Forests,
too, are valuable carbon sinks that absorb carbon and store it in soils, trees, and foliage.

Attacking climate change in all that we do

Global efforts to reduce emissions are having an effect. Last week, the chief economist of the
International Energy Agency announced that global CO2 emissions had been flat in 2014 for the first
time in four decades without an accompanying economic downturn, while the global economy grew
by 3 percent.

“Is this the beginning of decoupling carbon emissions from growth? We sure hope so,” President
Kim said.

Even if we do all of this successfully, we will still see changes, the president said. Scientists believe
that about 1.5 degrees Celsius of warming is already locked in through the amount of greenhouse gas
emitted and expected in the coming years, so the world will have to adapt while bringing down
emissions.
That means building resilience into all development and increasing financial support for
preparedness and prevention.

As a major provider of finance, the World Bank Group invests in disaster preparedness, renewable
energy, energy efficiency, city planning and development, and providing decision-makers with the
tools and data they need to make informed decisions. It tracking financial commitments for climate
mitigation adaptation co-benefits, screens for disaster and climate risk, and uses greenhouse gas
accounting and a price on carbon.

“What we really want to do is see how we can attack this problem in just about everything we do,”
the president said.

RELATED
WORLD BANK

 Brief: Integrating Climate Concerns into World Bank Group Actions

 Reports: Turn Down the Heat Series
 Initiative: Carbon Pricing Initiative
 Initiative: Energy Subsidy Reform and Delivery Technical Assistance Facility
 Initiative: Low-Carbon Livable Cities
 Projects: Climate Finance Overview
 Website: World Bank Climate Change

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