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Climate and Development: An Agenda for Action

1818 H Street NW, Washington, DC 20433

Telephone: 202-473-1000; Internet: www.worldbank.org

This work is a product of the staff of The World Bank Group with external contributions. “The World Bank Group”

refers to the legally separate organizations of the International Bank for Reconstruction and Development (IBRD),

the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral

Investment Guarantee Agency (MIGA).

The World Bank Group does not guarantee the accuracy, reliability or completeness of the content included in this

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or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for

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do not imply any judgment on the part of the World Bank Group concerning the legal status of any territory or the

endorsement or acceptance of such boundaries. The ﬁndings, interpretations, and conclusions expressed in this

volume do not necessarily reﬂect the views of the organizations of the World Bank Group, their respective Boards

of Executive Directors, and the governments they represent.

The contents of this work are intended for general informational purposes only and are not intended to constitute

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should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC

20433, USA; e-mail: pubrights@worldbank.org.

Cover design: Brad Amburn

Climate and Development: An Agenda for Action

1. Contents

Foreword ......................................................................................................................................................... 4

Summary ........................................................................................................................................................ 6

1. Country Climate and Development Reports: integrating climate change and development ............. 7

2. Climate change poses a major threat to long-term development objectives .................................... 10

2.1. Climate change has widespread, deep, and cascading effects across most sectors .......................................... 10

2.2. Boosting resilience and adaptation is an urgent and integral part of development and poverty reduction,

especially in low-income countries ...................................................................................................................................13

2.3. Even with adaptation, successful development and poverty reduction require accelerated mitigation action,

especially from high-income countries and large emitters ............................................................................................. 19

3. Climate objectives can be achieved without compromising development ........................................ 21

3.1. Structural change and supportive policy environments are needed for successful and just climate action ......... 21

3.2. Sectoral transitions with private sector mobilization create opportunities to reduce GHG emissions while

contributing to development ..............................................................................................................................................22

3.3. Most countries can follow development pathways that align with a just transition and the Paris Agreement

without major trade-offs .................................................................................................................................................... 33

4. Success requires urgent policy reforms and increased ﬁnancial support from the international

community ................................................................................................................................................... 39

4.1. Innovative climate ﬁnance solutions to meet additional investment needs ......................................................... 39

4.2. Consider the political economy in policy design ......................................................................................................45

4.3. Building institutional capacity and improving governance and decision making ................................................46

4.4. Accelerated innovation and scaling up key technologies for adaptation and mitigation ..................................... 47

4.5. A just transition: preventing and managing impacts on people and communities .............................................. 49

5. Prioritization and sequencing: a requisite for success ......................................................................... 51

5.1. Prioritizing what is good for development or urgent to achieve climate goals ......................................................51

5.2. Main recommendations in the CCDRs...................................................................................................................... 52

6. Conclusion ................................................................................................................................................ 55

Acronyms

CBAM Carbon Border Adjustment Mechanism

CCAP Climate Change Action Plan

CCDR Country Climate and Development Report

CPAT Climate Policy Assessment Tool

CSA climate-smart agriculture

DRM disaster risk management

EU European Union

EV electric vehicle

GDP gross domestic product

GHG greenhouse gas

GRID Green, Resilient, and Inclusive Development

HIC high-income country

LIC low-income country

LMIC lower-middle-income country

M&E monitoring and evaluation

MANAGE (World Bank’s) Mitigation, Adaptation, and New Technologies Applied General Equilibrium

MFMod (World Bank’s) Macro-Fiscal Model

MIC middle-income country

NDC Nationally Determined Contribution

O&M operations and maintenance

SME small and medium-sized enterprise

SOE state-owned enterprise

UMIC upper-middle-income countries

/55

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1ClimateandDevelopment:AnAgendaforAction2ClimateandDevelopment:AnAgendaforAction©2022TheWorldBankGroup1818HStreetNW,Washington,DC20433Telephone:202-473-1000;Internet:www.worldbank.orgThisworkisaproductofthestaffofTheWorldBankGroupwithexternalcontributions.“TheWorldBankGroup”referstothelegallyseparateorganizationsoftheInternationalBankforReconstructionandDevelopment(IBRD),theInternationalDevelopmentAssociation(IDA),theInternationalFinanceCorporation(IFC),andtheMultilateralInvestmentGuaranteeAgency(MIGA).TheWorldBankGroupdoesnotguaranteetheaccuracy,reliabilityorcompletenessofthecontentincludedinthiswork,ortheconclusionsorjudgmentsdescribedherein,andacceptsnoresponsibilityorliabilityforanyomissionsorerrors(including,withoutlimitation,typographicalerrorsandtechnicalerrors)inthecontentwhatsoeverorforreliancethereon.Theboundaries,colors,denominations,andotherinformationshownonanymapinthisworkdonotimplyanyjudgmentonthepartoftheWorldBankGroupconcerningthelegalstatusofanyterritoryortheendorsementoracceptanceofsuchboundaries.Thefindings,interpretations,andconclusionsexpressedinthisvolumedonotnecessarilyreflecttheviewsoftheorganizationsoftheWorldBankGroup,theirrespectiveBoardsofExecutiveDirectors,andthegovernmentstheyrepresent.Thecontentsofthisworkareintendedforgeneralinformationalpurposesonlyandarenotintendedtoconstitutelegal,securities,orinvestmentadvice,anopinionregardingtheappropriatenessofanyinvestment,orasolicitationofanytype.SomeoftheorganizationsoftheWorldBankGrouportheiraffiliatesmayhaveaninvestmentin,provideotheradviceorservicesto,orotherwisehaveafinancialinterestin,certainofthecompaniesandpartiesnamedherein.NothinghereinshallconstituteorbeconstruedorconsideredtobealimitationuponorwaiveroftheprivilegesandimmunitiesofanyoftheorganizationsofTheWorldBankGroup,allofwhicharespecificallyreserved.RightsandPermissionsThematerialinthisworkissubjecttocopyright.BecauseTheWorldBankGroupencouragesdisseminationofitsknowledge,thisworkmaybereproduced,inwholeorinpart,fornoncommercialpurposesaslongasfullattributiontothisworkisgivenandallfurtherpermissionsthatmayberequiredforsuchuse(asnotedherein)areacquired.TheWorldBankGroupdoesnotwarrantthatthecontentcontainedinthisworkwillnotinfringeontherightsofthirdparties,andacceptsnoresponsibilityorliabilityinthisregard.AllqueriesonrightsandlicensesshouldbeaddressedtoWorldBankPublications,TheWorldBankGroup,1818HStreetNW,Washington,DC20433,USA;e-mail:pubrights@worldbank.org.Coverdesign:BradAmburn3ClimateandDevelopment:AnAgendaforAction1.ContentsForeword..........................................................................................................................................................4Summary.........................................................................................................................................................61.CountryClimateandDevelopmentReports:integratingclimatechangeanddevelopment..............72.Climatechangeposesamajorthreattolong-termdevelopmentobjectives.....................................102.1.Climatechangehaswidespread,deep,andcascadingeffectsacrossmostsectors...........................................102.2.Boostingresilienceandadaptationisanurgentandintegralpartofdevelopmentandpovertyreduction,especiallyinlow-incomecountries....................................................................................................................................132.3.Evenwithadaptation,successfuldevelopmentandpovertyreductionrequireacceleratedmitigationaction,especiallyfromhigh-incomecountriesandlargeemitters..............................................................................................193.Climateobjectivescanbeachievedwithoutcompromisingdevelopment.........................................213.1.Structuralchangeandsupportivepolicyenvironmentsareneededforsuccessfulandjustclimateaction..........213.2.SectoraltransitionswithprivatesectormobilizationcreateopportunitiestoreduceGHGemissionswhilecontributingtodevelopment...............................................................................................................................................223.3.MostcountriescanfollowdevelopmentpathwaysthatalignwithajusttransitionandtheParisAgreementwithoutmajortrade-offs.....................................................................................................................................................334.Successrequiresurgentpolicyreformsandincreasedfinancialsupportfromtheinternationalcommunity....................................................................................................................................................394.1.Innovativeclimatefinancesolutionstomeetadditionalinvestmentneeds..........................................................394.2.Considerthepoliticaleconomyinpolicydesign.......................................................................................................454.3.Buildinginstitutionalcapacityandimprovinggovernanceanddecisionmaking.................................................464.4.Acceleratedinnovationandscalingupkeytechnologiesforadaptationandmitigation......................................474.5.Ajusttransition:preventingandmanagingimpactsonpeopleandcommunities...............................................495.Prioritizationandsequencing:arequisiteforsuccess..........................................................................515.1.Prioritizingwhatisgoodfordevelopmentorurgenttoachieveclimategoals.......................................................515.2.MainrecommendationsintheCCDRs......................................................................................................................526.Conclusion.................................................................................................................................................55AcronymsCBAMCarbonBorderAdjustmentMechanismCCAPClimateChangeActionPlanCCDRCountryClimateandDevelopmentReportCPATClimatePolicyAssessmentToolCSAclimate-smartagricultureDRMdisasterriskmanagementEUEuropeanUnionEVelectricvehicleGDPgrossdomesticproductGHGgreenhousegasGRIDGreen,Resilient,andInclusiveDevelopmentHIChigh-incomecountryLIClow-incomecountryLMIClower-middle-incomecountryM&EmonitoringandevaluationMANAGE(WorldBank’s)Mitigation,Adaptation,andNewTechnologiesAppliedGeneralEquilibriumMFMod(WorldBank’s)Macro-FiscalModelMICmiddle-incomecountryNDCNationallyDeterminedContributionO&MoperationsandmaintenanceSMEsmallandmedium-sizedenterpriseSOEstate-ownedenterpriseUMICupper-middle-incomecountries4ClimateandDevelopment:AnAgendaforActionAchievingClimateandDevelopmentGoalsTogetherForewordbyDavidMalpassDevelopingcountriesfaceauniquechallengeofhavingtoachievetheireconomicdevelopmentgoalsinthecontextofachangingclimate.Policymakersfacetoughquestions.Howtotranslateshort-andlong-termclimateimpactsintodecisionstoday?Whatpolicyreformsandinvestmentsshouldbeprioritized?Whatarethetrade-offsbetweenimmediatebenefitsandcostlierdelays?Theanswerstothesequestionswillimpacteverysectoroftheireconomiesandsocieties.Moreover,thereisnosinglesolution:theenergytransitioninChinalooksverydifferentfrominChad,andthedevelopmentprioritiesofPakistanvarysignificantlyfromthoseofTürkiye.Allcountriescanbenefitfromasystematicapproachthatcombinesthebestavailabledata,models,andtoolstoprovideimmediateandactionablerecommendationsthatintegrateclimateanddevelopmentgoals.Thatiswhatourtransformativenewdiagnostic—theCountryClimateandDevelopmentReports—setsouttodo.ThereportsbuildontheWorldBankGroup’slongandongoingcountryengagementastheworld’sleadingdevelopmentinstitutionandtheleadingproviderofclimatefinancetothedevelopingworld.Eachreportisrootedinitsuniquecountrycontext:fromthecountry’sclimatecommitmentsanddevelopmentprioritiestoitsincomelevelanditssectoraltransitions.Thereportstakeapeople-centricapproach,frompeoplelivinginflood-proneareastoworkersinthecoalindustry,toprotectthepoorestandmostvulnerableandcontributetoajusttransition.Theycapturetheessentialroleoftheprivatesectorinincreasingresilienceandreducingemissions.Theyalsoexaminethe“Allcountriescanbenefitfromasystematicapproachthatcombinesthebestavailabledata,models,andtoolstoprovideimmediateandactionablerecommendationsthatintegrateclimateanddevelopmentgoals.Thatiswhatourtransformativenewdiagnostic—theCountryClimateandDevelopmentReports—setsouttodo.”5ClimateandDevelopment:AnAgendaforActiontechnologiesandinnovationsneededforlowercarbonintensityproductionofelectricity,steel,cement,andmanufacturing,andhowtheworldwillbuildgreenandefficientsupplychainsforsustainabledevelopment.Theresultisthateachreportcontainsawealthofinformationonthepathwaysandinvestmentsthatcanhelpeachcountrytoshapealow-carbon,resilientdevelopmentfuture.Thesereportsdonotprovidealltheanswers,buttheyoffernewanalysisandlayoutthechallengesandopportunitiesofclimateanddevelopmentinanintegratedwaythatenablespolicymakerstobetterfindtheanswerstheyneed.Thefirstbatchofreportsspans24countries:Argentina,Bangladesh,BurkinaFaso,Cameroon,Chad,China,ArabRepublicofEgypt,Ghana,Iraq,Jordan,Kazakhstan,Malawi,Mali,Mauritania,Morocco,Nepal,Niger,Pakistan,Peru,Philippines,Rwanda,SouthAfrica,Türkiye,andVietnam.EachreportisconductedjointlybytheWorldBankanditsprivatesectorarms,theInternationalFinanceCorporationandtheMultilateralInvestmentGuaranteeAgency,andinclosecoordinationwiththeInternationalMonetaryFund.Iwanttothankallthosewhohavetakenpartinthisgroundbreakingexercisefortheirinsights,rigor,collaborativespirit,andhardwork.Thisanalysis,ClimateandDevelopment:AnAgendaforAction,drawsfromtherichnessoftheindividualcountryreportsandsharessomeearlyinsightswehavegleanedfromthefirstbatch.Theseearlyinsightsarestriking.InCCDRcountries,investinganaverageof1.4%ofGDPinadaptationandmitigationcouldincreasetheirresilienceandreducetheiremissionsbyasmuchas70%by2050.ThetransitioncouldseepositiveimpactsonGDPandemployment,butthesemustbebalancedagainstlossesinfossilfuel-intensivesectorswhichwillimpactsomepopulationsandcommunities.Thegainsaretheretobereapedbuttheyarenotautomatic:theydependoncarefullydesignedpoliciesaswellasincreasedfinancialsupportfromrichereconomies.Especiallyinlower-incomecountries,whereinvestmentneedsforclimateactionoftenexceed5%ofGDP,increasedvolumesofconcessionalfinance—includingthroughgrants—arecriticaltoasuccessfulandjusttransition.ThefirstbatchofCCDRsshowsusthattacklingclimateanddevelopmentisachievable.Together,wecanforgeapathtowardalow-carbonresilientfuture.6ClimateandDevelopment:AnAgendaforActionSummaryTosupportthealignmentofdevelopmentandclimateobjectivesatthecountrylevel,theWorldBankGrouphaslaunchedanewcorediagnostictool:theCountryClimateandDevelopmentReport(CCDR).TheCCDRsintegrateclimatechangeanddevelopmentconsiderationsandaimtohelpgovernments,privatesectorinvestors,citizens,anddevelopmentpartnersprioritizethemostimpactfulactionsthatcanboostresilienceandadaptationandreducegreenhousegas(GHG)emissions,whiledeliveringonbroaderdevelopmentobjectives.Thefirstsetof20CCDRscovers24countriesandprovidethreemaininsights.First,climatechangeposesamajorthreattolong-termdevelopmentobjectives,especiallypovertyreduction.Withappropriateadaptationpolicies,countriescanreduceimpactsintheshortterm.Buteventhen,successfuldevelopmentrequirerapidreductionsinglobalGHGemissions,whichrequiresfirstandforemostacceleratedmitigationactioninhigh-incomecountriesandotherlargeemitters.Second,climateobjectivescanbeachievedwithoutcompromisingdevelopment,butonlyifkeyconditionsaremet.Thesekeyconditionsincludewell-designedclimateactions,strongparticipationoftheprivatesector,adequateinternationalsupport,andappropriatecomplementarymeasurestomanageunavoidabletrade-offs,protectpoorpeople’sconsumption,andfacilitateajusttransition.MostCCDRlow-carbondevelopmentpathwaysaremoreambitiousthanexistingNDCs,reducingtotalGHGemissionsinCCDRcountriesby70%comparedwithacurrent-policyscenario.Takentogether,however,theywouldstillleadtosignificantemissionsin2050,showingtheneedtoadjustthesepathwaystoincreaseambitionovertime,butalsoforenhancedsupportfromandactioninHICs,includingwithnegativeemissions.Third,successrequireschallengingpolicyreforms,reallocationofscarcepublicresources,increasedmobilizationofprivatecapital,andincreasedfinancialsupportfromtheinternationalcommunity.Resilientandlow-carbonpathwayscandeliverneteconomicgains,ifadditionalannualinvestmentneedsaveraging1.4percentofcountries’GDPover2022–30canbemet.Thetransitionalsorequiresmanagingpoliticaleconomyobstacles;strengtheninginstitutions;acceleratingdiffusionofnewtechnologies;andmanagingdistributionaloutcomes.Tobesuccessful,allcountrieswillrequirecarefullydesignedpoliciesandscaled-upfinancialsupportfromrichereconomies.Low-incomecountriesfacehigherinvestmentneeds,oftenexceeding5percent,andwillneedaccesstosustainedlevelsofconcessionalresources,includinggrants.TheCCDRsrecognizethatineachcountry,agovernment-ledprioritizationandsequencingexerciseisanessentialsteptotranslatethediagnosticintoacountry-ownedstrategyandimplementableinvestmentplan.ACCDRcanbeanopportunityforgovernmentsandprivatesectorinvestors,citizens,internationalfinancinginstitutions,andWorldBankGrouppartnerstoengageondevelopmentandclimateaction,withbettercountry-levelcoordination.Climatechangeposesamajorthreattolong-termdevelopmentobjectives,especiallypovertyreduction,andacceleratedemissionreductionsareneeded,particularlyinhigh-incomeandotherhigh-emittingcountries.Reducingemissionscanbedonewithoutcomprisingdevelopment:takentogether,CCDRlow-carbondevelopmentstrategiesreduceemissionsby70%,withoutsignificantimpactongrowth,providedthatpoliciesarewelldesignedandfinancingisavailable.Financingneedsaverage1.4percentofGDP,amanageableamountwithappropriateprivatesectorinvolvement.Butinlower-incomecountries,financingneedscanexceed5%,whichwillrequiremoresupportfromhigh-incomecountries,includingincreasedconcessionalresources.7ClimateandDevelopment:AnAgendaforAction1.CountryClimateandDevelopmentReports:integratingclimatechangeanddevelopmentClimatechange—causedbygreenhousegas(GHG)emissionsfromhumanactivities—posesseriousthreatstocountries’abilitytosecurepastdevelopmentsgainsandsustainimprovementsinlivingstandards.Climatechange,poverty,andinequalityaredefiningchallengesofourtime—anditiscrucialthatwetacklethemtogether,acknowledgingtheinterconnectionsbetweenpeople,planet,andtheeconomy.Tothisend,itisurgentthatcountriesbuildtheresilienceandadaptationoftheirpeopleandeconomiestotheeffectsofclimatechangeintheirdevelopmentstrategies,whilealsoreducingGHGemissionstomitigatedamagingchangestotheglobalpublicgoodthatisclimate.IntegratingclimateanddevelopmentisattheheartoftheWorldBankGroup’sClimateChangeActionPlan(CCAP)2021–25andtheWorldBank’sGreen,Resilient,andInclusiveDevelopment(GRID)approach.1TheWorldBankGrouphasrecentlylaunchedanew,corediagnostictool:theCountryClimateandDevelopmentReport(CCDR).Integratingclimatechangeanddevelopmentconsiderations,thisdiagnosticisjointlyconductedbytheWorldBank,theInternationalFinanceCorporation,(IFC)andtheMultilateralInvestmentGuaranteeAgency(MIGA),inclosecoordinationwiththeInternationalMonetaryFund.ItaimstohelpcountriesprioritizethemostimpactfulactionstoboostresilienceandadaptationandreduceGHGemissions,whiledeliveringonbroaderdevelopmentobjectives.CCDRsaredesignedtoanalyzetheconnectionbetweenclimateanddevelopmentpoliciesandidentifyconcretepriorityactionsthatsupportcountries’developmentgoalsastheyimproveclimateresilienceandloweremissions.Capturingthecentralityofpeopleinclimatechangepolicies,CCDRsassesshowclimaterisksaffectpeople,andhowgovernmentsandtheprivatesectorcanbuildresilience,consideringtheimplicationsofphysicalandtransitionrisksonpovertyandjobs.Thefirstsetof20CCDRs(publishedorinpress)covers24countries(figure1).2BuildingonthelessonslearnedfromtheinauguralyearoftheCCDR,weaimtorolloutCCDRstoallourclientcountriesoverthenextthreetofiveyears.CCDRsuseascenarioapproach—consideringcountry-specificresilientandlow-carbondevelopmentpathways—toexplorethreebroadpolicyspaces.First,theylookatsectoralandmacroeconomicpoliciesandinvestmentsthatcreatesynergiesbetweenclimateactionandshort-tomedium-termdevelopmentobjectives.Forexample,improvingpublictransitcanexpandaccesstojobsandcriticalsocialservices,particularlyforwomenandthepoor,reducetrafficcongestion,andaddresslocalairpollution,allwhilereducingGHGemissions.Second,CCDRsexaminepotentialtrade-offsbetweenclimateandotherdevelopmentobjectivesandidentifypoliciesandinvestmentsthatcanpreventormanagethesetrade-offs.Forexample,decommissioningcoalinfrastructurereducesGHGemissionsbutcouldhaveadversesocialimpactsifnotaccompaniedbytargetedsupportforlocalcommunitiesandworkers.Third,CCDRsexploreopportunities,reforms,investments,andpolicyinstrumentstofurtherleverageprivatesectorresourcesandsolutionsforbothclimatechangeadaptationandmitigationandtobettermanagedistributionalimpactsandthepoliticaleconomy,usingapeople-centricapproachtotheclimateanddevelopmentagenda.1https://openknowledge.worldbank.org/handle/10986/35799;https://openknowledge.worldbank.org/handle/10986/36322.2https://www.worldbank.org/en/publication/country-climate-development-reports.8ClimateandDevelopment:AnAgendaforActionAspublicdocuments,CCDRscanprovideimpetusatthecountrylevelforgovernments,theprivatesector,citizens,anddevelopmentpartnerstoengageintheclimateanddevelopmentagenda.Byconveningprivatesectorinvestors,governments,andmultilateraldevelopmentbanks,CCDRssupportcoordinatedcountry-levelclimateaction,andcanhelpdirectconcessionalandprivatefinancingfromprivatesectordevelopmentfinanciersandnontraditionaldonorstohigh-impactclimateaction.FIGURE1:CCDRcountriescoveredinthissynthesispaperandthosewhereCCDRshavebeenrecentlyinitiatedArgentinaBangladeshBurkinaFasoCameroonChadChinaEgyptGhanaIraqJordanKazakhstanMalawiMaliMauritaniaMoroccoNepalNigerPakistanPeruThePhilippinesRwandaSouthAfricaTürkiyeVietnamPublishedorinpressAngolaBrazilHondurasIndonesiaMozambiqueForthcomingUkraineSudanOnholdAzerbaijanBhutanCambodiaCentralAfricanRepublicColombiaDemocraticRepublicofCongoCôted'IvoireInitiatedDominicanRepublicEasternCaribbean(AntiguaandBarbuda,Dominica,Grenada,St.KittsandNevis,St.Lucia,andSt.VincentandtheGrenadines)EcuadorGuinea-BissauIndiaKenyaLebanonLiberiaMadagascarParaguayRomaniaTunisiaUzbekistanWestBankandGazaZimbabwePopulation(billions,2021)GDP($,trillions,2020)GHGemissions(MtCO2e,2018)2.7(34.0%)0.6(7.2%)1.8(23.2%)2.7(34.5%)19.4(22.4%)2.6(3.0%)60.5(69.9%)3.9(4.5%)15,980(33.8%)3,387(7.2%)5,460(11.5%)22,063(46.7%)393(0.8%)Note:MtCO2e=milliontonsofcarbondioxideequivalent.CCDRscombinethebestavailabledata,models,andtoolstoplacewhatisoftenadiscussionofimpactsinthedistantfutureintomoreimmediateandactionablerecommendationsfordecisionmakerstoday.Whiletheanalysisanddiagnostictypicallyextendto2050,CCDRpolicyrecommendationsfocusonthemedium-term,especiallytheyearsuntil2030.TheybenefitfromtheexpertiseofWorldBankGroupclientsandstaffondevelopmentchallenges—includingpovertyandprivatesectorissues—andstrongsynergieswithotherdiagnostics,suchasCountryEconomicMemorandums,PovertyAssessments,andCountryPrivateSectorDiagnostics.Theywillbeusefulfor:9ClimateandDevelopment:AnAgendaforAction•TheWorldBankGroup:CCDRswillinformtheWorldBankGroup’sSystematicCountryDiagnosticandCountryPartnershipFramework,ensuringthatthegroup’sprioritiesandfinancingportfolioconsiderdevelopmentandclimateobjectives.•Governments:Byprovidingastrategic,macrofiscal,andfinancialdiscussiononclimate-relatedissues,andcomplementingWorldBankGroupsectoralengagementandanalyses,CCDRswillhelpcountriesframetheirowndevelopmentandclimateobjectives,facilitateawhole-of-governmentapproachtothisagenda,andidentifyhowtomobilizetheprivatesectorincludingprivatesectorcapital.•Theprivatesectorandgeneralpublic:Aswellasthemaineconomicrisks,CCDRsidentifyeconomicopportunitiesforprivatesectorinvestmentandmarkets.Theycanalsotriggeraconversationwiththepublicandcivilsocietyaroundkeypriorities,trade-offs,andajusttransition.•Aglobalaudience:CCDRsexplorerealisticpathwaystoachievetheglobalcommunity’sdevelopmentandclimateobjectives,includingtheSustainableDevelopmentGoalsandthe2030agenda,andidentifypolicyandexternalfinancingneedsaswellascommontechnologyandtradeissues.ThissynthesissummarizesthemainemergingfindingsfromthefirstsetofCCDRs.Itidentifiescommonalitiesaswellasdifferencesandspecificitiesacrosscountrycontexts,incomegroups,andgeographies.Italsoaimstocombinetheseinsightstoinformonhowinternationaldevelopmentpartners—especiallyhigh-incomecountries(HICs)—shouldsupporttheglobaltransitiontowardamoreresilientlow-carbondevelopmentpath,includingthroughtheirownclimateactionandsupporttoclimateactioninlow-andmiddle-incomecountries(LICsandMICs)thushelpingreconcileclimateanddevelopment.10ClimateandDevelopment:AnAgendaforAction2.Climatechangeposesamajorthreattolong-termdevelopmentobjectivesClimatechangeaffectsallenvironmentalconditionsinwhichpeopleliveandeconomiesoperate,withcomplexdirectandindirectimpactsonactivitiesandwell-being.Forexample,someimpactsarefeltthroughchangesinaverageclimateconditions,suchaswaterscarcityorthespatialdistributionofplants,crops,andwildlife,whileothersarefeltthroughchangesinthefrequencyandintensityofextremeweatherevents,suchasheatwaves,drought,floods,orstorms.Impactscanbedirect,suchaswhenhighertemperaturesaffecthealth,well-being,orlaborproductivity,orindirect,suchaswhenchangesinclimateaffectthedistributionofpeststhataffectagriculturalyieldsormagnifyconflict.ThefirstsetofCCDRsexaminemanyimpactchannels—includingeffectsonlaborproductivity,agriculturalyields,ornaturalhazards—toidentifyopportunitiesforprotectingeconomiesandpopulations.Thefutureimpactsofclimatechangecriticallydependonthechoiceswemaketoday.Impactscanbereducedintheshorttermwithappropriatedevelopmentandadaptationpoliciesandinterventions,andinthemedium-to-longtermbyreducingglobalemissions.GHGemissions,demographics,technologies,workingconditions,andsocialandphysicalinfrastructureswillhavealargeimpactonboththemagnitudeofclimatechangeandthevulnerabilityofaffectedeconomiesandpopulations.2.1.Climatechangehaswidespread,deep,andcascadingeffectsacrossmostsectorsSectoral,macroeconomic,andpovertyimpactassessmentsdemonstratevulnerabilitytoclimatechange,especiallyinlow-incomeandhigh-povertycountries.Theimpactsofclimatechangearewide-rangingandcomplex,andtheyoftencascadeacrosssectorsandsystems.Anddespitebeingpartialandnotextendingbeyond2050(whentheworstimpactsareexpected),theCCDRimpactassessmentsdemonstratethatclimatechangehassignificantimplicationsforfoodsecurity,humanhealth,economicopportunities,anddevelopmentoutcomes(table1).TheCCDRsalsoshowthatimpactstendtobelocalized,withcountriesandregionsexposedtodifferentthreats.Forexample,inSub-SaharanAfrica,whereverypoorpeoplespendalargeshareoftheirbudgetonfood,peoplearehighlyvulnerabletoagriculturalimpactslocallyandinotherbigfood-producingcountries.Thedirectimpactofhighertemperaturesonlaborproductivity—especiallyforoutdoorworkers—isoneofthemainsourcesofeconomicdamageacrossallcountries.»Climatechange—causedbyGHGemissionsfromhumanactivities—posesamajorthreattolong-rundevelopmentobjectives,especiallypovertyreduction.»Withappropriateadaptationpolicies,countriescanreduceimpactsintheshortterm.»Evenwithappropriateadaptation,successfuldevelopmentandpovertyreductionrequirerapidreductionsinglobalGHGemissions,whichrequiresfirstandforemostacceleratedmitigationactioninHICsandotherlargeemitters.TABLES.1:ExamplesofclimatechangeimpactsfromthefirstsetofCCDRsAgricultureandfood»By2030,Vietnamcouldexperienceagriculturallossesofupto6.2%comparedto2010levelsasopposedtoascenariowithoutclimatechangewhereagriculturaloutputisestimatedtoincreaseby25%»InArgentina,annuallossesinrainfedagriculturefromwaterdeficitsorexcessesareestimatedat$2.1billion(0.6%ofGDP)»By2050,inadryorhotscenario,theSahelcountriescouldexperiencea5–10%and11–20%fallincroprevenuesandlivestockyield,respectively,whileinawetscenario,theimpactonlivestockyieldscouldbepositiveinallcountries»By2050,withoutclimatechangeadaptation,morethan2.6millionunitsoflivestock(71%ofthecurrenttotal)inCamerooncouldbeunderdrought-inducedstressconditionsannually»By2050,overallfoodproductioninEgyptcoulddeclineby5.7%Water»Withoutreallocationoflaborandcapitalandnewinvestments,a20%fallinwateravailabilitycouldleadtoareductioninGDPofupto6.6%inJordan»InBangladesh,projectedsealevelrisecouldnearlydoubleassetrisk(currentlyabout$300millionperyear)by2050,whilethreateningagriculturalproduction,watersupplies,andcoastalecosystems»Withoutreform,a10%fallinwatersupplyinTürkiyecouldreduceGDPby6%»WateravailabilityinIraqcoulddeclineby13–28%by2050duetoclimatechangeTransport»Annualcapitalandoperationsandmaintenance(O&M)spendingonroadsinMalawicouldincreasebyabout$100millioncomparedtohistoricalspendinginabusiness-as-usualscenarioEnergy»By2040,hydropowergenerationinGhanacouldbereducedby8–30%comparedto2020levels»10%ofelectricityinKazakhstanisfromhydropower,withoverhalfgeneratedinriverbasinswithhighorextremewaterstressIndustryandservices»Heat-relateddiseasesinGhanacouldreducelaborproductivityinmanufacturingsectorsbyupto2.6%by2050»Duetoincreasedfrequency,duration,andintensityofheatwaves,outdoorworkerproductivityinsomeprovincesofChinacoulddeclineby2–15%by2060Urbandevelopment»Withoutplanningforresilienturbangrowth,thepopulationexposedtoa1-in-100-yearpluvialfloodinEgyptcouldincreaseby35%by2030,withanadditional1.1millionpeoplelivinginflood-proneareas»In2018,floodsinRwandacaused2.4%ofGDPindamagetophysicalassets»By2050,6–19%oftheurbanpopulationinsixmajormetropolitanareasinSouthAfricacouldbevulnerabletofloodingHealth»InPakistan,preliminaryestimatesoftheimpactsofthe2022monsoonfloodssuggestthenationalpovertyratewillincreaseby4.5to7.0percentagepoints,andthattotallossesamountto$26billion(asofOctober19,2022),with1,900casesofacutewaterydiarrhea,200casesofmalariaand50casesofdenguefeverreportedacrossfloodaffectedareas»By2050,inamoderate-warmingscenario,increasedtemperaturesinArgentinacouldslightlyreducemortalitythankstoadecreaseinextremecolddays,butclimatechangewouldincreasemortalityunderapessimistic-warmingscenarioEducation»In2021,atyphooninthePhilippinesaffected30,000schoolsservingaround12millionstudentsin11regions,with$1.2billioninrepaircosts(about10%oftheeducationdepartment’sannualbudget)»WhiledroughtconditionsinMalawiincreasetheprobabilityofanindividualfallingbelowthepovertylineby14%,theimpactonindividualswithonlyaprimaryeducationrisesto26%,versus9%forthosewithahighereducationTourism»InRwanda,higheraveragetemperaturescouldcauseinternationaltourismdemandtodropby11–20%by2040»TheNationalTourismInvestmentMasterPlan2022–42forMalawiidentifieslake,nature,andwildlifetourismasthecountry’scoretourismproducts,andtheywillsufferfrombiodiversitylossandlanddegradation11ClimateandDevelopment:AnAgendaforAction12ClimateandDevelopment:AnAgendaforActionThemacroeconomiceffectsofclimatechangeongrossdomesticproduct(GDP)aresignificant,particularlyforpoorercountries,evenwhenestimatedonlyforasubsetofimpactcategoriesandwithoutexploringthelargerimpactsexpectedpost-2050.Whilecurrentknowledgedoesnotallowforanexhaustiveassessmentofallclimatechangeimpactchannels—especiallysomeofthebiggestriskslinkedtoecosystemoreconomictippingpoints3—theCCDRsfocusonsomeofthemostcriticalimpacts:onlaborproductivity,agriculturalyields,wateravailability,naturaldisasterrisks,migration,amongothers.Butevenwithapartialanalysis,figure2showsthatimpactshavesignificanteconomywidecosts,asmeasuredagainstGDP,particularlyforpoorercountriesandunderahigherwarmingscenario.Thetimeprofileoftheseimpacts(forexample,whethertheycauseaconstantslowingdownofeconomicgrowthorasuddenshockorcrisistriggeredbyextremeeventsorthresholdeffects)isuncertainbutwouldmatterfortheireventualimpactonwell-being.FIGURE2:EstimatedimpactsofclimatechangeonGDPby2050,basedonasubsetofimpactchannels01,0002,0003,0004,0005,0006,0007,0008,0009,000GDPpercapita($,2020)-12-10-8-6-4-20ChangeinGDP(percentagechange)PeruArgentinaKazakhstanGhanaBangladeshMauritaniaPakistanNepalNigerChadBurkinaFasoMaliCameroonClimatescenarioOptimisticIntermediatePessimisticNigerBurkinaFasoMaliNotes:AllcountryresultsarebasedontheWorldBank’sMacro-FiscalModel(MFMod),exceptforGhanaandCameroonwhicharebasedontheWorldBank’sMitigation,Adaptation,andNewTechnologiesAppliedGeneralEquilibrium(MANAGE).Warmingcategoriescorrespondtolevelsofradiativeforcing,asmodeledbytheintegratedassessmentmodels,aswellastheselectionofmoreoptimisticclimatemodels(e.g.,thosewithmoremanageableimpactsonwateravailability).Optimisticscenario=1.9–2.6Wattspersquaremeter(W/m2)by2100;intermediatescenario=4.5W/m2by2100;pessimisticscenario=7.0–8.5W/m2by2100.Climatechangecandeepenmonetarypovertythroughitsimpactonagriculturalyields,foodprices,health,laborproductivity,andotherfactors.AggregateGDPorconsumptionimpactsdonotcapturethefullextentofwelfareandequityimplicationsfortworeasons:becauseactualimpactsarehighlyheterogenousandmorepronouncedforpoorcountriesandpeople,andbecauselow-probability,high-impactrisksaredifficulttoassess.Highervulnerabilityofpeopleinorclosetopovertyissometimeslinkedtohigherexposuretorisk—forexample,throughdependencyonagriculturalincomeorlow-qualityhousing.Butitcanalsobelinkedtoalowerabilitytoprepareandrespond,duetoalackofsavingsandaccesstoborrowing,remittances,socialprotection,insurance,andothersupportsystems,andalackofvoiceindecisionmaking.InPeru,simultaneousshockstofoodpricesandagriculturalearningsresultingfroma2–5percent3Atippingpointdescribesasituationwhenasystemchangespermanentlyonceatemporarydisturbancehasshifteditbeyondacertainthreshold.Tippingpointthresholdscanbephysical(e.g.,collapsingicesheetsinGreenlandorAntarctica),ecological(e.g.,riskofcollapseofecosystemsliketheAmazon),orsocioeconomic(e.g.,permanentdeclineininvestmentorout-migrationsinaregion).13ClimateandDevelopment:AnAgendaforActionfallinyieldwouldincreasepovertybyupto1percentagepoint.Theimpactwouldbemodulatedbygeography,withruralhouseholdsinmountainareasmostsensitivetolossesinearnings,andurbancoastaldwellersmoreresponsivetopriceshocks.IntheSahelcountries,thepovertyratecouldincreasefroma27percentbaselineto34percentinthedryandpessimisticscenario,withanother13.5millionpeoplefallingintopoverty.Climatechangeimpactsonwell-beinggobeyondmonetaryimpactsandincludevariousdeprivations,suchasfoodinsecurityandlossofhistoricalorculturalheritage.InthePhilippines,forexample,agriculturalproductivityisestimatedtodeclineby9–21percentduetoclimatechangeby2050.ThefirstsetofCCDRsdoesnotincludesmallislandsthatmayfacemoredaunting—orevenexistential—challengeswithverylimitedadaptationoptions.ButCCDRscoveringsmallislandsarecurrentlyinprogress(figure1).Climatechangeimpactscanwidengendergaps.InCameroon,lowlevelsofhumancapitalandthegenderdivisionofagriculturallabormakewomenparticularlyvulnerabletoclimatechange.IntheSahel,foodinsecurityisparticularlychallengingforwomen,whoprovide70percentofthelaborinthefoodeconomy,asectorheavilyinfluencedbyclimaticchange.Theincreasedrisktotheirlivelihoodsmeansagreaterriskoffoodinsecurityandmalnutrition.Anemiaduetomalnutritioninpregnantwomenincreasestheriskofstuntinginchildren,withdeleteriouseffectsontheirfutureproductivityandtrappingfamiliesinaviciouscycleofpovertyandvulnerability.Fragilityandconflictsaremajormagnifiersoffutureclimateimpactsandreducepeople’sabilitytoprepareandrespond,whileclimateimpactsoftenincreasethelikelihoodofconflict.Wavesofconflict—somecausedbypressureonfertilelandsmaderarerbyenvironmentalchange—havedestabilizedtheSahelregionandcouldcreateanegativefeedbackloop,asmoreconflictmakesitharderforcommunitiestocopewithclimatechangeimpacts,whichleadstomoreviolenceandconflict,furtherreducingresiliencetoclimatechange.Thepovertyimpactsofclimatechangewillalsobehigherinruralareas—includinginpoorandinsecurebordercommunitiesinChad,Niger,andMali—increasingurban-ruralinequality.InIraq,asocialmediasurveyandfocusgroupdiscussionsconfirmrisingconcernsabouttheimpactofclimatechangeondisplacementandconflictwithinthenextfiveyears,andawillingnesstocontributetoclimatechangeactionsandinteractwiththegovernmentonclimatechange.Giventheriskofadaptationandmitigationmeasurestoexacerbateunderlyingdriversoffragilityandconflict,promotingconflict-sensitivityofclimateactionsandpoliciesiscrucial.2.2.Boostingresilienceandadaptationisanurgentandintegralpartofdevelopmentandpovertyreduction,especiallyinlow-incomecountriesCountriescanachievegreaterresiliencethroughathree-prongedapproach.Thisinvolves:first,rapidandinclusivedevelopment,especiallypovertyreductionanduniversalaccesstoinfrastructureandsocialservices;second,awhole-of-societyapproachtoresilienceandadaptation,toensureclimaterisksareconsideredinalldecisionsandinvestments;andthird,asetoftargetedsectoralinterventionscoveringhumancapital,infrastructure,andvariouseconomicsectors.InclusivedevelopmentfacilitatesclimateadaptationDevelopmentandlowerlevelsofpovertyenablepeople,firms,andcommunitiestobetteradaptto,copewith,andrecoverfrom,theimpactsandshocksassociatedwithclimatechange.Aworldfreefrompoverty,whereeveryonehasaccesstocleanenergyandwater,qualityhealth14ClimateandDevelopment:AnAgendaforActioncareandeducation,decentjobs,andreliablesocialsafetynets,ismoreresilienttoclimatechangeandextremeevents.CCDRsincludemanyexampleswhereawell-functioningeconomicsystem,coupledwithpoliciesthatensureequitableaccesstoresourcesandbasicservices,helpsreduceclimatechangeimpactsthankstostrongerhumancapital,betteraccesstofinancingortechnologies,reallocationofresourcesacrosssectors,ormorefiscalspaceforgovernmentaction.Theseareaprerequisiteforbuildingresilience,facilitatingandfinancingthetransition,andreducingmacroeconomicandsocialcostsofclimatechangeimpacts.Forinstance,theCCDRsidentifyfunctioninglabormarketsaskeyforadaptationinGhanaortheSahelcountriesanddiscussdomesticresourcemobilizationandfiscalspaceforSouthAfricaandTürkiye.Asupportivepolicyenvironmentandincentivesallowtheprivatesectortoconsiderclimaterisks,opportunities,andimpactswhendecidingthelocation,design,andtechnologyoptionsofinvestments,products,supplies,andproductionprocesses.Landmarketsthatpricefloodrisksandlabormarketsthatfacilitateworkers’transitioncanalsoplayacrucialroleindampeningtheimpactsofachangingclimate.ReflectingthisprincipleintheCCDRscenarios,estimatedannualGDPlossesarehigherinthelow-growththanthemedium-andhigher-growthscenariosforChad,Mali,Malawi,andNiger,becausetheformerinvolveslittleornostructuraltransformationandassumesthattheeconomycontinuestobedominatedbythetraditionalagriculturesector,whichwouldbesubjecttolargernegativeshocks.4Awhole-of-societyapproachisneededtofacilitateadaptationandresilienceDevelopmentaloneisnotenough;theCCDRsshowthattargetedadaptationactionscansignificantlyreducetheimpactsofclimatechangeandhavehigheconomicreturnsbutrequireinvestmentandmajorimprovementsindecisionmakingandgovernance.Figure3showsthatevenalimitedsetofadaptationmeasuressubstantiallyreducesclimatechangeimpactonGDP.IntheSahel,underamedium-growthscenario,thereductionintotalGDPlossesin2050(thedifferencebetweennoandpartialadaptation)rangesfrom2to5percentagepoints.Adaptationandresilienceinterventionsaregoodinvestmentswithhighreturns.Andincreasingresiliencerequiresbetterdecisionmakingandmainstreamingofclimaterisksinalldecisions(chapter4).InPeru,adaptationinvestmentshaveapositiveimpactongrowthandincreaseGDPby5percent,mostlyduetotheco-benefitsofagriculture,water,andsanitationinvestments.Buildingadaptationcapacityandreadinessrequiresawhole-of-societyapproachineverythingfrommacroeconomicprocessestolocalplanning,withgoodpolicydesign,publicinvestments,robustinstitutionsandgovernance,andactiveengagementoftheprivatesector.Despitemakingconsiderableprogressinsomeareas,manycountriesstillneedtomakeconcertedeffortstobuildcapacitytoaddresscurrentrisksandprepareforthenewchallengesandrisksposedbyclimatechange,especiallyinthefinancialsectorandmacrofiscalplanning.UsingtheAdaptationPrinciples5andanindicator-basedscoringsystem,theCCDRsprovidemacro-levelassessmentsofadaptationandresiliencereadinessinChina,Türkiye,andPeru,threeupper-middle-incomecountries(UMICs)withvaryingclimaterisksandvulnerabilities.Resultsshowthatthethreecountriesaremakingprogresstowardadaptationandresiliencecapacitybuildinginsixkeyareas(figure4),butprogressisuneven.Chinaperformsrelativelywellwithsocial,economicdevelopment,publicandprivatesectorresearchanddevelopment,andtheenablingenvironmenttosupportpeopleandfirmstoadapt.Butitcouldstrengthenitslegalframework,governance,andmonitoringand4AnnualGDPlossinpercentagetermsismoresimilaracrossallgrowthscenariosforBurkinaFasoandMauritania,whereagriculturealreadyrepresentslessthan25%ofGDP.5Hallegatte,S,Rentschler,JandRozenberg,J.2020.TheAdaptationPrinciples:AGuideforDesigningStrategiesforClimateChangeAdaptationandResilience.WorldBank,Washington,DC.15ClimateandDevelopment:AnAgendaforActionevaluation(M&E)foradaptationandresilience,socialprotectionofthepoorest,biodiversityandnaturalresourceprotection,andbetterincorporationofnature-basedsolutions.Peruhasmadeprogressonlegalframeworkstosupportimplementation,coordination,andM&Eofadaptation,butcouldmakegreatereffortstointegrateimplementationacrossnationalandlocalgovernments,protectcriticalpublicservices,suchaswaterandhealth,improvelanduseplanning,strengthendisasterriskmanagement,anddeveloptheinsurancesector.Türkiye,ontheotherhand,hasmadesignificanteffortstobuildadaptivecapacitytoprotectpublicassetsandadaptlanduse,butwouldbenefitfromaddressingfoundationalissueswithsocialinclusionandmacro-levelpolicyandgovernancestructuretoenablehouseholds,theprivatesector,andcommunitiestoundertakeeffectiveadaptationactions.Noneofthecountriesassessedhavesufficientmainstreamingofclimateanddisasterriskconsiderationsinfinancialandmacrofiscalplanning.FIGURE3:GDPimpactsofclimatechangein2050inpessimistic(high-emission)scenarios,withandwithoutadaptation,forselectedcountriesMalawiMaliChadNigerBurkinaFasoMauritaniaBangladeshPeru-10-505-4.4-11.0-6.7-10.7-5.7-10.5-8.4-11.9-4.2-6.8-5.1-7.2-0.6-3.74.2-0.8Climatechangeimpactsonly(smallsymbol)Climatechangeimpactswithadaptation(largesymbol)GDPchangesin2050(percentagechange)LowincomeLowermiddleincomeUppermiddleincomeNotes:Thesmalldotispartialimpactswithoutadaptation;thelargedotispartialimpactswith(partial)adaptationandsomeoftheirco-benefitsFIGURE4:CountryadaptationandresiliencereadinessscoresforChina,Peru,andTürkiye0123Rapid,inclusivegrowthFacilitateadaptationofpeopleandfirmsProtectpublicassetsandadaptlanduseResidualanddisasterriskmanagementFinancialandmacrofiscalplanningPrioritization,implementationandmonitoringTürkiyeChinaPeruNotes:Countriesareassessedalongsixkeyareasofadaptationandresilience,eachbasedonasetofindicators,assessingprogresswithascorebetween1to3(1=nascent,2=emerging,and3=established)foreachindicator.Aggregatingthescores(withequalweight)gavethescoreforeachkeyarea.16ClimateandDevelopment:AnAgendaforActionHumancapital—intheformofeducatedandhealthycitizens—andresilienteducationandhealthcaresystemsarecrucialforadaptivecapacity.Toimproveproductivityandbuildtheskillstheyneedforanewerandgreenereconomy,andinnovationsforlocallyrelevantclimatesolutions,countriesmustincreasetheircapacitytobuildhumancapitalthroughlearning,training,publichealth,andsafetynetsupport.IntheSahel,investinginchildren’s(especiallygirls’)healthandnutritionisessentialtoreducefertilityratesandachievesustainablegrowth.IncountrieslikeCameroon,whereclimatechangeisamaindriveroffoodinsecurity,developinganintegratedhealthorsurveillancesystemusingtheOneHealthframework—whichconsidersthenexusbetweenanimal,human,andenvironmentalhealth—isvitalformonitoringclimatechange-relateddiseases,integratingemergencyplanningandearlywarningsystems,andraisingawareness.6Naturalcapitalandlandusealsoplaykeyrolesinimprovingresilienceandlong-termdevelopmentprospects,withecosystemsalreadyprovidingsignificantclimateadaptationandmitigationbenefitsglobally.Withclimatechange,thevalueofecosystems(suchasmangrovesandwetlands)asameansofreducingrisktocriticalinfrastructureandavoidinglossoflifewillcontinuetoincrease.Climatechangeimpactsrequirecoordinatedactiontoaddressthethreatsfacingagriculture,water,andtheenvironment,collectivelymaintainingorrestoringnaturalcapital.Forexample,humanactivitiescompoundtherisksresultingfromclimatechangeintheAmazonbiomes,threateningtheecosystemservicestheyprovide,fromrichbiodiversitytopollination,soilformation,erosioncontrol,protection,nutrientcycling,watercycleregulations,andcarbonsequestration.ForestryandlandusearealsoimportantprioritiesforachievingRwanda’svisionoftransitioningtowardsagreeneconomy.Thecountry’seconomictransformationpillarprioritizessustainablenaturalresourcemanagementandtheenvironment,withobjectivestoincreaseforestrymanagementsustainabilityandprofitability,manageandprotectwatercatchmentstomitigatedisasters,andstrengthenlandadministrationandmanagement.InVietnam,wheremorethan35percentofcoastalsettlementsareonerodingcoastlines,theCCDRrecommendstheadoptionofnature-basedsolutionstoharnesstheprotectivefunctionandeconomiccontributionofecosystems(includingmangrovesandsanddunes)aswellasasystematicapproachtotheirrehabilitation,conservation,monitoring,andmanagement.TargetedsectoraladaptationinterventionsarekeyandcangeneratelargebenefitsBeyondmainstreaming,alltheCCDRsidentifymajoropportunitiestoboostresilienceandadaptationwithtargetedadaptationinterventionsatthesectorlevel.Thediversityandcontext-specificityofadaptationinterventionsidentifiedintheCCDRsillustratethechallengeofadaptation:asuccessfulresiliencestrategyimpliesfullmainstreamingofclimatechangerisksintodecisionmaking,aswellasnumerouslocalizedandtargetedadaptationinterventions.Changesinhydrologicalcyclesfromwarmingarecreatingsignificantchallengesforwatersecurityandwaterresourcemanagement.InPeru,one-thirdofthecountry’spopulationlivesintheLimametropolitanarea,whichreliesheavilyonwaterfromglacialmelt.Asthecountryhaslostabout43percentofitssurfaceglacialareasince1970,itislikelytoexperiencesignificantreductioninwaterflowasearlyas2030.TheArgentinaWaterSecurityDiagnostic7identifies$97billioninpriorityinvestmentsby2030—includingsafewaterandsanitationservices,greeninfrastructureforfloodanddroughtmitigation,anddeepeningtheParaná-Paraguaywaterway—whichcouldincreaseGDPby2.7percentin2030.Egyptisactivelyinvestinginnonconventional6Berthe,FCJB,Timothy,K,William,BLG,Francois,GM,Catherine,CP,Caroline,ASandRichardM.2018.OneHealth:operationalframeworkforstrengtheninghuman,animalandenvironmentalpublichealthsystemsattheirinterface.Washington,DC:WorldBank.7ArgentinaWaterSecurity:ValuingWater—BriefforPolicyMakers(English).Washington,DC:WorldBankGroup.http://documents.worldbank.org/curated/en/945671624438916229/W21006-Argentina-WSD-Policy-Brief-Accessible.17ClimateandDevelopment:AnAgendaforActionwaterresources,methaneemissionsreduction,andbiogasgeneration,whilewateralsoplayscriticalroleinenablingcountriessuchasKazakhstanandGhanatosequestermorecarbonfromrangelands.ThetransmissionofclimateriskthroughwaterscarcityissimilarlyprominentinallCCDRcountriesoftheMiddleEastandNorthAfricaregion(Egypt,Iraq,Jordan,Morocco).ManyCCDRs,suchasMorocco,highlightthelimitsofsupply-sideapproachestowatermanagementandrecommendcomplementingthemwithstrongdemandmanagementpolicies,includingwater-savingirrigationtechnologies(dripandin-soilirrigation,sprinkling,local-impulseirrigation,irrigationalongfurrows,regulationofirrigationoffields)anddiversifyingcropproductiontohigher-valuecropswithlowerwateruse.Asdiscussedinsection3.2,watershedandenvironmentalprotectionandrestorationcanalsoprovidebenefitsintermsofincreasedcarbonsinksandreducedGHGemissions.Toaddressclimateimpactsandbuildresiliencefortheagricultureandfoodsectors,butalsorespondtolong-termissuessuchaschronicallyunderproductiveagriculturalsystems,theCCDRspresentavarietyoftechnologyoptionsaswellaspolicyreformsunderthebroaderumbrellaofclimate-smartagriculture(CSA).Forexample,theSahelCCDRnotesthatsustainedincreasesinproductivityrequireacombinationofexpandedsustainablelandmanagementpractices,enhancedavailabilityandadoptionofclimate-resilientproductiontechnologiesandpractices,expandedaccesstofinanceandfinancialriskmanagementservices,andeffectivepreservationofagrobiodiversity.InMorocco,whererurallivelihoodsareparticularlyvulnerabletodroughtsandwaterscarcity,theCCDRrecommendsthat,aswellaspublicinvestmentsinirrigation,thecountryfocusonadaptationoptionsforrainfedagriculturealongCSAprinciples.TheBangladeshCCDRnotestheneedtodiversifyagriculturalproductionasanadaptationoption,drivenbytheintroductionandcommercializationofCSApractices.TheIraqCCDRrecommendsadaptationactionsfocusedonthewater-agriculture-povertynexusthatcontributetofoodsecurityandsupporttheresilienceofthemostvulnerable.TheChinaCCDRrecommendspromotingscience-basedplanningforcropdistribution,systematicallyintegratingnature-basedsolutionsintolandscapeplanning,anddevelopingdedicatedsectoralguidanceonclimateactionandadaptationresponse.InPeru,theCCDRrecommendsfacilitatingtheintegrationofsmalllow-productivityfarmersfromtheSierraandSelvaregionsintothevaluechainsofhigh-productivityexportingfarmersfromthecoast,asawaytoincreasesmallfarmers’productivitywhileincreasingtheresilienceoflargecoastalfarms,whichfaceincreasingwaterscarcity.Connectivityinfrastructuretoaddresscriticalruralaccessibilitysupportsthewelfareofvulnerableandisolatedcommunities,whilealsoimprovingtheeconomy’sresiliencetopublichealthandeconomicshocks.CCDRanalysesinMalawi,Peru,Vietnam,andArgentinahighlightedhowresilienceinthetransportsectorgoesbeyondconsideringtheclimateadaptationofindividualinfrastructureassets.Itisimportanttoalsoconsiderservices,systems,strategicsupplychains,andthecriticalityofnetworkconnectivitytoensureuninterruptedmovementofpeopleandgoodsinthefaceofclimatehazards,globalpandemics,foodscarcities,andothershocks.Socialprotectioncanbuildresiliencetoclimateshocksthroughproductiveinclusionorlivelihoodsprograms,andsavingsprograms,whichprotecthouseholdswhenaclimateshockhits.Atalocallevel,communityandpublicworksprogramsthatrestoreland,promotehomeorcommunitygardens,andrepairculvertsorroadscanalsosupportadaptationbyreducingtheseverityofclimateimpacts.Intheaftermathofclimatedisasters,digitalidentitysystemscanensureaccesstosocialsafetynetswhiledigitalfinancialservicescandistributefunds.InBangladesh,cash-basedshock-responsivesocialprotectionprogramsleverageexistinggovernment-to-personplatformstotarget18ClimateandDevelopment:AnAgendaforActiontheurbanpoorandclimatemigrants.Ghanahastwolargesocialprotectionprograms—LivelihoodEmpowermentAgainstPovertyandLabor-IntensivePublicWorks—whichitcanscaleupandadapttodisastershocks.IntheSahel,socialprotectionprogramsareexplicitlyadaptivetorespondrapidlytoclimateshocks,provideimmediaterelieftoaffectedhouseholds,andcontributetotheadaptationagendabybuildinghouseholdresilience.Nationalhealthinsuranceprogramsneedtobeexpandedtoincreaseaccesstothepoorestandmostvulnerable.Becausetheriseindisasterriskisintertwinedwithclimate,itisimportanttoboostdisasterriskmanagement(DRM)andensurethatinfrastructuresystemsaredesignedandconstructedforcurrentandfutureclimaterisks.InGhana,variousagenciesengageinproducinganddisseminatingearlywarninginformationanddevelopingearlywarningsystems.Manyadaptationoperationsaregroundedincities,asevidencedbyVietnam’sneedforsustainableurbandevelopmentwithinfrastructureandservicesthatstrengthenclimateresilience,reducethecostofdisasters,andenhanceintegrationwithnature.Moregenerally,landuseandspatialplanningmustincorporatedisasterriskreductionmeasurestopromoteclimateresilience,andshouldbeintegratedintocountryframeworkstoensuretheseareappliedatlocallevel,targetingvulnerableandminoritygroups.Coastalareasareespeciallyaffectedbystorms,floods,andsealevelrise,presentingsignificantneedsincountrieslikeBangladeshforinvestingindisaster-resilientinstitutions,frameworks,systems,andcriticalinfrastructure.TheChinaCCDRrecommendscombininggrayandgreeninfrastructuresolutionstomanagefloodanddroughtrisksincities,settlements,andkeyinfrastructure.TheCCDRsalsoidentifybuildingstronghydrologicalandmeteorological(hydromet)servicestoprovidethedataandinformationneededtoadapttoclimatechangeandpreventnaturaldisastersasapriority.Countriesneedconnectivity,datainfrastructure,andtherightskillstomonitorclimatechangeimpactsandmakeinformedadaptationdecisions.Forexample,anassessment8ofKazakhstan’scapacitytomonitor,forecast,project,andissuewarningaboutclimate-relatedhazardsconcludedthatthecountry’shydrometservicehassubstantialcapacity,highlymotivated,well-educated,andtrainedstaff,goodtechnicalinfrastructure,andfunctioningworkingproceduresandmethods.Butareasforimprovementincludestrengtheninginteractionwithusers,shiftingtodemand-drivenproductdevelopment,continuingtostrengthenitsscientificinfrastructureandstaffcapacities,andengagingmoreininternationaleffortstoimproveglobalweather,climateandwatermonitoring,forecasting,andinformationservices.Privatesectorclimateresilienceandpreparednessarestillatanearlystageofdevelopment,andpolicyandinstitutionalstructuresarerequiredtounleashinnovationandenableprivatesectorstoincorporateclimaterisksandinvestinresilience.Multiplebarrierspreventtheprivatesectorfromtakingclimateresilienceactions,includingalackofclimateriskinformation,capacity,regulatoryguidance,andincentivestoincorporateclimaterisks.InTürkiye,forexample,only5-10percentoffirmshaveclimatechangeobjectivesandadedicatedmanagerialroleforenvironmentandsustainability.Aswellasanenablingpolicyenvironmentthataddressesmarketfailures,thedevelopmentandwideradoptionofdifferentinstruments—suchasinsuranceschemesandpublic-privatepartnerships—canhelpaccelerateprivatesectorresilienceactions.InRwanda,theWorldBank-fundedCommercializationandDe-riskingforAgriculturalTransformationprojecthelpsmodernizeirrigationinfrastructurewithwater-efficienttechnologies.8ThisassessmentwasbasedonthemethodologyoftheAllianceforHydrometDevelopment’sCountryHydrometDiagnostics(https://alliancehydromet.org/country-hydromet-diagnostics/).19ClimateandDevelopment:AnAgendaforAction2.3.Evenwithadaptation,successfuldevelopmentandpovertyreductionrequireacceleratedmitigationaction,especiallyfromhigh-incomecountriesandlargeemittersLimitstoadaptationandthegrowingrisksoftippingpointshighlighttheneedforacceleratedactiontoreduceglobalGHGemissions.Whenclimate-relatedimpactsreachatippingpoint,theycanexceedtheresilienceofsocioeconomicsystems.Forexample,continueddeforestationintheAmazonBasincouldleadtoatippingpointbeyondwhichlargeareasofSouthAmericawouldbeunabletosustaintheirecosystemsandnativeforests,affectingrainfallandwateravailabilityinparticular.Socioeconomictippingpointsarereachedwhenacommunitymovesfromstabilitytoinstability—forexample,ifasystemicshareoftheskilledlaborforcedecidestoout-migrateinresponsetodeterioratingclimateconditions,itwouldjeopardizeprospectsfortherestofthepopulation.Rapidaccelerationofglobalmitigationactionisurgentlyneededtopreventtheworstimpactsofclimatechange.Undercurrentpolicyscenarios(aswellasworse-casescenarios),implementedpoliciesandactionswouldleadtowarmingwellinexcessoftheagreedobjectiveofkeepingtheglobaltemperaturerisewellbelow2oreven1.5degreesCelsiushigherthanpre-industrialtemperatures.AccordingtotheClimateActionTracker,9whichcovers85percentofcurrentglobalemissions,countries’internationaltargetsandcommitmentsfor2030bringtheworldclosertoanestimatedwarmingofaround2.4degreesCelsius.Thelong-termcommitmentsareevenmoreambitiousandwouldleadtoanestimated2.1-degreeCelsiuswarming(1.8degreesifallannouncedpledgesareimplemented).Thelargegapbetweentargetsandpolicieshighlightsthemajorimplementationchallengefacingtheworld.WhileallcountrieshavearoletoplaytoachievetheobjectivesoftheParisAgreement,HICs—withtheirgreaterresponsibilityforhistoricalemissions,higheremissionspercapita,highercapacitytodevelopnewsolutionsandtechnologies,10andlargerresources—mustleadthewaywithdeeperdecarbonizationatafasterpace.PoorcountriesandpeoplecontributeverylittletoGHGemissions(figure5).But,asdiscussedinsection2.1,theyneedtoincreaseenergyandmaterialconsumptiontomeetbasicdevelopmentneeds—byensuringpeoplehaveaccesstoelectricity,improvedwaterandsanitation,health,andeducation—andtocreatethejobsandbusinessesneededtoreducepoverty.TheCCDRsarguethateventually,allcountrieswillneedtoact,particularlyHICsandthemiddle-incomelargeemitters,whichareresponsibleforalargeandgrowingshareofglobalemissions.LICsandMICsmustalsoactnowtoavoidlockingintocarbon-intensiveenergysystems,urbanforms,industries,orinfrastructuresystems,whichwillbedifficulttocorrectinthefuture.9https://climateactiontracker.org/.10Seealsosection4.4ontheroleofhigher-incomecountriesindevelopingnewtechnologiesandbearingassociatedrisks.20ClimateandDevelopment:AnAgendaforActionFIGURE5:NetGHGemissionspercapita,2019a)BycountryandGDP(selectedcountries)0510152025303540Micronesia,Fed.Sts.RussianFederationPapuaNewGuineaEgypt,ArabRep.UnitedStatesSwitzerlandBangladeshElSalvadorIndonesiaMyanmarSriLankaThailandLaoPDRBelizeQatarChinaIndia0K10K20K30K40K50K60K70K80K90K100K110K120KGDPpercapita($,2019)0510152025303540UnitedArabEmiratesSingaporeNewZealandAustraliaAustriaBahrainBarbadosBelgiumBelizeBoliviaBotswanaBruneiDarussalamCanadaChileDenmarkFinlandFranceGuyanaIcelandIrelandKuwaitLuxembourgMaltaNetherlandsNorwayOmanPalauQatarSaudiArabiaSloveniaSwedenSwitzerlandTurkmenistanUnitedStatesPopulationAverageGHGemissionspercapita(tCO2e/person/year,2019)AverageGHGemissionspercapita(tCO2e/person/year,2019)b)BycountryincomegroupHighincome29.7%Lowincome4.6%Lowermiddleincome22.6%Uppermiddleincome43.1%Source:EmissionsdatafromClimateWatchWorldResourcesInstitute2022https://www.climatewatchdata.org;GDPandpopulationdatafromtheWorldBankDataBank21ClimateandDevelopment:AnAgendaforAction3.Climateobjectivescanbeachievedwithoutcompromisingdevelopment3.1.StructuralchangeandsupportivepolicyenvironmentsareneededforsuccessfulandjustclimateactionReformsthattackleunderlyingstructuralobstaclesforgrowthanddevelopment,includingbarrierstoprivatesectorparticipation,areimperativetofacilitatecountryresponsestoclimatechange.TherecommendationsinmanyCCDRsarefullyconsistentwithotherWorldBankGroupdiagnostics—includingCountryEconomicMemorandumsandPovertyAssessments—highlightingthesynergiesbetweendevelopment,economicgrowth,andclimateaction.Theyconcludethatimplementingclimatepoliciesrequiresbroadeconomicanddevelopmentreformstotacklestructuralchallengessuchasmacroeconomicstability,institutionalcapacity,multilevelgovernance,andmarketfrictions.InArgentinaandTürkiye,prioritiesarereducingmacroeconomicvolatility,stabilizinginflation,andimprovingfiscalpolicymanagementtoincentivizeamorerobustinflowofforeigndirectinvestmentandensuretherequiredpublicandprivateinvestments.IntheSahel,addressingthedriversoffragility,conflict,andviolenceiscrucialforachievingsustainable,resilient,andinclusivegrowth.InPeru,tacklinginformalitycanhelpreduceillegaldeforestation,andinChina,providingapredictableregulatoryenvironmentwillimprovetheinvestmentclimateforprivatesectorparticipation.ImprovingthemultilevelgovernanceframeworkandundertakingreformstostrengthennationalandlocalinstitutionalcapacitywillfacilitatethetransitioninCameroon,Egypt,Morocco,Peru,andNepal.Diversificationoffersaclearsynergyinhighlyspecializedcountriestoenhanceeconomicgrowth,reduceclimatechangevulnerability,andfacilitateemissionreductions.Ineconomiesthatspecializeinfossilfuelexports(Iraq,Kazakhstan),agriculturalcommodities(Argentina),orwhereagriculturalproductionisvulnerable(Argentina,Sahel),thereisastrongoverlapbetweenclimate-relatedandgrowth-enhancingrecommendations.Forexample,energyexporterssuchasIraqwouldbenefitfromgreaterexportcompetitivenessinnon-oilsectors,andglobalclimatepoliciesamplifytheimportanceofthisdiversification.Similarly,energyimporterssuchasTürkiyeorVietnambenefitfromreducingfossilfueldependencetoshieldtheireconomiesfromfuelpricevolatilityandbenefitfromdevelopingdomesticsourcesofrenewableenergytomeetgrowingdemand.Decarbonizingtheeconomyrequiresreform,resourcesforinvestment,andsupportforaffectedpeople,whicharemoreeasilyavailableinacontextofrapidgrowth,stronggovernancewith»SubstantialreductionsinGHGemissionsarecompatiblewitheconomicgrowthandcountrydevelopmentgoals,butonlyifkeyconditionsaremet,includingwell-designedclimateactions,strongparticipationoftheprivatesector,adequateinternationalsupport,andappropriatecomplementarymeasurestomanageunavoidabletrade-offs,protectpoorpeople’sconsumption,andfacilitateajusttransition.»MostCCDRlow-carbondevelopmentpathwaysaremoreambitiousthanexistingNationallyDeterminedContributions(NDCs)andtheywouldreducetotalGHGemissionsinCCDRcountriesby70percentby2050,comparedwithacurrent-policyscenario.Takentogether,however,theywouldstillleadtosignificantemissionsin2050.Thisshowsnotonlytheneedtoadjustthesepathwaystoincreaseambitionovertime,butalsoforenhancedsupportfromandactioninHICs,includingwithnegativeemissions.22ClimateandDevelopment:AnAgendaforActionefficientinstitutions,goodbudgetmanagementandprocurement,anduniversalaccesstofinancialservicesandglobalcapitalmarkets.Withoutaddressingunderlyingstructurallabormarketissuesandconstraintsonprivatelabordemand,countrieswillstruggletomitigatetheimpactsofclimatechangeonworkersandfacilitatethelabormarkettransitionrequiredtosupportashifttowardmoreclimate-responsiveeconomies.Climateactionscreateopportunitiesfornewjobs;butspatial,skill,andexpectationmismatchescanerodethesebenefits.Complementarypoliciesandprogramswillmaximizepositivejoboutcomesandminimizedisruptionsanddisplacementfromdecarbonizationandtransition.AlltheCCDRsfindthattheprivatesectorcouldplayakeyroleinboostingadaptationandmitigationandneedsenablingconditionsandtargetedsupporttoreachitsfullpotential.Aswellasprovidingtechnologicalsolutionsandinnovation,promotinghigherefficiency—evidencefromChinasuggeststhattheprivatesectormaybesignificantlymoreenergy-efficientthanstate-ownedenterprise(SOEs)—theprivatesectorprovidescapitalforinvestments.InTürkiyeandPeru,halfoftheinvestmentneedsforclimateactionareexpectedtocomefromtheprivatesector.Buttomeetthisexpectation,theprivatesectorneedsanenablingenvironmentandtherightincentives,suchassubsidyreformsandcarbonpricing(section4.1).Countriescannotaffordtowaittohavefixedalltheirgovernancechallengesbeforestartingtoinvestinclimateaction.AlltheCCDRsconcludethatstronginstitutionalandgovernanceenvironmentswouldreducecostsandmaximizethebenefitsoftransition.Ontheotherhand,theurgencyofclimateactionmeansthataparallelapproachisneededinstrengtheninginstitutionsandinvestinginclimateaction.So,theCCDRsidentifysynergiestheycancapturewithoutdelay,evenwithimperfectinstitutions,governance,andeconomicstructures.3.2.SectoraltransitionswithprivatesectormobilizationcreateopportunitiestoreduceGHGemissionswhilecontributingtodevelopmentIfwelldesigned,short-termclimateactionsthatreduceemissionscanacceleratelocaleconomicgrowthanddevelopmentwhilecontributingtothegloballong-termtemperaturegoal.Cleanerandmoreefficienttechnologiesareoftenmoreproductiveandlessexpensivethanfossil-fueltechnologies,andthebarrierstomoreresilientandlower-carbondevelopmentarealsobarrierstoeconomictransformationandeconomicgrowth.11ThissectionhighlightsthemainsynergiestheCCDRsidentifybetweendevelopmentandclimateaction,whicharefoundinthekeytransitionsidentifiedintheCCAP.Climatepoliciescanalsocreatetrade-offsandhavenegativepovertyanddistributionalconsequences,andsorequirecarefuldesignandcomplementaryinterventions.InArgentina,China,Peru,thePhilippines,Vietnam,andEgypt,carbonpricingandfossilfuelsubsidyremovalcouldincreasepovertyintheshortrunthroughhigherprices,unlesstheseeffectsaremitigatedbyrecyclingaportionoffiscalsavingsorcarbonrevenueintocompensationforpoorerhouseholds.Removingandrepurposingwatersubsidiesthatencourageexcessivewaterconsumption,especiallyinagriculture,isalsoimportantforlong-termresilience,butmayhavenegativeimplicationsforsmallfarmersintheshortterm.Tothatend,someoftheCCDRs(Morocco,Pakistan,Iraq)recommendofferingsupporttofacilitatetheshifttolesswater-consumingcropsormoreefficientirrigation11Foraframeworkidentifyingtheopportunitiesforclimateactiontofacilitatedevelopment,seeWorldBank.2012.InclusiveGreenGrowth:ThePathwaytoSustainableDevelopment.Theseopportunitiescomefromacceleratingtheaccumulationofphysical,human,ornaturalcapital;improvingefficiencybyremovingdistortions;oracceleratinginnovationandproductivitygrowth.23ClimateandDevelopment:AnAgendaforActionsystems.Forlargefossilfuelproducers,suchasSouthAfrica,mineandpowerplantclosurescanhavenegative—andoftenspatiallyconcentrated—impactsonsomecommunitiesintheshortterm,requiringextensiveredistributiontocompensateaffectedworkersandcommunities(seealsosection4.4).FIGURE6:Evolutionoftheshareofrenewableenergyandcoalcapacityinasubsetofcountriesa)ShareofrenewableenergycapacityEastAsia&PaciﬁcChinaVietnamEurope&CentralAsiaTürkiyeMiddleEast&NorthAfricaEgypt,ArabRep.IraqJordanMoroccoSouthAsiaBangladeshSub-SaharanAfricaBurkinaFasoGhanaMalawiMaliMauritaniaNigerSouthAfrica2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year2020203020402050Year0%20%40%60%80%100%Renewablecapacityinstalled(shareoftotal)BaselineLow-carbondevelopmentpathwayb)InstalledcoalcapacityEastAsia&PaciﬁcChina202020302040Year-2000200Installedcoalcapacity(GW)EastAsia&PaciﬁcVietnamEurope&CentralAsiaTürkiyeMiddleEast&NorthAfricaMoroccoSouthAsiaBangladeshSub-SaharanAfricaMalawiNigerSouthAfrica202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year-20020Installedcoalcapacity(GW)BaselineLow-carbondevelopmentpathwayNotes:Inpanela,year2020dataaresettoequalmodeledresultsfor2021forIraqandJordan.Renewables=solar,on-andoffshorewind,andhydropower.Inpanelb,theverticalscaleforinstalledcapacityisdifferentforChina.OpportunitiesforrenewableenergyandcleancookingAllcountrieshaveanenormousopportunitytoexpandrenewableenergytomeetgrowingdemandforelectricity,improveenergysecurity,andreduceemissionsintheenergysector,butrequirelargeinvestmentsinpowergridsandinterconnections.Powersectormodelinginseveralcountriesshowsthatsolarandwindenergywillplayasignificantpartinmeetingthegrowingdemandforelectricitythisdecadeatthelowestcosttoconsumers.12Figure6aillustratesthatineverybaselinescenario,withoutconsideringclimateobjectives,expandingsolarandwindenergy12Powersectormodelingincludesasetoftechnologies,includingfossilfuels(oil,gas,coal),renewableenergy(hydropower,solar,wind,geothermalenergy),otherdecarbonizedtechnologies(nuclear,gaswithcarboncaptureandstorage,insomecaseshydrogen),andelectricitystoragetechnologies(batteries,pumpedhydropower).24ClimateandDevelopment:AnAgendaforActionispartoftheleast-coststrategytomeetgrowingelectricitydemand.Theroleofsolarandwindenergygrowsevenlargerinalow-carbonscenario,inwhichtheyrepresentalmostallnewcapacityadditions.IllustratingtheaggregatecapacityinalltheCCDRcountriesinthebaselineandlow-carbondevelopmentscenarios,figure7showsthedecliningroleofcoalpower(seealsofigure6b)andgrowthinsolarandwind,withothertechnologiesplayingastableorlimitedrole.13Batteryenergystorageplaysakeyroleinmanyofthelow-carbonscenarios,reachingavolumemuchlargerthanthecurrentmarket(figure8).FIGURE7:Aggregatedpowergenerationcapacityinstalledinbaselineandlow-carbondevelopmentscenariosinselectedcountriesBaselineLow-carbondevelopmentpathway20202025203020352040Year20202025203020352040Year01234567Installedcapacity(terawatts)EnergysourceRenewablesNuclearOilGasCoalNotes:Theambitionlevelandtimingoftheenergytransitionsanalysesvarybycountry.Somelow-carbondevelopmentpathwayswerenotdesignedtoachievenet-zeroemissionsbymid-century.Thisfiguredescribestheenergytransitionthatresultedfromtheselow-carbonanalysesinaggregatebutshouldnotbeinterpretedasaprescriptionforlowcarbondevelopment.Someofthenaturalgascapacityincludescarboncaptureandstorageabatement.Withintheanalyses,nucleardeploymentreflectsthecommitmentsofgovernments.Totalcapacityishigherinthelow-carbondevelopmentpathway,duetolowercapacityfactorandincreaseddemandfromelectrificationinothersectors.Countriesincludedinthefigureare:Angola,Bangladesh,BurkinaFaso,China,Egypt,Ghana,Iraq,Jordan,Malawi,Mali,Mauritania,Morocco,Niger,SouthAfrica,Türkiye,andVietnam.FIGURE8:BatteryenergystoragecapacityforselectedcountriesEastAsia&PaciﬁcVietnamEurope&CentralAsiaTürkiyeMiddleEast&NorthAfricaEgypt,ArabRep.IraqJordanMoroccoSouthAsiaBangladeshSub-SaharanAfricaAngolaBurkinaFasoGhanaMaliMauritaniaNigerSouthAfrica202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040Year202020302040YearInstalledcapacity(GW)0102030405060Note:ThefigureshowsbatterystorageresultsfromtheWorldBank’sEnergyPlanningModel.13Forsomecountries,likeMoroccoandTürkiye,thepowersystemisfullyoralmostfullydecarbonizedin2050withrenewablesharearound80%,withtheresidualpowergenerationfromotherdecarbonizedsources,suchasgaswithcarboncaptureandstorageornuclearenergy.25ClimateandDevelopment:AnAgendaforActionTheshifttowardlow-carbondevelopmentscenariostendstomoderatelyincreasethepresentvalueofthesystemcosts—thatis,thefixedcostofnewgenerationandstorageandthevariablecostsofproducingelectricity—buttheincreaseinupfrontcapitalcostrisesmuchmoresubstantially,makingfinancingamajorchallengeinthetransition(chapter4).Thisisespeciallytrueincountrieswithayoungcoalpowerfleet(China)whereexitingfromcoalmeansretiringcoalpowerplantsearly.Inothercountries,suchasSouthAfrica,wherethecoalpowerfleetisnearingitsendoflifetime,additionalinvestmentneedswillbesmallerasthecountrywillhavetoinvestinnewgenerationeitherway.Butcountriesoftenlackthepoliciesandinstitutionsrequiredtoattractormobilizethefinancingtheyneedtobeabletoinvestinrenewableenergyataspeedandscalethatwillensuretheycanmeettheirclimategoalsatthelowestcost.ManyoftheCCDRsrecommendacceleratingrenewableenergydevelopmentasthelowest-costwaytomeetgrowingdemand,withtheadditionalbenefitsofimprovingenergysecurityandaccess,reducingenergyimportbills,improvinglong-termbalanceofpayments,andcreatingdomesticjobs.InIraq,energycostsperkilowatthourarelowerinscenarioswithahighershareofrenewableenergythanbusiness-as-usualscenarios.However,thisisonlytrueuptoaspecificlevelofpenetrationofrenewableenergy(31percent);beyondthis,decarbonizationbecomesmoreexpensive.Yetsomecountries,suchasTürkiye,faceinertiawhenreconsideringuneconomicfossilfuelprojectsandstillplantoincreasefossilfuelpowergenerationcapacity,whichcouldcreatemajoreconomiccostsinthenextdecades.Realizingrenewableenergypotentialwillrequireaparallelefforttostrengthenelectricutilities,aswellaslargeinvestmentsinthegridandinterconnections,flexibilityinenergysupplyanddemand,andelectricitystorage.Governmentsshouldprioritizefinanciallyviableutilitiesthatareabletopartnerwiththeprivatesectortodeploycleanenergyandcontinueinvestmentsinenergyaccessandresilientnetworkinfrastructure.14Forexample,Ghanaistakingstepstoaddresstheprecariousfinancialstateofitsutilities,recognizingthisasanobstacletodevelopingrenewableenergy.InChina,electricitymarketreformsandtheintegrationofprovincialandregionalpowermarketswouldoptimizeoverallcapacityutilization,reducesystemcosts,andenhanceflexibility,enablingamoreefficientintegrationofrenewableenergy,andshifttheroleofitslargecoalfleet.Powersystemswithalargeshareofrenewables—suchasTürkiye’s—alsorequireinvestmentsintheelectricitygrid(usuallyfrompublicresources)andinsourcesofflexibility,fromdemandmanagementtostorage.Regionalpowertrade,whichexpandsaccesstolower-costandlower-emissionelectricity,alsorequiressignificantreformandinvestment(box1).Thetransitionisexposedtorisksfrombottlenecksinkeygreensupplychains.Thegrowthinrenewableenergyandstoragerequiresrapidgrowthintheproductioncapacityofkeyproducts,suchassolarpanelsandbatteries(figure8),aswellastheirrecycling.Strongdemandhasledtorapidincreaseintheexpectedproductioncapacityfor2030.15Forinstance,theproductioncapacityoflithium-ionbatteriesisexpectedtoreach5.9terawatthoursby2030(comparedto0.8in2021).16However,bottleneckslinkedtorawmaterials,keycomponents,orfinishedproductsareachallengeaswellasanopportunityformanycountries.14Becausefinanciallyunviableutilitiescannotaccessaffordableloansfornetworkinfrastructure,thisimpactsthecostofdebtandequityforprivatesector-ledrenewableenergy,directlyimpactingconsumeraffordability.Whilefinancialviabilityisbeingrestored,creditenhancementcouldallowutilitiestoborrowataffordableratesandde-riskinginstruments—suchasliquidityandterminationguaranteesorfirstloss—couldmitigateriskstoprivatesectorinvestment.15Forbatteries,thisdemandismostlylinkedtoe-mobilitythatrepresents(andwillcontinuetorepresent)mostofthedemand.16Yu,AandMarjolin,A(April12,2022)“Investmentinlithium-ionbatteriescoulddeliver5.9TWhcapacityby2030.”S&PGlobalMarketIntelligence.https://www.spglobal.com/marketintelligence/en/news-insights/research/investment-in-lithium-ion-batteries-could-deliver-5-point-9-twh-capacity-by-2030.26ClimateandDevelopment:AnAgendaforActionForcountrieswithenergyaccessdeficits,universalaccesstoelectricityandcleancookingaredevelopmentprioritiesthatarecompatiblewithlow-emissionsdevelopmentandprovidehealthbenefits.Cleancookingcanreplacetraditionalbiomassuseandreducedeforestation,improvinghealthandwell-beingforpeoplelivinginorclosetopoverty.IntheSahel,gridandoff-gridrenewablescouldbringaffordable,reliableelectricitytothetwo-thirdsofthepopulationcurrentlywithoutaccess.InRwanda,introducingefficientcookstovesandothercleancookingtechnologieswillreducetheincidenceofrespiratorydiseasesinthemorethan80percentofhouseholdsthatrelyonwoodfortheircookingfuel.Opportunitiesintransport,buildings,andindustriesfromelectrificationandenergyefficiencyLow-carbonscenariosintheCCDRsincludeelectrificationofenergyenduse,suchasintransport,buildings,andindustries.Aswellasimprovingenergyefficiency,electrificationdeliversGHGemissionreductionswhencombinedwithactiontoreducethecarbonintensityofthepowersector.Aselectrificationincreasesgrowthinelectricitydemand,moreinvestmentisneededinthepowersystem.ComplementingelectrificationwithenergyefficiencyinvestmentsandregulationsisthereforeastrongfocusoftheCCDRs.Energyefficiencyisanessentialtoolforharmonizingclimateanddevelopmentobjectives;butmostcountriesneedtoimprovemarketsignalsthroughpoliciesandpricingtoattractefficiencyinvestmentsatscale.LICsandMICsinallregionsneednewenergysourcestomeetrisingdemandamidsecurityandaffordabilityconcernsexacerbatedbycurrentglobalcrises.Cost-effectiveinterventionstoincreaseenergyefficiencyormanageenergydemandcanhelpcountriesmeetthischallenge.Energyefficiencyandotherdemand-sidemanagementapproachesalsomakedecarbonizationofthepowersectormoreaffordable,improveenergysecuritybyreducingexposuretovolatilefuelprices,andreduceemissionsfromfossilfuelcombustion.InTürkiye,Box1:ThepotentialofregionalpowertradeIncreasingpowertradebetweenBhutan,Bangladesh,India,andNepalmakeseconomicandenvironmentalsense.Asynchroniesofdemandandsupplyoffersignificantpotentialbenefitsfromtrade.IndiaandBangladeshcanusehydropowerfromNepalandBhutantomeetseasonalsummerpeaksatlowercost,whilethelattertwocanimportpowertofirmupsupplyduringthedrywintermonths,whenhydroelectricoutputislow.Projectednetelectricitytradeflowsoverthenextdecadeareexpectedtogeneratesignificantannualeconomicbenefits.Thefourcountrieshavebeenworkingonaframeworkforcross-borderelectricitytradingsince2014.IndiaandBhutanhavealong-standingagreementunderwhichIndiaimportsapproximately1,400megawattsayear,allowingBhutantosignificantlydevelopitshydropowersystem.NepalandIndiahaverecentlysignedamemorandumofunderstandingforcross-borderelectricitytrade.RegionalpowerintegrationcanplayasimilarlyimportantroleforWestAfricanPowerPoolmembersincludingGhana,BurkinaFaso,Mali,andNiger,aswellasneighboringMauritania.TheWestAfricanPowerPool,whichcovers14countriesfromNigeriatoSenegalisanefforttocreateaunifiedregionalelectricitymarket.By2025,theregionaimstobeinterconnected,pavingthewayforregionalpowertrade.Torealizethispotential,countrieswillhavetoestablishcommercialandoperatingframeworksandensurethatutilitieshavethefinancialstrengthtobecredibletradecounterpartiesandhonortheirpaymentobligations.27ClimateandDevelopment:AnAgendaforActionelectrifyingbuildingswithoutincreasingenergyefficiencywouldputsignificantpressureonthepowersystemandcouldmorethandoubleelectricitygenerationinvestmentneeds.InKazakhstan,energyefficiencyimprovementsinkeysectorscanachievetotalsystemcostsavingsofover$70billionintheperiodto2060(figure9).FIGURE9:EnergyconsumptioninKazakhstaninalow-carbondevelopmentscenariowithandwithoutenergyefficiency,bysector0100200300400500600700800202020252030203520402045205020552060PetajoulesIndustryTransportBuildingsNotes:Solidlinesshowenergyconsumptioninanetzeroby2060scenariowithoutenergyefficiency.Dashedlinesshowenergyconsumptioninanetzeroby2060scenariowithenergyefficiency.ManyoftheCCDRshighlighttheneedtoimproveenergyefficiencyinthebuildingsector.InthePhilippines,improvingenergyefficiencyinresidential,commercial,andpublicbuildingsplaysacriticalroleintheenergytransitionandmoderatingfutureelectricitydemand.Thiscanbethroughregulations(forexample,byenforcingenergy-efficientbuildingcodesandminimumperformancestandardsforairconditionersandmajorappliances)andincentives,suchasrebatesforpurchasinghigh-efficiencyappliancesandacceleratedpermittingprocessforhigh-classgreenbuildings.Co-benefitsincludeloweremissions,householdenergycosts,andexposuretoindoorairpollution,andhighercapacitytowithstandhotterandcolderextremetemperatures.InTürkiye,forexample,therearecost-savingopportunitiestoimprovebuildingenergyefficiencywhilealsoperforminglife-savingseismicretrofits.Improvingindustrialenergyefficiencythroughaffordabletechnologysolutionscontributestodecarbonizationwhileincreasingproductivityandstrengtheningexportcompetitiveness.Toimproveenergyefficiency,theKazakhstanCCDRrecommendsadoptingavailabletechnologiesandsoftwarefordeepenergyauditsandtodigitizeenergyusedatatomobilizemanagementinformationsystems,informlineoperators,andprovidepolicymakerswithaggregateddata.InBangladesh,energyefficiencysolutionscanreduceenergyconsumptionintheready-madegarmentandtextilesectorbyaround30percentandincreaseproductivityby10–15percent.Whileamodalshiftawayfromroad-basedvehicletransportthroughmulti-modality(forpassengers)andinter-modality(forfreight)istheprimarywin-winfordevelopmentandclimate,improvingfuelefficiencyandelectrifyingvehicleswillalsoplayacrucialroleinthetransition.ManyoftheCCDRs(Kazakhstan,Peru,Türkiye,Vietnam)highlighttheAvoid-Shift-Improve28ClimateandDevelopment:AnAgendaforActionframework.Thisinvolvesreducingdemandfortransportthroughlanduseandurbanplanningortechnology(avoid),alongwithmodalshiftsfromprivatevehiclestopublicandnonmotorizedtransport(shift),andimprovedfuelefficiencyandelectrificationofvehicles(improve)toreducecongestion,airpollution,andGHGemissions,especiallywhencombinedwithincreasinglylow-carbonelectricity.AsidentifiedintheChinaCCDR,incentivizingprivatesectorinvestmentsinfuel-savingtechnologiesandelectrification,digitalization/automationforoperatingefficiency,andbehavioralchangecanhelpcountriesimproveenergyefficiencyinthetransportsector.Similarly,theVietnamCCDRrecognizesthemajorroleoftheprivatesectorindecarbonizingtransportandrecommendsthatthegovernmentdevelopalegalframeworkfortransitioningtoelectricvehicles(EVs),withcleartargetsandplanssupportedbyacombinationofregulationsandfiscalincentivescoveringthesupplyside(manufacturing),demandside(purchaseandusage),infrastructure,andfinancing.RaisingGhana’smodestNDCambitionsonvehiclefuelefficiencystandardsandimportregulationswouldincreaseproductivity,improveroadsafety,andaddressairqualityconcerns,whilealsocontributingsubstantiallytodecarbonizationefforts.InTürkiye,theCCDRhighlightsopportunitiesfromintermodalityandshifttorailtransport,notingthattrucksaccountfor72percentofallton-kilometerstransportedinthecountry,comparedto4percentforrailfreight,despitethetripdistancesandcommodityprofilesbeinggenerallyfavorabletorailuse.Ascitiesgrow,integratedspatialplanningtoensurethatthegrowthiscompactandresource-efficientwillhelpavoidlockingintolow-density,costly,andemissions-intensivesprawlthatwillbehardtocorrectinthefuture.Urbanareasareresponsiblefornearlythree-quartersofemissionstoday,afigurethatislikelytoincreaseas2.5billionpeoplejointheglobalurbanpopulationby2050,mostlyinLICsandMICs.ResearchfortheChinaCCDRfoundastrongnegativerelationshipbetweenurbandensityandpercapitaemissions.Whenwell-coordinatedwithpublicandnonmotorizedtransportation,urbandensityenablesshortertrips(avoid)andmakesmasstransitmoreviable(shift).Italsoreducestheembodiedemissionsassociatedwithnewinfrastructuresuchasbuildings,roads,bridges,andpipes,enablesgreaterbuildingenergyefficiency,andcanreduceencroachmentontoforestandagriculturalland.TheSouthAfricaCCDRfindsthatimplementingclimate-smarturbanpolicies—suchaslanduseplanning,compacturbanforms,greenbuildings,andpublicmasstransit—canreduceenergyconsumption,GHGemissions,andpluvialfloodrisk.Behaviorswillplayakeyroleinmakingdevelopmentandclimateobjectivescompatible.TheCCDRsidentifytheimportanceofdemandandconsumptionpatterns—forexample,forenergyuseinbuildings,dietandfoodwaste,nonmotorizedtransportation,orprioritizingproductsthatrespectcertainnorms,suchasdeforestation-freeagriculturalproducts,orgoodsproducedwithrenewableenergy.Thisemphasizestheimportanceofcitizenparticipation,includingpoorandvulnerablepopulations,bothinpublicdebatesaboutclimateactionandincommunity-targetedinterventions(Türkiye,Vietnam).Thelatterrangefromawareness-raisingandbehavior-changeinitiatives(forexample,usingexistingbehaviorchangeplatforms,whicharepresentinmostsocialprotectionprojects)toprovidingemergencyfoodandnutritionsupportwhenfoodinsecurityisacute.29ClimateandDevelopment:AnAgendaforActionBox2:ReducingmethaneemissionsisvitaltoachieveglobalclimatetargetsMorethan121countrieshavecommittedtocollectiveactiontoreduceglobalmethaneemissionsby30percentby2030(equivalenttoshiftingtheglobaltransportsectortonetzerocarbondioxideemissions)aspartoftheGlobalMethanePledgelaunchedattheUnitedNations’26thClimateChangeConference,COP26.aForsomeofthecountriescoveredbythefirstsetofCCDRs,methanerepresentsasignificantshareofoverallemissions,notonlyintheenergysector,butalsofromlivestock,riceproduction,andwaste.InArgentina,methaneemissionsaccountedfor26percentofGHGsin2019,with56percentcomingfromagriculture,livestock,forestry,andotherlanduse,14percentfromwaste,and30percentfromenergyproduction(includingfugitiveemissions).Opportunitiesinclude:»Abatingthegassupplychainbycapturingfugitivegases:inIraq,morethan70percentofmethaneemissionscouldbeabatedfromoilandgasoperationswithexistingtechnologiesatnonetcost»Includingmethaneinemissionstrading(Kazakhstan)»Usingthebestavailabletechnologiesinnewindustrialinstallations»Improvedfarmingtechniques:alternatewettinganddryinginriceproductionsimultaneouslyreduceswateruseandmethaneemissions(Vietnam)»Betterlivestockmanagement,throughimprovedpastures,feed,andanimalhealth»Improvedmanuremanagement»Improvedmunicipalwastecollection,sorting,andtreatment,includingcapturingmethanefromlandfillsites(Bangladesh)toboostrenewableenergygenerationandreducelocalairpollution.FigureB2.1:MethaneemissionspersectorintheCCDRcountries,201902004006008001,0001,2001,4001,6001,800Emissions(MtCO2e)ChinaBrazilIndonesiaIraqPakistanArgentinaSouthAfricaBangladeshEgypt,ArabRep.VietnamKazakhstanPhilippinesTürkiyeAngolaChadPeruMozambiqueNigerNepalMaliCameroonBurkinaFasoGhanaMoroccoHondurasMauritaniaJordanMalawiRwanda27%21%12%42%21%8%37%27%15%49%44%60%26%15%50%34%7%18%15%13%17%31%11%26%29%41%17%24%8%Methaneemissions(percentofcountrytotal)SectorFugitiveemissionsEnergyAgricultureLandusechangeandforestryWasteOthers=ForthcomingSource:ClimateWatch,WorldResourcesInstitute2022https://www.climatewatchdata.orgNote:MtCO2e=milliontonsofcarbondioxideequivalentaSeemoreonWorldBankGroupinterventionstoreducemethaneemissionsonwww.worldbank.org/methane.30ClimateandDevelopment:AnAgendaforActionOpportunitiesinlanduse,forestry,agriculture,andwaterInadditiontoenhancingtheroleofforestsascarbonsinks,actionstoprotectandrestoreforestsbringmultipleeconomicbenefits.Economicgrowthhasoftencomeatthecostofnaturalcapitaldegradation.Butthereisincreasingevidencethatreversingdeforestationtrendscangohandinhandwithjobcreationandeconomicgrowth.InRwanda,forexample,protectingforests—thenaturalhabitatformountaingorillasandotherecotourismattractions—isessentialforthehealthofthecountry’stourismindustry,whichgenerated21percentoftotalexportrevenueover2015–19.InPeru,whereagriculturerepresents90percentoftotaldeforestedarea,movingtoazero-carbonforestsectorcouldgenerateanestimated85,000jobsperyearby2050andbring$3.5billioninbenefitsfromrecoveredecosystemservicesanddevelopingthewoodvaluechain.Improvinglanduseplanningandagricultureinnovationsystems,promotingintensification,andintegratingsmallholdersandcommunalorganizationsintoagriculturevaluechainscannotonlyhelpreversedeforestation,butboostincomesandaccesstomarketsaswell.Countriesalsoneedtoadapttodemandsorrequirementsfordeforestation-freecommodityproducts.Argentina’simportantbeefandsoyexportsareincreasinglyunderpressuretodemonstratedeforestation-freeproduction;butthecountrycannotyetmeetthisstandard,puttingexportearningsatrisk.Controllingdeforestationwillprovidebenefitstocommodityproducersbykeepingsoyandbeeftradeoptionsopen.TheNepalCCDRsimilarlyhasastrongforestrynarrative,featuringcommunity-basedgroupssuccessfullyadvancingreforestationandeconomicdevelopment.Inmanycountries,forestlandscapesofferanimportantoffsetforGHGemissionsfromothersectors.InTürkiye,recenteffortshaveincreasedforestedareaby0.5percentover2010–20.Andcontinuedeffortstoincreaselandscaperestoration,mainstreamsustainableforestmanagement,reduceillegallogging,optimizeharvestratesandstorageinlong-livedwoodproducts,promoteefficientbiomassfueluse,andstrengthenfiremanagementcangenerategreaternegativeemissionsandhelpthecountryreachitsobjectiveofnetzeroemissionsby2053.Morocco’sReforestationProgramproducessignificantcarbonbenefitsandpromotesadaptationbyprioritizingwatershedsupstreamfromlargedamstoreducesiltation.ItisclearfromNDCsandothercountrystrategiesandpoliciesthatmanycountriesrecognizethatagricultureplaysacriticalroleinreducingemissionsandmeetingtheirclimategoals.Similarly,severaloftheproposedmeasuresincludedintheCCDRsformitigatingGHGemissionswouldalsoaugmentcountries’resiliencetoclimatechange.CurbingdeforestationintheAmazonForestwouldalsolowerclimaterisksforagricultureacrosslargepartsoftheSouthAmericancontinent,includingimpactsfromerosionandchangesintemperatureandprecipitation.Vietnam’sagriculturesectoristhesecond-largestcontributorofGHGemissions,contributingaround19percentoftotalemissionsin2020,anditsCCDRnotestheopportunitytorepurposepublicexpenditureinagriculturetosupporttheadoptionoflower-emittingcropvarietiesandproductiontechnologies.Thisincludesalternatewettinganddryinginriceproduction,whichalsoprovidesmajoradaptionbenefitsduetousinglesswaterandimprovingsoilquality.China’sCCDRrecommendsasetofinterventionsthatreduceemissionsandhaveadaptationco-benefits,includingrepurposingsubsidiestosupportlow-carbonlanduse,cuttingfoodlossandwaste,increasingefficiencyintradeandfoodsupply,andreusingagriculturalwaste.OpportunitiesingreenvaluechainsandprivatesectordevelopmentGlobalmarketsincreasinglydemandgreenerandlower-carboncontentproducts,andtheglobaltransitionalsocreatesmajoropportunitiestogrowandexportingreenvaluechains,forcountriesatallincomelevels.Withalargeshareoftheworldeconomyundernetzeroemissionpledges,31ClimateandDevelopment:AnAgendaforActiontechnologiesthatarecrucialfordecarbonization—suchassolar,wind,hydrogen,andEVs—areexpectedtoseedrasticgrowthoverthecomingdecades.Sucharapidscale-upinthesecriticalgreentechnologieshassignificantgrowthimplicationsfortheindustriesandcountriesinvolvedinallstagesoftheirproduction.Andbecausemanycomponentsassociatedwithgreentechnologyvaluechainsaretechnologicallysophisticatedandhaveknowledgespilloveropportunities,countriesthatcultivatecompetitivenessinthesehigher-complexityproductscouldbenefitfromtechnologicalupgradingandexportgrowthopportunities.SeveraloftheCCDRsexplorecountries’strengthsandopportunitiestodiversifyintokeyproductsandcomponentsassociatedwiththesolar,wind,andEVvaluechains,aswellasotherenvironmentalgoods.Countrieswithstrongmanufacturingbases,suchasChina,Morocco,andTürkiye(figure10),haveavarietyofcompetitivestrengthsintheEVandwindvaluechains.Chinaisalreadythelargestproducerofrenewableenergyequipmentandkeepsinvestingmassivelyinenergyresearch,development,andinnovation.Thesecountrieshavenumerousopportunitiesfordiversifyingfurtherintoexportmarketsbydevelopingcompetitivenessinproductsthatrequiresimilarproductivecapabilities.Thosewithlessadvancedandlessexport-orientedmanufacturingindustries,suchasArgentina(figure10)andKazakhstan,haveamoreselectsetofstrengthsandthereforeopportunitiesinlower-complexityproducts,components,andminerals.Policiestounlockfurthercompetitivenessandgrowthopportunitiesarehighlycountryandindustry-specific,withhighimporttariffs,non-tariffbarriers,regulatoryrestrictionsonenvironmentalservicestechnicians,andinadequatestandardsandqualityinfrastructureframeworksremainingkeybarrierstocountries’exportcompetitiveness.Insomecases,complementaryinvestmentsareneeded.Türkiye’srelativelyundevelopedcharginginfrastructurecould,forexample,slowdownthegrowthofitsnascentEVindustry.FIGURE10:Exportstrengthsinthesolar,windandEVvaluechainsforTürkiye(left)andArgentina(right)RevealedcomparativeadvantageRevealedcomparativeadvantageTradedvaluechainproductsNotes:TheProductComplexityIndexprovidesanindicationofaproduct’stechnologicalsophistication.Revealedcomparativeadvantagereflectsacountry’sexportshareinaproductrelativetotheglobalaverage.Bubblesizereflectscountrytradevolume.Countriesendowedwithcriticalmineralsrequiredforgreentechnologiescouldseewindfallgains,particularlyiftheycanextractthemsustainably.Theprojectedgrowthingreentechnologiesisexpectedtodriveasignificantincreaseindemandforlithium,graphite,nickel,cobalt,manganese,andotherminerals.Consideredcriticalminerals,theseareessentialinputsforgreentechnologieswithuncertainsupplyduetogeological,geopolitical,environmental,andotherconstraints.Argentina,withtheworld’sthirdlargestlithiumreserves,isanexampleofaCCDRcountrywith32ClimateandDevelopment:AnAgendaforActionrichendowmentsofcriticalmineralsfortheEVvaluechain.17However,itisimportantthatthesemineralsareexploredusingresponsibleandsustainablemanagementpractices—includinggoodwatermanagement—ascountriesotherwiserisksignificantenvironmental,social,andgovernancechallenges.1817TheArgentinaCCDRfindsthatby2030itslithiumsupplycouldmeetbetween12%(conservativescenario)and19%(optimisticscenario)ofglobaldemand,becomingarelevantplayerintheglobalenergytransition.18Climate-smartminingpracticesinclude:usingrenewableenergytopowerminingmachineryandtransportation;encouraginginnovationtodriveresourceandenergyefficiency;adoptingforest-smartminingpracticestoavoidandminimizenegativeimpactstoforestedareas;androbustlymanaginggeologicaldataandenvironmentalimpacts.Box3:Climate-developmentopportunitiesfortheprivatesectorThesynergiesbetweendevelopmentandclimateactionhighlightedintheCCDRsdependonprivatesectorinvestmentsandinnovation,butalsocreatemajoropportunitiesforprivatesectordevelopment,increasedincomeandexports,andjobcreation.Intheenergysector,thelargegrowthinrenewableenergycapacityisexpectedtobelargelyfinancedbytheprivatesector,whichcanalsocontributetoinnovationinstorageanddemand-sidemanagement.Intransportandbuildings,theprivatesectorisalsoexpectedtoplayaleadingrole,withrapidinnovationandgrowthalreadyhappeningintheEVmarket.Forexample,electrictwo-andthree-wheelersarestartingtoreplacetraditionalvehiclesinlower-incomemarkets,andtheglobalmarketforelectriccars,buses,andothervehiclesoffersanopportunity,especiallyforMICswithapre-existingstrongindustrialsector.Türkiye,forexample,isalreadyexportingelectricbusesandhasexportedtheworld’sbiggestelectricferryboat.Effortstoincreaseenergyefficiencyandresilienceinbuildingsisanothermajoropportunityfortheprivatesector,andespeciallysmallandmedium-sizedenterprises(SMEs),andcouldcreatealargenumberofjobs.SeveraloftheCCDRsnotelargeemploymentgainsintheconstructionsector.Climate-smartagriculture,forestry,andmoregenerallylandscapemanagement—includingenvironmentalandwatershedrestoration—cannotonlybuildresilienceandreduceemissions,butalsocreatemanybusinessopportunitiesandjobs(forexample,anestimated85,000jobsperyearby2050inPeru),includinginruralareaswheresuchopportunitiesarerarer,andpovertyishigher.Beyondspecificsectorsandtechnologies,theglobaltransitiontowardlower-carboneconomiescreatesbothrisksandopportunitiesfortheprivatesector.Changesinconsumerdemandinmajormarkets,newclimate-informedimport-marketregulations,andtraderules—suchastheEuropeanUnion’s(EU)CarbonBorderAdjustmentMechanism(CBAM)—canthreatenexistingpositions,butofferopportunitiesforgrowingexportsandsales.Thisisespeciallysoforcountrieswithlowcarbonintensity,whichwillbeabletomonitorandcrediblyreportontheemissions(ordeforestation)embeddedintheirgoodsandservices.SMEsandsmallproducersfacehigherbarrierstoincludeclimatechangeintheirstrategies,copewithclimatechangeimpacts,andnavigatethetransition;andfirmsurveysinmanyoftheCCDRcountrieshighlightthattheyarelesspreparedthanlargerfirms.ConsideringtheroleofSMEsinjobcreationandlong-termdevelopment,supportingthemisapriorityinmanycountries.Toinvestinthesesectors,theprivatesectorneedsclearsignalsandincentivesfromthepublicsector.Thesecouldberegulatory(vehicleemissionsstandards,buildingcodes,financialsectorstandards,CBAMs,andsoon)orfiscal(carbontaxes,fossilfuelsubsidyphaseouts,publicinvestmentsincertaintechnologies,andsoon).Addressingdemand-sidechallenges—suchasalackofmarketawareness,tenormismatch,anddisparitiesbetweenprivateandsocialcosts—arealsoprerequisitesforstrongprivatesectorparticipation.33ClimateandDevelopment:AnAgendaforActionDespiteuncertaintyaroundtimingandcosts,greenhydrogenhasaroletoplayandpresentsanopportunityforcountriestotapintofutureglobaldemand.TheInternationalEnergyAgency’snetzeroemissionsscenarioprojectsthat,in2050,hydrogenandhydrogen-basedfuelscouldaccountfor10percentofglobalfinalenergydemandforelectricity,transport,construction,andsyntheticfuelproduction.SomeCCDRs(Morocco,Egypt)illustratetheproductionandexportopportunitiesthispresents,whileothers(Türkiye,China)showthedemandispresent,especiallywithinindustrialandtransportstrategies.Somecountries(Bangladesh)highlighttheimportanceofeducationandskillsdevelopmenttosupporttherequiredtechnologicaladvancements.Mauritaniahasamatureminingindustrysincethe1960sandadevelopedsteelsectorwherethereissomediscussionabouttransformingitintoanichegreensteelproducerusinghydrogen-basedtechnology.CCDRsalsodiscusstherisksanduncertaintiesregardingthefutureofgreenhydrogen,includingfuturedemand,productionandtransportationcosts,andtheimpactonwaterconsumption,especiallyinwater-scarcecountries.3.3.MostcountriescanfollowdevelopmentpathwaysthatalignwithajusttransitionandtheParisAgreementwithoutmajortrade-offsMostoftheCCDRsexploreambitiouslow-carbonstrategiesthoughthetransitiontimingandultimateambitionvarybycountry(figure11a).TheCCDRsadoptdifferentapproachestoexploreillustrativepathwaystowardlow-carbondevelopment,consideringuniquecountrycontextsandincludingclimatecommitments,incomelevels,potentialforrenewableenergyorland-basedemissionreductions,anddomesticdevelopmentpriorities.AchievingtheParisAgreement’sglobalmitigationobjectivesdependsonglobalemissions,sonosinglecountrytrajectorycanbeconsistentwiththeParisAgreementobjectivesonitsown.Theillustrativelow-carbondevelopmentscenariosintheCCDRsreducecountries’GHGemissionsby48percentby2040,comparedtocurrentlevels,and54percent,comparedtothereferencescenarios(figure11b).By2050,reductionswouldbe71and74percent,respectively.WithoutChina—which,duetoitssizeandcurrentemissions,playsakeyroleintotalnumbers—2040emissionsintheCCDRlow-carbonscenarioswouldbereducedby42percent,comparedtocurrentlevels,and65percent,comparedtoreferencescenarios(53and74percent,respectively,by2050).Thelow-carbonstrategiesweredesignedtobemoreambitiousthancurrentNDCs,emphasizingtheimportanceofthisdecadeinachievinglong-termclimateobjectivesandtheneedtoalignshort-termcommitmentswithlong-termpledges.TheCCDRsalsohighlighttheurgencyofacceleratedactionandtheimportanceofaligningshort-termplansandtargetswithlong-termobjectives.WiththeexceptionofChina,theCCDRlow-carbondevelopmentscenarios’2030emissionmilestonesaremoreambitiousthanthoseinthecountries’NDCs(figure11c).19However,eveninthelow-carbondevelopmentscenarios,annualemissionsinCCDRcountriescouldstillreachmorethan5gigatonsofcarbondioxideequivalentby2050.AchievingtheParisAgreement’sglobalmitigationobjectivesandreducingnetglobalemissionstozeroinoraround2050wouldrequireenhancedsupportfromHICstohelpLICsandMICsincreasetheirambitionbeyondtheCCDRlow-carbondevelopmentpathways.19ForChina,thelow-carbondevelopmentscenariointheCCDRisalignedwiththecountry’snationalcommitments,includingthe2030peakemissionsgoal.However,theCCDRincludesanaccelerateddecarbonizationscenariothatillustratesthecostsandbenefitsofmoreambitiousaction.34ClimateandDevelopment:AnAgendaforActionFIGURE11:Low-carbonscenariosexploredbytheCCDRsa)GHGemissions,relativetorecentemissionlevels202020252030203520402045205020552060Year0%50%100%150%200%250%Emissions(%of2019or2020)TürkiyeKazakhstanMoroccoBangladeshRwandaPeruChinaVietnamArgentinaGhanaPakistanPhilippinesRecentemissionsNetzeroemissions439%(2050)IncomegroupLowincomeLowermiddleincomeUppermiddleincomeb)TotalGHGemissionsinselectCCDRcountries(representing41percentofglobalemissions)2020/2021CCDRreferencescenarios,2040CCDRlow-carbonpathways,2040CCDRreferencescenarios,2050CCDRlow-carbonpathways,20500246810121416182022ArgentinaBangladeshGhanaKazakhstanMoroccoPakistanPeruPhilippinesRwandaTürkiyeVietnamChinaForthcomingEmissions(GtCO2e)18.621.09.620.75.4Notes:GtCO2e=gigatonsofcarbondioxideequivalent.FortheCCDRsthatdidnotestimateareferencecase(Argentina,Morocco),weuseaverageemissionsfromtheNetworkforGreeningtheFinancialSystem(NGFS)CurrentPoliciesscenarios,harmonizedto2018CAIThistoricaldata.Forthosethatestimatelow-carbonpathwayemissionsoutto2030or2040(Bangladesh,thePhilippines,Türkiye,Vietnam),weconservativelyusethelatestemissionsvalueavailableforallfutureyears.35ClimateandDevelopment:AnAgendaforActionc)EmissionsreductionsinCCDRlow-carbondevelopmentscenarios,comparedto2019or2020emissionlevelsandunconditionalcommitmentsinNDCs-300%-250%-200%-150%-100%-50%0%50%100%150%Emissionsreductionfromrecentlevel(%)EastAsia&PaciﬁcChina203020402050Vietnam203020402050Europe&CentralAsiaKazakhstan203020402050Türkiye203020402050LatinAmerica&CaribbeanArgentina203020402050Peru203020402050MiddleEast&NorthAfricaMorocco203020402050SouthAsiaBangladesh203020402050Pakistan203020402050Sub-SaharanAfricaGhana203020402050Rwanda20302040205050.9%80.2%9.8%21.5%21.5%-9.8%27.4%47.9%81.8%29.2%61.1%91.0%16.1%44.5%64.8%100.2%31.7%72.7%40.7%65.1%89.6%-2.5%-8.0%-8.0%-7.7%-8.0%6.8%51.2%49.5%32.3%-339.0%-109.0%2.1%NetZeroNetZeroNetZeroNetZeroNetZeroNetZeroNetZeroNetZeroNetZeroNetZeroNetZeroI=NDCNote:NDCvaluescorrespondtounconditionalNDCcommitments,comparedtorecentemissions.Low-carbonscenariosintheCCDRsincludecomplementarypoliciescoveringthefivetransitionsidentifiedintheCCAP.20Whilecountriesdifferintheiremissionsstructure,alltheCCDRmitigationstrategiesinclude:decarbonizingthepowersectorbyreducingandretiringcoal-firedgenerationandscalingupsolarandwindpower;increasingtheuseof(increasinglylow-carbon)electricity;higherenergyefficiencyintransportation,cities,andindustry;reducingdeforestationandemissionsfromagriculture;andmaximizingnaturalcarbonsinks.Themacroeconomiceffectsofreducingemissionsaresmall,andoftenpositiveThelow-carbonstrategies’macroeconomiceffectsonGDPandconsumptionremainsmall,eveninthemostambitiousscenarios.TheCCDRanalysissuggeststhat,ifactionsareearlyandwelldesigned,theimpactsofdecarbonizationonGDPandgrowthwillbesmall,rangingfromslightlynegativetoslightlypositive,withmorepositiveoutcomesinenergy-importingcountriesandthosewithlargerenewablepotential,suchasTürkiyeandPeru(figure12).Theimmediateeconomicbenefitsarelinkedtoreducingfuelspendingandimports,thankstoefficiency,electrification,andtheshifttorenewableenergy,whilelaborproductivitygainsandhealthbenefitsarelinked20Thefivekeysystemsare:energy;agriculture,food,water,andland;cities;transport;andmanufacturing.36ClimateandDevelopment:AnAgendaforActiontobetterairqualityandreducedcongestion.InPakistanandNepal,forexample,themovetocleanerenergywouldhavesignificanthealthbenefitsandreduceannualhealthcosts,equivalentto6.5and5percentofGDP,respectively.21Similarly,inthePhilippines,electrifyingjeepneysandbusescouldreduceannualhealthcostsbyupto$315millionin2050.Figure12alsohighlightsthatimpactsonconsumptioncanbelargerthanGDPimpacts—adirectconsequenceoftheincreasedinvestmentneedsforthetransition,especiallyinlower-incomecountries.Theimpactonconsumptionhighlightstheimportanceofmobilizingfinancetominimizetrade-offswithconsumption,butalsotheneedforappropriatecompensationandsocialinterventionstoprotectpoorpeople’sconsumptionandfacilitateajusttransition.Theimplicationsforajusttransitionarediscussedinchapter4.FIGURE12:MacroeconomiceffectsonGDPandconsumptionin2030ofthemostambitiousclimatepoliciesexploredbyselectCCDRs,withoutaccountingforbenefitsfromreducedcarbonemissionsandmitigatedclimatechangea)ForindividualcountriesGDP01234-2-10123Rwanda$798/capNepal$1,155/capPakistan$1,189/capBangladesh$1,962/capGhana$2,206/capVietnam$2,786/capMorocco$3,108/capEgypt,ArabRep.$3,569/capIraq$4,146/capPeru$6,127/capTürkiye$8,536/capArgentina$8,579/capKazakhstan$9,122/capChina$10,435/cap0.490.361.210.183.320.950.17-0.101.003.202.032.081.100.09-1.24-0.790.421.021.020.14-1.740.572.201.032.140.50-0.15Impactsfromclimatechangepolicy(%)Impactsfromclimatechangepolicy(%)HouseholdconsumptionLowincomeLowermiddleincomeUppermiddleincomeb)AggregatedpercountryincomegroupLowincomeLowermiddleincomeUppermiddleincome-2.0-1.5-1.0-0.50.00.51.01.52.02.53.03.54.0GDPLowincomeLowermiddleincomeUppermiddleincome0.5-0.13.30.13.2-1.21.02.2-1.7-0.2Impactsfromclimatechangepolicy(%)HouseholdconsumptionNotes:ImpactsofclimatechangepolicyindeviationfromthebaselinescenarioforGDPandconsumptionin2030usingtheClimatePolicyAssessmentTool(CPAT),MANAGE,orMFMod.Thesesimulationsarederivedfromheterogeneousclimatemitigationscenariosthatarethemostambitiousandwell-designedineachCCDR—forexample,theBangladeshCCDRconsidersa$25carbonpriceforthepowersectorin2030(CPAT),whereasVietnamistestinglargelow-carbondevelopmentinvestmentprogramsinkeysectors,aswellassupportivepolicies,suchasacarbontax,tounlockthegrowthpotentialoftheseinvestments.21In2013,airpollution-inducedlossofwelfarewasrecordedat$2.8billion,equivalenttonearly5%ofNepal’sGDP.37ClimateandDevelopment:AnAgendaforActionButachievinggrowthbenefitsrequirestherightpolicies,andcountrieswillfacesignificantimplementationchallenges.CCDRscomparebaselinescenariosbasedoncurrentpolicieswithillustrativelow-carbondevelopmentscenariosthatincludeasetofpolicychangesandinvestmentsthathaveapositiveimpactonmacroeconomicaggregates.However,ifcountriesdonotmanagelabormarketfrictionsoriftherequiredinvestmentscrowdoutotherinvestments,thecostsofthelow-carbondevelopmentpathwayswillbehigher.InTürkiye,forexample,domesticsavingsincreasetofinanceinvestmentneedsintheresilientandnetzeropathway.Butinascenariowheresavingsdonotincreasesufficiently,investmentsinothersectorsdecrease,erasingasignificantpartoftheeconomicgains.Thiscrowding-outeffectwouldbefurthermagnifiedifcountriesdonotrecyclecarbontaxrevenuesinawaythatsupportsprivatesectorinvestmentoriflargelabormarketfrictionspreventlaborreallocations.Thetransitionhassmall,oftenpositive,impactsonemployment,butthesehidelossesinexposedsectors—especiallyfossilfuel-intensiveones—andgainsinkeysectors,suchasconstructionandservices(figure13).Labordemanddeclinesaregreatestfortheelectricity,gas,mining,andquarryingsectors(Bangladesh,Ghana,Kazakhstan,Pakistan,Peru,Philippines,Türkiye,andVietnam).Brown(polluting)sectorjoblossesoftendisproportionatelyaffectlower-skilled,poor,informal,andinsomecases,womenandrural,workers.InTürkiye,theincidenceofbrownjobsandjobsrequiringupskillingasashareoftotalemploymentisgreaterformalethanforfemaleworkers,at6vs.3and16vs.6percent,respectively.RoughestimatesforChinashowthatupto10–15percentoftheworkforceareemployedincarbon-intensiveindustries,andthatthesearemostlylow-skilledworkerswhowillbeaffectedbythetransition.Employmentestimatesshowadeclineofabout600,000workersinthecoalindustryand2millionjobsinthecurrentenergypoliciesscenariobetween2019and2030.Primarilyaffectinglow-skilledmaleworkersinruralinteriorprovinces,theresultsalsoimplythatthetransitiontoalow-carboneconomywillcreate52millionnewhigh-skilledjobsby2030,whichcouldrequireretrainingandreskilling.FIGURE13:Sectorallabordemandchangesin2030acrosssectors,forselectedcountriesSector-6-4-202468PercentchangeElectricityandgasMiningandquarryingWatersupplyandwastemanagementTransportationandstorageManufacturingInformationandcommunicationActivitiesofhouseholdsasemployersWholesaleandretailtradeRealestateactivitiesAccommodationandfoodserviceactivitiesOtherserviceArts,entertainmentandrecreationFinancialandinsuranceactivitiesPublicadministrationanddefenseConstructionAgriculture,forestryandﬁshingHealthandsocialworkEducationProfessional,scientiﬁcandtechnicalactivitiesAdministrativeandsupportserviceCountryBangladeshChinaKazakhstanPakistanPeruPhilippinesTürkiyeVietnamBangladeshChinaKazakhstanPakistanPeruPhilippinesTürkiyeVietnamNotes:Sectorsareorderedbyaveragelabordemandchangesacrosstheincludedcountries.Thesimulationsshownear-termchangesinsectorallabordemandrelativetoabusiness-as-usualscenario,stemmingfromsector-specific,largelyfiscal,mitigationand/oradaptationpolicymeasures.Miningandquarrying(-26.0%)forBangladesh—primarilydrivenbyareductioningasexploration—isnotshownduetothescaleofthefigure.NotethatgasexplorationinBangladeshmakesuparound0.3%ofthetotalworkforce.38ClimateandDevelopment:AnAgendaforActionSomecountrieshavespecificvulnerabilitiesorfacelargebarrierstotransitionCountrieswitheconomiesthatareundiversified,energy-intensive,ordependonalargeshareoffossilfuelsfacelargerobstacles.Ingeneral,undiversifiedeconomiesthatspecializeinresourceextraction(especiallyfossilfuelexporters)facehighervulnerabilitytoglobalclimatepoliciesandclimatechange(Iraq).Shiftingtoaproductivity-ledeconomicmodel,greenmining,andsustainableforestrywouldmakecountriesmoreresilientandimprovetheirabilitytoreduceemissions.Forlargecoalproducers(China,thePhilippines)ajusttransitionapproachrequiresdeepanalysisofthecoalecosystemandearlylong-termplanningtomanageandmitigatetheenvironmentalandcommunityimpacts.Forcountriescontinuingtopursuenaturalgas(Argentina,Egypt,Kazakhstan)carefulstresstestingofinvestmentsandprospectsforcarboncaptureandstoragearevitaltoavoidlockingintoinfrastructurethatisatriskofstrandingassetsinthefuture.Extremelyspecializedfossilfuel-exportingcountries(Iraq,Chad,Kazakhstan)areheavilyexposedtolowerglobalfuelpricesandadeclineinfossilfueldemandthatmayresultfromtheglobalenergytransition.TheCCDRsdistinguishdecisionsaroundfossilfuelextraction(andexports)fromthequestionofhowbesttomeetdomesticenergydemand,highlightingthegrowingroleofenergyefficiencyandrenewableenergyeveninfossil-fuelexportingcountries(Argentina).Newgasproductioncanoffersomecountriesmuch-neededrevenues,especiallyinthecontextofthehighenergypricesseenin2022andsustaineddemandfromHICs.Butlargeinvestmentsinfossilfuelproductionalsocreaterisksofexcessivedependencyonenergyexports,increasedconflict,orstrandedassets(Argentina,Kazakhstan,Egypt,Iraq).Inthecontextoflargeuncertainty,includingthecommercialpotentialofhydrogentechnologies,theCCDRanalysesshowtheimportanceofcarefullyappraisingnewdevelopments,consideringthetimingofexpectedincreasesinrevenue,productioncosts,emissionsintensity,andultimately,theriskofstranding.Forexample,oilandgasexportsfromArgentina’sVacaMuertadepositareimportantforthecountry’stradebalancebutwouldneedtobecoupledwithpoliciestosupportadomestictransition,includingincreasingenergyefficiency.InIraq,theenergytransitionwilldependheavilyonthelevelandpaceofglobaldecarbonizationefforts,withaglobalnetzeroemissionsscenariopotentiallyreducingGDPbyupto21percentby2040.Significantreformscanbringfiscalandgrowthgainsbutwouldlikelybeinsufficienttocushionthefullimpactofloweroilreceiptsinanet-zeroclimateworld.TheEUCBAMcouldaffectimportantsectorsinCCDRcountries.WhiletheEUproposesasoftstarttotheCBAM,ithassignaledanincreaseinscopeovertime.ManyoftheCCDRsconcludethat,whiletheCBAMwouldhavelittleaggregateimpactonGDPortradebalance,theimplicationsonjobsandpeopleinhighlyaffectedsectorsorcommunitieswouldbesignificant.Together,theeffectofNDCsandtheEUCBAMcouldreducerealincomeby0.6percentinEgyptand0.5percentinthePhilippinesandVietnamby2030,relativetothebaseline.Butimpactswillbemoremarkedinthemostexposedsectors,suchasferrousmetalsinKazakhstan,andchemicalsandpetroleumproducts,iftheCBAMscopeincreases.InTürkiye,chemicalsandcementareaffectedmostinproportionalterms,whileironandsteelproductsaremostaffectedinabsoluteterms.ThewarinUkrainehasincreaseduncertaintyandpricevolatilityintheworld’senergymarketsandre-emphasizedtheimportanceofenergysecurity.Howindividualcountries,especiallymajoreconomies,respondtothischallengemattersfortheglobaldecarbonizationagenda.Toachieveglobalclimateobjectives,theneededresponsetoshort-termchallengesshouldbedesignedtocontributeto—orleastnottoimpair—theachievementoflong-termgoals.39ClimateandDevelopment:AnAgendaforAction4.SuccessrequiresurgentpolicyreformsandincreasedfinancialsupportfromtheinternationalcommunityTheCCDRsacknowledgethatmanycountries,governments,andlocalauthoritieshavemadeeffortstoboostresilienceandreduceemissions.InArgentina,since2010,emissionshavedecreasedby2percentandemissionsintensityby7percent,mainlyduetoreduceddeforestation.Inresponsetonaturaldisasterslinkedtoecosystemsdegradation,Chinainvestedaround0.3percentofGDP,annually,from1990–2018,expandingforestcoverfrom12percentintheearly1980stoover23percentoftotallandareatoday,significantlyincreasingcarbonsequestration.Sinceindependence,Bangladeshhasinvestedabout$10billionindisasterriskmanagementandpreparedness,withinterventionsalsoatalocallevel.TheBangladeshClimateChangeResilienceFundallocated$12.5milliontonongovernmentalorganizationstoimplementcommunity-drivenadaptation,includingresilientinfrastructure,livelihoodsupport,watersupply,andraisinghomesteads.Somecountrieshaveinvestedheavilytoincreasetheshareofrenewableenergysourcesinthemix—forexample,inTürkiye,itisnowat42percent,andChinaadded101gigawattsofrenewableenergycapacityandinvested$266billionintheenergytransitionin2021alone.Butmoreneedstobedone.Inthisregard,theCCDRsidentifyfivemajorchallengesthatneedtobeaddressed.Theseinclude:financialneedsandbarriers,politicaleconomyobstacles,governanceandcapacitychallenges,technologicalneeds,anddistributionalimpacts.4.1.InnovativeclimatefinancesolutionstomeetadditionalinvestmentneedsThefirstsetofCCDRsidentifyanaverageannualinvestmentneedof1.4percentofcountries’GDPover2022–30tobuildresilienceandbeontracktoreduceemissionsby70percent,comparedtocurrentlevels,by2050.Annualinvestmentneedspercountryareveryheterogenous—rangingfrom1to10percentofGDP—andarehigherinLICs(figure14).SomeoftheCCDRsestimatetheseneedspost-2030,andtheserangefrom1to8percent.Whiletheestimatesarepartial,thesectorsincludedcovereachcountry’smostimportantneeds,makingthemgood(butconservative)proxiesfortotalneeds.Formostcountries,thisincludesmeetingthecostofadaptationandresiliencemeasuresneededtoreducepeople’sandsystems’vulnerabilitytotheinevitableimpactsofclimatechange.»Resilientandlow-carbonpathwayscandeliverneteconomicgains.Buttheywillnotberealizedwithoutimprovedandsustainedaccesstofinanceandmobilizationofprivatecapitaltomeetadditionalannualinvestmentneedsaveraging1.4percentofcountries’GDPover2022–30inallCCDRsand8percentinlow-incomeCCDRcountries.»Thetransitiontomoreresilientandlower-carbondevelopmentalsorequiresmanagingpoliticaleconomyobstacles,strengtheninginstitutionalcapacity,acceleratingdiffusionofnewtechnologies,andcarefulmanagementofnegativedistributionaloutcomes.»Toovercomethesechallengesandachieveajusttransition,allcountrieswillrequirecarefullydesignedpoliciesandreformsandscaled-upfinancialsupportfromrichereconomies.LICsinparticularwillneedaccesstosustainedlevelsofconcessionalresources,includinggrants,tomeettheinvestmentandspendingneedsforresilientlow-carbondevelopment.40ClimateandDevelopment:AnAgendaforActionClimate-developmentfinancingneedsarelargerasapercentageofGDPinthecountriesthathavecontributedleasttoglobalwarming,andwhereaccesstocapitalmarketsandprivatecapitalismorelimited.Figure14suggeststhatLICsandLMICswillneedrelativelylargerupfrontinvestments(relativetotheirGDP)comparedtoUMICs.Thisislargelyduetotheexistinginfrastructuregap,whichmagnifiesclimatevulnerability.Assuch,LICandLMICinvestmentsmustalsomeetdevelopmentneeds,suchasenergyaccessorwaterandsanitationinfrastructureandservices(Sahel,Rwanda,Cameroon,Pakistan).Inthesecountries,itisimpossibletoseparateclimate-relatedneedsfromdevelopmentneeds,asclimatechangevulnerabilitycannotbereducedwithoutfirstclosingtheinfrastructuregap.So,theinvestmentneedsidentifiedintheseCCDRscannotbeconsideredentirely“additional”topre-existingneeds.Nevertheless,asLICsandLMICsarehistoricallyleastresponsibleforclimatechangeandholdrelativelylowlevelsofdomesticresources,internationalconcessionalclimatefinancewillbevitalinaddressingtheirclimateanddevelopmentchallenges.FIGURE14:Investmentneedsforaresilientandlow-carbonpathway,2022–30a)Bycountry01,0002,0003,0004,0005,0006,0007,0008,0009,00010,00011,00012,00013,000GDPpercapita($/person)0%1%2%3%4%5%6%7%8%9%10%11%Investments(%ofGDP)SouthAfricaMoroccoArgentinaTürkiyeKazakhstanPakistanCameroonG5SahelG5SahelVietnamEgyptEgyptEgyptPeruPeruIraqIraqIraqGhanaGhanaPhillippinesPhillippinesChinaChinaChinaJordanJordanJordanIncludedsectorIndustryLandscapePowerTransportUrbanWaterb)Byincomegroup0%1%2%3%4%5%6%7%8%9%LowincomeLowermiddleincomeUppermiddleincome8.0%5.1%1.1%Additionalinvestmentneeds(shareofGDP)Notes:InvestmentneedsarepresentedasashareofbaselineGDPaccumulatedoverthesameperiod.G5SahelisBurkinaFaso,Chad,Mali,Mauritania,andNiger.PanelbincludesestimatesfrompublishedandinpressCCDRs.InmanyCCDRs,especiallyLICsandLMICs,estimatedinvestmentsincludedevelopmentneeds,especiallythoselinkedtoclosingtheinfrastructuregaps—suchassolarminigridstoprovideenergyaccess—andcannotbeconsideredentirely“additional”topre-existingfinancingneeds.41ClimateandDevelopment:AnAgendaforActionDespitetheneedforlargeupfrontinvestments,resilientandlow-carbonpathwaysgeneratebenefitsthatpartiallyorcompletelyoffsetcosts.SomeoftheCCDRsestimatetheneteconomicimpactofaligningdevelopmentwithclimate-orientedgoals.InTürkiye,majorbenefitsfromreducedenergyimportsandlowerairpollutionareestimatedtoleadtoanetgainof$146billionover2022–40(1percentofGDP).InPeru,O&Msavingsinthetransportsectorandecosystemservicesfromreduceddeforestationcouldamounttomorethan$400billioninnetbenefitsby2050(9percentofGDP).InGhana,improvementsinpublichealth,fuelimportsavings,andhighertimberextractionthroughincreasedplantationinaresilientandlow-carbonscenariocouldamountto$35billioninnetbenefitsby2050(around2percentofGDPoverthesameperiod).Inmostcountries,thefulleconomiccostofthepowersystem(combiningthefixedcostofnewgenerationandstorageandthevariablecostofproducingelectricity)increasesmoderatelytoreducecarbonemissions,buttheincreaseinupfrontcapitalcostrisesmuchmoresubstantially,whichcanmaketheenergytransitionunaffordable.Identifiedfinancingneedsincludeinvestmentsthatcanbecoveredfromdifferentsources,whichfallintothreemaincategories.221.Investmentsthatcanbefinancedaffordablybytheprivatesector,withtherightenablingenvironment:Butincountrieswithpoorcreditratingsorhighperceivedrisksposedbyunderdevelopedpolicyandregulatoryframeworksandinadequateinstitutionalcapacity,theprivatesector’shighreturnrequirementcouldmakeinvestmentstoocostlyforgovernmentsorconsumerstoabsorb.Forexample,inLICsandevensomeMICs,highcapitalcostspreventinvestmentsincapital-intensiverenewableenergyprojectsthatareotherwiseeconomicallyviable.CCDRshighlightthatmanycountriesneedto:improvetheirmacroeconomicframeworksandfinancialregulationstoreducecapitalcosts;strengtheninstitutionsandpoliciesthatunderpintheenablingenvironmenttoreduceperceivedrisks;andaccessconcessionalcapitaltofacilitatetheprivatefinancingoftheseprojects,includingthroughappropriatede-riskingandguarantees.2.Investmentsthatgeneratereturnsoverlongtimeperiodsorcontributetopublicgoods,whichrequirespecificpolicies,regulations,ormarketdesigntocreateadditionalfinancialflowstoattractprivatecapitalonaffordableterms.Althoughtherearelimits,privatecapitalcancontributetofinancinglocalpublicgoods(suchaslocalresilienceorimprovedairquality)orglobalpublicgoods(suchasGHGemissionreductions)whentherisk-returnprofileisimprovedthroughdomesticorglobalsubsidies,includingglobalclimatefinance—forexample,throughblendedfinanceinstrumentsorcarbonmarkets.3.Spendingneedsthatyieldsocioeconomicbenefits—suchastransfersorcompensation—whichrequirepublicresources.Forexample,expenditurestofacilitatecommunities’transitionawayfromcoalwillneedpublicresourcesfromdomestictaxrevenuesorinternationalsources,suchasofficialdevelopmentassistance,globalclimatefinance,orcarbonmarkets.Governmentsneedtobeabletoaccess—andtheworldcommunitymustmakeavailable—grantfundingtohelpcoversomeofthecostsidentifiedintheCCDRs,especiallyforsocialexpenditureandensuringajusttransition,andinparticularinLICs.22WorldBankGroup.2022.AchievingClimateandDevelopmentGoals:TheFinancingQuestion,documentfortheOctober14,2022DevelopmentCommittee(JointMinisterialCommitteeoftheBoardsofGovernorsoftheBankandtheFundontheTransferofRealResourcestoDevelopingCountries)Meeting.https://www.devcommittee.org/sites/dc/files/download/Documents/2022-10/Final%20Achieving%20Climate%20DC2022-0006.pdf.42ClimateandDevelopment:AnAgendaforActionIncountriesthatarehighlyspecializedinfossilfuelexports,arapidglobaltransitionmayfurtherchallengethefinancingoflocalenergytransitions.Aglobaldecarbonizationpathwouldsignificantlyaddtofiscalpressuresandleadtoaballooningofpublicdebtinfossilfuelexporters.InIraq,forexample,theoverallfiscaldeficit-to-GDPratio,isexpectedtobe65,21,and6percentagepointshigherby2040undertheInternationalEnergyAgency’sNet-Zero,itsStatedPolicy,anditsNDCscenarios,respectively,comparedtoabaselinescenario.Thedeclineingovernmentrevenuesthroughareductioninoilrevenuescansignificantlyhamperacountry’sfiscalcapacitytodiversifyitsenergysources.Governmentscanincreasepublicresourcestowardclimateactionandoptimizetheiruse.RepurposingenergysubsidiesorintroducingcarbonpricingcanbeamassiveopportunityformutualdevelopmentandclimatebenefitsacrossLICsandMICsandcanofferfiscalspacetoincreaseinvestments.Broad-basedenergysubsidiesarenotfiscallyaffordable;theyalsodistortenergypricesignals,undermineutilities’financialviability,andinmanycountries,stokedemandforfossilfuels.Carbonpricingoffersopportunitiesfordomesticresourcemobilizationwithlessnegativeimpactsongrowththanalternativetaxes(box4).Suchfiscalandpricereformeffortsshouldalsohelpmanagedistributionalimpactsandthepoliticaleconomy(chapter4).Constrainedbymacroeconomicconditionsanddebtceilings,countriesneedtoprioritizeestablishingtheenablingconditionsfortheprivatesectortofinanceclimatemitigationandadaptationaction.Forinstance,theTürkiyeandPeruCCDRsestimatethattheprivatesectorcancoverabout50percentoftheincrementalinvestmentsneededforclimateactionby2030,butthatachievingthisratiowouldrequirechangesinthemacroeconomicandfinancialenvironment.Developinganationalstrategyforgreeningthefinancialsectorcanbeahelpfulstartingpointforestablishinganenablingenvironmentforprivatesectorinvestment.One-thirdoftheFY22CCDRcountrieshavedevelopednationalgreenfinanceroadmapsorstrategies.Tailoredtothelocalcontextandconsideringtheleveloffinancialsectordevelopment,theseshouldbecomplementedbyothersupportivefinancialsectorregulations,theintroductionofclimate-relateddisclosureandreportingstandards,andthedevelopmentofgreentaxonomies,toenhancemarkettransparencyandfacilitatetheidentificationofclimatefinancerisksandopportunities.Givenlowawarenessandexpertise,buildingthecapacityofrelevantfinancialauthoritiesiskeytoensuringtheyintegrateclimateriskandopportunityconsiderationsintosupervisoryframeworks,conductingclimate-relatedriskassessmentsandprovidingsupervisoryguidancetothesector,todirectcapitaltowardinvestmentsthatcontributetolow-carbongoals.Benchmarkingassessmentssuggestthatmostcountriesareatanearlystageofdevelopingregulatoryandsupervisoryapproachestorespondtoclimate-relatedfinancialrisks.Standardsetters,centralbanks,andsupervisorsareincreasinglyinterestedinbetterassessingandmanagingclimaterisksforthefinancialsector.Somefinancialauthoritieshavetakenimportantstepstoraiseawarenessofclimaterisks.Forexample,inMorocco,theCentralBankissuedadirectiveonmanagingclimateandenvironmentalfinancialrisks,settingoutexpectationstothebankingsectoronintegratingtheserisksinstrategiesandgovernance,riskmanagement,trainingandawareness,andreportingframeworks.However,mostoftheCCDRcountrieshaveyettointegratesuchrisksintotheirsupervisoryframework.Giventhislackofguidanceandincentivefromtheauthorities,financialinstitutionshavetakenlimitedactionstoassess,disclose,andmanageclimaterisks.43ClimateandDevelopment:AnAgendaforActionAlongwithdevelopingasupportivesustainablefinanceregulatoryarchitecture,havinglong-termfinancinginstrumentsthatareappropriateforthelocalcontextcouldhelpclosethefinancinggapforadaptationandmitigation.Prioritizingcapitalmarketdevelopmentiskeyinallcountries,asthechallengeofmobilizingprivatecapitalforemergingmarketsgoesbeyondclimate.ForBox4:ThemultipleopportunitiesfromcarbonpricingThevastmajorityofCCDRs(Argentina,Bangladesh,Cameroon,China,Egypt,Ghana,Jordan,Kazakhstan,Pakistan,Peru,thePhilippines)considercarbonpricingpoliciesasimportantinstrumentsformakingcountries’fiscalframeworksmoreclimateanddevelopmentfriendly.Countriescanintroducecarbonpricingthroughanumberofpolicies,generatingdirectorindirect,positiveornegativepricesignals,eitherdirectly,throughcarbontaxesoremissionstradingschemes,orindirectly,throughenergytaxesorfossilfuelsubsidyreforms.Tailoredtocountrycontexts,theCCDRsconsidervariouspolicycombinations—includingfossilfuelsubsidyreforms,carbontaxeswithorwithoutsubsidyreform,oremissionstradingschemes—withvarioususesoftherevenues,includingredistributionthroughcashtransfers,reducingothertaxes,orinvestingindevelopmentorlocalpublicgoods.TheCCDRsfindvariousbenefitsinreformingcarbonpricingforclimateanddevelopmentobjectives.First,itincentivizeslow-carbonprivatesectorinvestmentsbyshiftingthecostsassociatedwithGHGemissionsfromsocietytothemarket,whichcanreducethepressureonpublicbudgets.Second,iteasesfiscalpressureandraisesrevenuetofinancepublicinvestmentneeds,asreformingfuelsubsidiesandimplementingcarbontaxescanmobilizeupto4percentofGDPinfiscalresources,dependingonemissionsandcarbontaxlevelsconsideredintheCCDR.Third,itenhancestheequityofoverallfiscalpackagestowardurgentdevelopmentgoals.WiththeexceptionofsomeUMICs,suchasArgentina,theCCDRsfindthatcarbonpricingisdistributionallyneutralorevenprogressive,andcountriescanusesomeoftherevenuesfromcarbonpricesandfossilfuelsubsidyreformstoimprovedistributionalimpacts—forexample,byspendingrevenuesonprovidingelectricityandaccesstoinfrastructure(Bangladesh,Pakistan)orenhancingsocialprotection(figureB4.1).FigureB4.1:Consumptionincidencefromcarbonpricingpolicybycountry,shareofconsumption-15-10-5051015-15-10-5051015PoorestQuintile2Quintile3Quintile4Wealthiest%consumptionBangladeshPhilippinesKazakhstanPakistanArgentinaBangladesh(withrevenuerecycling)Kazakhstan(withrevenuerecycling)Pakistan(withrevenuerecycling)Argentina(withrevenuerecycling)44ClimateandDevelopment:AnAgendaforActionexample,thereisabroadneedtosupportprojectpreparationtodevelopalargerprojectpipelineandintroduceinstrumentstoaddresspoliticalrisk.Greenfinancecouldplayacatalyzingroleinoverallmarketdevelopment(Bangladesh,Egypt,Morocco,SouthAfrica,Vietnam).Somecountries(China,SouthAfrica,Morocco)havealreadyissuedsovereignorcorporategreenbonds(figure15)andcouldexploregreenequity,insuranceandalternativefinancingproducts,includingperformance-linkedbonds.Countrieswithlessdevelopedcapitalmarkets(Rwanda,Sahel)orwherethebankingsectoristhedominantsourceoffinance(Ghana,Jordan,Nepal)willneedtofocusonbankingsectorpolicies.MostCCDRsrecommendblendedfinanceinstruments—suchascreditenhancementforissuingbondsandco-investmentopportunitiesforinvestorsalongsidedevelopmentfinancialinstitutions—andpublic-private-privatepartnerships,especiallyforurbaninfrastructure(Pakistan),waterandagriculture(Sahel,Morocco,Rwanda),andtransmissionanddistribution(Rwanda).Localgovernmentsfaceparticularlychallengingfinancialconstraints,whichhavesometimesimpededlocalclimateaction.Forexample,Cameroon’sYaoundéIIImunicipalityisapioneerindevelopingclimatechangeactionplansbuthasstruggledtoimplementthemduetolackofresources.FIGURE15:Greendebtmarketsinselectedcountries(amountsraised,2017–21)0.00.20.40.60.81.01.2ShareofGDP(%)ChinaPhilippinesEgypt,ArabRep.TürkiyeCountriescanstrengthentheirfinancialresiliencetoclimateshocksbydevelopingintegratedclimateanddisasterriskfinancestrategies.Thisrequiresidentifyingandquantifyingcontingentliabilitiesandthefinancialprotectiongapcausedbyclimateshocksforgovernments,businesses,farmers,andhouseholds(Peru)andundertakingcost-benefitanalysestoevaluatethepotentialbenefitsofalternativedisasterriskfinanceinstruments(Morocco).Climateanddisasterriskfinancestrategiesshouldbuildonarisk-layeringapproachthatleveragesamixofpolicyreformsandfinancialinstruments—suchasreservesorfunds,contingentcredit,insurance,andcatastrophebonds—toaddressdifferentlayersofrisk(Ghana,Cameroon).Developingcatastropheinsurancemarketsandcapitalmarketsoffersnewopportunitiestomobilizeprivatecapitalforresiliencethroughinnovativefinancialsolutions,suchasparametricinsuranceandcatastrophebonds,toprotectgovernmentbudgetsandassets,firms,farmers,andhouseholds(Morocco).ImprovingaccesstofinancebyleveragingdigitalfinancialservicesisanotherimportantrouteforincreasingtheresilienceofhouseholdsandSMEs(Sahel,Jordan,Morocco).Asuccessfultransitiontoresilientlow-incomedevelopmentwillrequireasustainedlevelofconcessionalresources,especiallyinLICs.Giventheglobalpublicgoodnatureofclimatemitigation,governmentscanmakeuseof—andtheworldcommunityneedstomakeavailable—publicandprivatefundstohelpcoversomeofthecostsidentifiedintheCCDRs.Internationalcarbonmarketscanbeasourceofresults-basedfundingforsovereignsandSOEsengaginginactivitiesthatreduceGHGemissions,aswellasfortheprivatesectoringeneral.Sustainability-45ClimateandDevelopment:AnAgendaforActionlinkedbondsandloanscanalsoprovideareliablesourceoffinancingthatispairedwitharesults-baseddiscounts(orpenalties)formeeting(ornot)pre-agreedobjectives,suchasameasurablereductioninGHGemissionsatcountryorSOElevels.Internationalpublicandprivatedonorfinanceiskeytoremovingsomeofthebarrierstodomesticandprivate-sectorinvestmentsinclimateactionandsupportinginvestmentsthatbringlargeglobalpublicgoodsorsocialbenefits,oradaptationprojectswithstrongdevelopmentco-benefits.InternationaltransferscanmakeadaptationinvestmentsaffordableforLICsandsupporttheeconomiccostsofalow-carbontransition,inlinewiththeprincipleofcommonbutdifferentiatedresponsibilities.Concessionalfundingorde-riskinginstruments,includingblendedfinance,arealsorequiredforinvestmentsthatarenotyetcommerciallyviable,suchasnew,unprovenclimate-smarttechnologies,orinnascentmarkets.Climatefinanceprovidedbydevelopedcountriesfordevelopingcountriesreached$83.3billionin2020,$16.7billionshortofthe$100billiontarget,andonlyasmallfractionoftotalinvestmentneedsidentifiedinCCDRs.4.2.ConsiderthepoliticaleconomyinpolicydesignThepoliticaleconomycanbeabarriertoclimateaction,ifpowerfulactors,interestgroups,orthepublicdonotsupportreforms.Powerfulinterestgroupscanbenefitfrompolicies,practices,orareasofeconomicactivitythatwillbeaffectedbythetransitionandmayopposereforms.Rent-seekingorelitecaptureinfossilfuelindustries(Iraq,Kazakhstan,Pakistan)andagriculture,forestry,andlogging(Philippines)standoutasareaswherevestedinterestsopposereformsorrisksforoppositionaresignificant.Incountriesaffectedbyfragilityandconflict(Cameroon,Iraq,Sahel),promotingtheconflictsensitivityofclimateactionsandpoliciesiscrucial,tomitigatetheriskofadaptationandmitigationmeasuresthatexacerbatetheunderlyingdriversoffragilityandconflict.Concentratedlossesinhighlyexposedregionsorsectorsinfragilecountriescouldleadtodisturbance,unrest,moreconflict,andviolence.Andexperiencewithenergysubsidyreformshowsthatcompensationforthepoorestsegmentsofthepopulationisofteninsufficienttoensuresocialandpoliticalacceptability.Buildingeffectiveinstitutions,managingdistributionalimpacts,politicalincentives,andclearpolicycommunicationscanallhelpimprovethepoliticaleconomyofpolicyreform.ManyoftheCCDRscallforframeworklegislationorastronginstitutionalanchorforclimatepolicymakingtoembedlong-termpolicydirection.InVietnam,thismeansestablishingaClimateChangeCommitteechairedbytheprimeministertosecurestrongleadershipandcoordinationbetweencentralandlocalgovernmentlevels.Establishinganinstitutionalmechanismtocoordinateregionalinitiatives—suchasbuildingresilienceinthe13provincesoftheMekongDeltaregionordecarbonizingtheHanoiagglomeration—wouldbeapriority.Civicengagementandpolicycommunicationcangeneratepolicysupportandhelpengenderdesiredbehavior.Possibleapproachesincludeincreasingpublicparticipationtosecureaccountabilityandtransparencywithopen-dataande-governmentinitiatives,andusingeducationtoincreasecivilsocietyandprivatesectorengagementinclimatechangedecisionmaking.Maximizingandemphasizingtheimmediateanddirectbenefitsthatclimateactioncandelivercanalsohelpbuildconsensusandfacilitateimplementation.Forexample,Argentina,Bangladesh,andTürkiyehaverecognizedthatanintegratedairpollutionandclimatemitigationstrategyisthefastestpathforachievingcleanerairandasaferclimate.ThedesignandimplementationofsuchastrategyiskeytoachievingNDCcommitmentsandcandeliverimmediateanddirecthealthandeconomicbenefits.Emphasizingthehealthbenefitsthatairqualitymanagementcandeliver“here46ClimateandDevelopment:AnAgendaforActionandnow”canencourageclimateactionthatwillbringglobalandfuturebenefits,sincehealthisgenerallyatthetopofmostnationalpoliticalagendasandhasbecomeamorepressingissueduetotheCOVID-19pandemic.Linkinghealthtotheairpollutionagenda—andultimatelytheclimateagenda—allowsbetterpublicandpoliticalsupportformitigationefforts.4.3.BuildinginstitutionalcapacityandimprovinggovernanceanddecisionmakingInmanycases,poorgovernanceandinadequateinstitutionalcapacitycanbeabiggerobstacletotransitiontoalow-carboneconomythaneconomics.AcommonchallengeobservedinmanyCCDRcountriesisthelackofacohesiveandcomprehensivelegal,regulatory,policy,andinstitutionalframeworkfortheeffectiveintegrationofclimatechangeadaptationandmitigationactionsacrossvarioussectorsandgovernmentplans.Inmanycountries,domesticclimateregulationischaracterizedbyapatchworkofpolicies,ratherthanlegallybindingandenforceablestatutoryand/orregulatoryinstruments.Policy-basedframeworkscancreatechallengessuchasdifficultiesenforcinggovernmentclimatechangepriorities,lackofcertainty,difficultyattractingsignificantcapitaltosupportpolicyaims,andalteredpolicyprioritiesasgovernmentschange.TheCCDRsemphasizetheneedtodevelopacomprehensivelegal,regulatory,policyandinstitutionalframeworkforintegratingclimatechangeintocountries’developmentplans,yetinmanysectorsandcountries,poorgovernanceandweakinstitutionsarethemainbarrierstoclimateaction.Thisisparticularlychallengingincountrieswithhighlevelsoffragilityorongoingconflicts(Sahel).Althoughsomecountrieshavesetupspecializedinstitutionstomanageclimatechange,alackofeffectivecoordinationmechanismsandill-definedmandateshinderwhole-of-governmentaction.OnlyafewoftheCCDRcountries(Argentina,Peru,thePhilippines)havepassedclimatechangeframeworklegislationsettingoutpolicyinstrumentsandaninstitutionalframework.Mosthaveapatchworkoflegislation,policydocuments,andinstitutions,leadingtoambiguous,fragmented,andoverlappingresponsibilitiesbetweencentralandsectoralagencies.Somecountrieshavestartedtointegrateclimatepoliciesintheirdevelopmentplanninginstruments,butconflictingprioritiesandinadequatemonitoringunderminetheefficacyoflong-termclimateplans.Mosthavedevelopedmedium-orlong-termdecarbonizationandadaptationplans,andsomehaveincorporatedtheseintheirnationaldevelopmentandsectoralplans.ChinahasincludedtargetstoreducethecarbonintensityofGDPinitsFive-YearDevelopmentPlans.SomeCCDRsidentifyinconsistenciesandconflictingprioritiesbetweennationalclimatestrategiesanddevelopmentplansandmostnotethatmonitoring,reporting,andverificationsystemsareinsufficient.Afewcountrieshavebeguntoaddressclimatechangeintheirbudgetsandpublicinvestmentmanagementpractices,particularlybyconsideringclimateriskandadaptationindecisionmaking.ThePhilippines,forexample,hastrackedbudgetallocationsforclimateactionssince2013,focusingattentiononfinancingforDRM.Peruissuedguidelinestoincludethesocialpriceofcarbonininvestmentprojects.Subnationalgovernmentscanplayanimportantroleinresilienceandclimateaction,butmoralhazards,inadequateresources,andlimitedcapacityarecommonconstraints.InArgentina,Cameroon,Pakistan,andTürkiye,subnationalgovernmentsarerequiredtoprepareclimatechangeplans,whilethreeofPakistan’sfourprovinceshavedevelopedpolicies,strategies,oractionplanstoaddressclimatechange,withencouragingexamplesofprovincialactionundergreengrowthprogramsandthenationalafforestationprogram.Subnationalgovernmentshaveanimportantmandatetoensureresilientandsustainablelanduseplanning,buildingregulations,47ClimateandDevelopment:AnAgendaforActioninfrastructure,andservicedelivery(includingtransportation,wastemanagement,andfloodprotection).Butlimitedfinancialandtechnicalcapacitytoaddressclimateissues,arelianceonnationalgovernments,andinadequatelocalizedinformationonclimaterisksaresignificantobstaclesforeffectivelocalclimateactioninallcountries,especiallyforsmallandmedium-sizedlocalgovernments.Inmanycountries,SOEsaremajoremittersandakeyareaforaction,includingthroughimprovedincentivestructures.InSouthAfrica,forexample,thegovernmenthasbeenslowtoimplementthereformsneededtolowerSOEemissions.ThecentralroleofSOEsinthecountry’scommitmenttonetzerowillrequirechangesintheirwayofdoingbusiness,especiallyinnetworkindustries(suchasenergyandtransport)whereweakperformanceunderminesthecompetitivenessofalleconomicsectorsthatrequiretheirinputs.Short-termrecommendationsincludelinkingbudgetaryallocationstoSOEswithinvestmentsinlow-carbon,climate-resilientinfrastructureandstrengtheningSOEclimateimpactassessments,climatedisclosures,creditworthiness,andlong-termfinancialsustainabilitysothattheycanattractprivateclimatefinance,includingbymonetizingexistingassets.InChina,SOEsareestimatedtogenerateabouthalfofthecountry’sGHGemissions,giventheirdominantpresenceincarbon-intensivevaluechains.TheCCDRrecommendsadoptingcarbonaccountingandmonitoringsystemstogetherwithenhanceddisclosure,includingpublishingSOE-specificclimateobjectivesandperformanceaspartoftheSOEsectorannualreporting,tohelpinformSOEcorporatemanagementandfacilitatemonitoringandoversight.Atthesametime,deepeningreformstoexposeSOEstomarketdisciplineandcompetition—inlinewithChina’sownstatedreformobjectives—wouldhelpensureemissionreductionisachievedinanefficientmanner.TheCCDRalsocallsforstrengthenedcorporaterestructuring,andinsolvencyframeworkswouldbeimportanttofacilitatethemarket-basedexitofnonviablefirmsandreduceexcesscapacity.Countrieshaveyettoimplementrobustarrangementsforparticipatoryclimatepolicymakingandoversight,althoughsomehavetakenstepstodesignsucharrangements.Somecountries,suchasArgentinaandCameroon,engageorinformcivilsocietyinclimatepolicydesign.Nepal’sNDCaimstodeveloptargetedprogramstoensurefull,equal,andmeaningfulparticipationofwomen,indigenouspeople,andothervulnerablecommunitiesinclimatechangepolicyformulation.ButfewCCDRcountriesgivecivilsocietysignificantinfluenceondecisionmakingandsupremeauditinstitutionshaveyettoaddresstheeffectivenessofclimatepolicyinmostCCDRcountries.4.4.AcceleratedinnovationandscalingupkeytechnologiesforadaptationandmitigationAdaptationandmitigationrelyonkeytechnologicalsolutionsthatrequireinnovation,whichistakingplaceinonlyafewhigher-incomecountries.Upto2035,theCCDRscenariosrelyonwell-establishedtechnologies,whichcontinuetoimproveinperformanceanddeclineincost,andarebothcommerciallyavailableandcostcompetitive.Existingcost-effectivetechnologysolutionsalsohavetremendouspotentialtosupportclimate-informedresiliencedecisions,suchasclimate-smartagricultureandwaterresourcemanagement.Overthelongerterm,however,manyCCDRscenariosrelyonmajorscalingupofknowntechnologies,suchasbatterystorageanddigitaltechnologies,andontechnologiesthatarenotyetcommerciallyavailable,suchasgreensteel,carboncaptureandsequestration,orgreenhydrogen.Therolefornewormaturingtechnologiescreatesanuncertaintythatcountriesneedtoconsiderinclimatestrategydesign,adjustingtheirplansasinformationbecomesavailable.48ClimateandDevelopment:AnAgendaforActionAcceleratedclimateactioninHICswouldimprovelow-carbontechnologies,reducecoststobenefitallcountries,andmakeiteasierforLICsandMICstoachievetheirclimateobjectiveswithouttrade-offswithgrowthandpovertydevelopment.Globalstudieshighlightthatclimate-relatedinnovationisconcentratedinHICsandafewUMICs,includingChina,whichisrapidlyaccumulatinginnovationcapacity,asevidencedbyitslow-carbonpatentingactivity—nowtheworld’slargest,intermsofquantityofpatents.23Thesecountriesplayakeyrole,investinginhigh-risk,high-potentialtechnologiesthatcanbetransferredtoLICs.TodevelopthetechnologiesneededoverthelongtermandreducetheircostandmakethemaccessibleinLICs,acceleratedclimateactioninHICsandhigherinvestmentindevelopingandpilotinggreentechnologiesareessential.Forexample,ifhigher-incomeeconomiescouldachievenetzeropowergenerationby2030or2035,allcountrieswouldbenefitfromthelearningandknowledgegenerated.LICsandMICsalsohaveanimportantroletoplay,asthefeasibilityofhigh-ambitionscenariosreliesnotonlyondevelopingtechnologythroughinnovation,butalsoonestablishingpoliciesthatremovethebarrierstoadoptingthesetechnologies,includingtradebarriers,asidentifiedintheBangladeshCCDRforsolarpower.Technologyinnovationanddiffusionanddigitaltransformationareopportunitiesforincreasingresourceefficiencyandenhancingcountries’adaptationandresilienceatlocal,sectoral,andsystemlevels.Digitaltechnologies,connectivity,anddatainfrastructureareneededtosupportcriticalDRMsolutionsandenablebusinesscontinuity.Iftheyhaveaccesstoclimatedataandriskassessments,informationsystemssuchasearlywarningsystems,andM&Ereports,households,firms,andthepublicsectorcanmakeclimate-informeddecisionsandinvestments.Trainingfarmerstousetechnologyalsomakesiteasiertodisseminateinformationrelatedtoeffectiveresourcepractices,increaseuptakeofrelevanttechnologies,andmainstreamtheuseofearlywarningsystems.Thisextendsbeyonddigitaltoon-farmtechnologyandeducationalsystemsthatcanhelpfarmersandothersidentify:cropsthataremoreresistanttohightemperatureanddrought;wateruseefficiencyanddesalinizationmethods;andfintechthatsupportsadaptivesocialprotectionandinsurance.ThebroadmobileinternetuserbaseandstrongeconomiesofscaleindigitaltechnologiescreateopportunitiesforrapidlyscalingupclimatesolutionsatlowcostinLICsandMICs.Butmanyhighlyvulnerablecountriesalsohavelowdigitalconnectivityandskills,andneedsignificantactionandinvestment.Throughcurriculumreformintheeducationsystem,countriescanincreasefutureworkers’climateandsustainabilityknowledgeandinnovationcapacity.GhanaandVietnamareenhancinggovernmentcoordination,developingpolicyandinstitutionalframeworksfordigitaltransformation,investingintechnologyresearchanddevelopment,expandingaccesstodigitaltechnologies,anddevelopingrelevantskills.Argentinaisimplementinganewdigitalplatform,FomentarEmpleo,whichincludestrainingandalabormarketinformationsystemwithup-to-dateinformationonvacancies,labormarkettrends,andskillsrequirements.The2019DigitalNepalFrameworkincludesprogramstoboostfarmproductivityandsustainability,energyinfrastructure,andurbanresilienceandrequiresover$2billionininvestmentsforuniversalbroadbandaccessandtoimplementalltheprograms.AcceleratedrolloutofmobilemoneyanddigitalfinancialserviceswouldyieldsignificantandimmediatebenefitsintheSahel.23Onmitigation:Pigato,M,Black,SimonJ,Dussaux,D,Mao,Z,McKenna,M,Rafaty,RandTouboul,S.2020.TechnologyTransferandInnovationforLow-CarbonDevelopment.https://openknowledge.worldbank.org/handle/10986/33474.Onadaptation:Dechezlepretre,A,Fankhauser,S,Glachant,M,Stoever,JandTouboul,S.2020.InventionandGlobalDiffusionofTechnologiesforClimateChangeAdaptation:APatentAnalysis.https://openknowledge.worldbank.org/handle/10986/33883.49ClimateandDevelopment:AnAgendaforAction4.5.Ajusttransition:preventingandmanagingimpactsonpeopleandcommunitiesAlthoughclimatepoliciesmaybepositiveinaggregate,theycanhavelargenegativeimpactsoncertaincommunities,sectors,orregions,anditisimportanttominimize,manage,orcompensatethese.MostoftheCCDRsfindthatcountriescancompensatefortheimpactofclimatepoliciesonpoorpeopleatalowfinancialcost,comparedtothelargefinancial,economic,andenvironmentalcostsofinaction.Someofferexamplesofgoodpracticeforotherstoreplicate.NearlyalltheCCDRsrecommendstrengtheningsocialprotection,improvingtargeting,andmakingcashtransfersmoreeffective.Byaddressingmultiplevulnerabilitiesinhouseholds—includingemploymentloss,disability,oldage,poverty,andfemale-headedhouseholds—suchpoliciescanhelppeoplecopewiththeimpactsofdecarbonizationpoliciesintheshortterm.Forexample,theKazakhstanCCDRrecommendsshiftingfromenergysubsidiestotargetedcashtransfers.Thesecanencouragehouseholdstouseenergymoreefficientlyastheeconomymovestolow-carbonenergyresourcesandaddressmultiplevulnerabilitieswithinhouseholdsbyaddingbenefitstoexistingsocialassistancetransfers.TheCCDRsalsohighlighttheroleofpublicworksprograms,whichhaveencouragedwatershedmanagementandre/afforestation,enhancingresilience,andcarbonsinks.Butdesigningthemechanismforthesetransfersisachallenge,especiallywheresocialprotectionsystemsarenascentandfinancialinclusionislimited.Forexample,Malawi’sflagshipSocialCashTransferProgramonlycovers7percentofthepopulation.Withinthesecontexts,boostingsocialprotectionsystemswillfacilitateajusttransition,increaseresiliencetoclimateandnon-climateshocks,andfacilitatepovertyreduction.Ajusttransitionrequiresthinkingbroadlyaboutimpactedworkersandtheirfamilies,anddesigningprogramsandpoliciestofacilitatetheirtransitiontoalternativelivelihoodsandsustainableandgrowth-enhancingeconomicactivities,andeducation,labormarketpolicies,andconductiveregulatoryenvironmentsallplayimportantrolesinthis.TheCCDRsidentifyakeyroleforlearning,reskilling,activelabormarketprograms,andinvestinginpeopletogivethemtheskillsandknowledgetheyneedtonavigatethetransition.Theyalsodiscusstheroleoflabormarketregulationsinfacilitatingandreducingthemacroeconomiccostoftransition.Accompanyingtrainingpolicieswillprepareworkersandfacilitateaccesstonewgreenerjobopportunitiesandsustainableentrepreneurship.Profilingworkersinaffectedsectors(byskilllevel,gender,mobility,andvulnerablegroup)andthequalityofjobs—intermsofformalityandwages—providesabasisforidentifyingwhichtypesofworkerwillbeaffectedbyworseningclimatechangeandtheconstraintsoftransitioningtobetterjobs.Beyondreskilling,countriesmustalsoaddressthebroaderinclusionofthepoorinthetransitiontowardalow-carboneconomy.SomeoftheCCDRs(Nepal,Bangladesh)includeanexplicitdiscussiononprohibitivemigration,especiallyforthepoor,andtheneedtobetterunderstandmigrationasacopingstrategyandintegrateclimatemigrationintoplanning.Climate-drivenmigrationfromruralareasisexpectedtoincreasegrowthinurbanareas,particularlyinformalsettlements.Citieswillneedtobeproductiveandinclusive,todeliveradequatelivelihoods,livability,andcohesionforthosedisplacedbytheimpactsofclimatechange.By2050,Bangladeshcouldhave13.3millioninternalclimatemigrants,manyofwhomwillprobablymovetocities,whileinMorocco,over5percentofthenationalpopulationcouldmigrateawayfromruralareas.SomeoftheCCDRs(China,Bangladesh,Pakistan)alsoconsidertheneedtoaddressaffordabilityconstraintsandbehavioralchangeinadoptingcleanerenergyandtransporttechnologies,forresilientandlivablecities,andenergyandtransportsectortransitions.50ClimateandDevelopment:AnAgendaforActionApeople-andcommunity-centeredapproachtocoalphase-downalsorequiresaddressingenvironmentallegacyissuesandtherepurposingoflandandinfrastructureassetsfornewpublicandprivatesectorinvestments.Theseareinterrelatedandformanintegralpartoftheoverallapproachtoensuringajusttransitionawayfromcoal.Incountrieswithhighlycoal-dependentenergysectors(Kazakhstan,China),repurposingthevastlandsandassetsthatarecurrentlylockedincoalminingwillbeakeycontributortothetransitiontorenewableenergyandisanimportantleverforjobcreation.Landavailability—especiallywithgoodconnectiontoinfrastructure—hasbeenidentifiedinmanycountriesasakeybottleneckforrenewableenergyplacement.Improvingspatialanalysisandplanningforcoalmininglands,andimplementingmodernrepurposingtools,wouldhaveanimportantimpactondecarbonization,especiallyintheenergysector.Box5:Economicandfinancialcostsofcoalphase-downAjusttransitionrequiresdeepanalysisofthecoalecosystemandearlylong-termplanningtomanageandmitigatetheenvironmentalandcommunityimpactsofthetransition.Thisshouldincludenecessarysocialexpenditure,compensationforearlyretirementoffossilfuelassets,investmentinaffectedcommunitiesandregionstoaddressenvironmentallegacyissues,andrepurposinglandandinfrastructureassetsfornewpublicandprivatesectorinvestments.Withsomeexceptions(suchasChina),theeconomiccostofthecoalexitisrelativelysmallinaggregate,butajusttransitionishardtodesignandimplement,ispoliticallysensitive,andwillimposeadditionalcostsforpublicfinances.Andwhilethetransfersrequiredtomakethetransitionpoliticallyandsociallyacceptableandprotectthepoorandmostvulnerablecanrequirelargepublicfinances,creatinganenablingenvironmentforstrongprivatesectorparticipationtoinvestinrepurposedlandandinfrastructureassetsinareassuchasrenewableenergyisequallyimportant.Forexample,ontopofthenecessaryinvestmentsinthegridandreplacementpowergeneration,Türkiyewillneedanadditional$12billion(discounted)by2040inpublicorprivatesectorinvestmenttopaycompensationfortheearlyretirementofcoalpowerplants(withupto$4billioninforegoneprofits),supportplantandmineworkersandthewideraffectedcommunity($6billion),andpaydecommissioningandenvironmentalcosts($2billion).Transfersandcompensationcouldbepartlyfinancedbyforegonesubsidiestocoalfiredpowerplantsandcoalmines,whichwouldhaveamountedtoaround$8billion(discounted)overthesameperiod.51ClimateandDevelopment:AnAgendaforAction5.Prioritizationandsequencing:arequisiteforsuccess5.1.PrioritizingwhatisgoodfordevelopmentorurgenttoachieveclimategoalsPrioritizingtheproposedinterventionsisamajorchallengeforallcountries,astherecommendationsinmanyoftheCCDRsmayexceedgovernmentabilitiesoravailableresources,especiallyinlow-incomeorfragileenvironments.MostoftheCCDRsidentifyasetofprioritiesforthenextfiveyears,focusingonthemostimportantorurgentissuesinthecountrycontext.Inpractice,prioritizationandsequencingisbasedontwodimensions(figure16):241.Theoutcomesoftheproposedinterventionsintermsofdevelopmentbenefits,prioritizinginterventionsthatsynergisticallydeliverclimatebenefitsanddevelopmentgainsintermsofgrowth,povertyreduction,orimprovedwell-being.2.Theurgencyoftheproposedinterventions,forbothresilienceandemissionsreductions,prioritizinginterventionsthatcannotbedelayed,eitherbecausedelaywouldincreasethecostandreducefeasibilityofthetransitionatafuturedate—forexample,becausebuildingresilientinfrastructureassetsischeaperthanretrofittingthemlater—orcreateirreversibledamage.FIGURE16:FramingtheprioritiesoftheCCDRs,basedonsynergieswithdevelopmentandurgencytoactURGENT(Delayinactionincreasesthecostofachievingthesameendpoint)LESSURGENT(Delayinactiondoesnotincreasethecostofachievingthesameendpoint)SYNERGIES(Actionfacilitatestheachievementofotherdevelopmentobjectives)Synergeticandurgentactionsaretobeprioritizedandshouldbepartoftherecommendations(butitisimportanttoidentifytheobstaclesthatexplainwhyithasnotbeendonealready)Synergeticactionsthatcanbedelayedshouldbeimplemented,butonlyifimplementationscapacityallowsit.Ifcapacityandpoliticalcapitalarelimited,delayingthemmaybepreferable,especiallyifnetbenefitsaresmalloruncertainTRADE-OFFS(Costofactionmakestheachievementofdevelopmentobjectivesmoredifficult)Urgentactionsthatcreatetrade-offsarethemostchallenging.Optionstoexploreinclude:»specificdesignstominimizeorreversetrade-offs,orprotectthepoor,suchasrecyclingoptionswithacarbontax»opportunitiestomobilizeconcessional(climateordevelopment)financingtomanagethetrade-offsActionsthatcreatetrade-offswithotherdevelopmentobjectivesandcanbedelayedshouldbedelayed24SeealsoWorldBank.2012.InclusiveGreenGrowth—thePathwaytoSustainableDevelopment.»TheCCDRsidentifycountry-specificpriorityactionsandinterventionsthatwouldeitherdeliverimmediatedevelopmentbenefitsorwhosedelaywouldcreatelock-ineffectsorlargercostsinthefuture.»Thesepriorities,whichcoverallsectorsandincludebothadaptationandmitigation,demonstratetheimportanceofmainstreamingclimatechangeintomacroeconomicandsectoralpolicies,regulations,andinvestments.52ClimateandDevelopment:AnAgendaforActionThereasonableandrealisticambitionofthereformsandinterventionsproposedoverthenextfiveyearsdependsoncountrycapacity,whichincludes,butgoesbeyond,financialcapacity.MostoftheCCDRsalsoacknowledgethatcountrycapacityismultidimensionalandincludesinstitutionalcapacity,accesstotechnologies,andpoliticaleconomy.Higher-incomeandhigher-capacitycountriescanimplementmorecomplexreformsinparallelandinvestmoreinclimateanddevelopmentthanpoorerormorefragilecountries.Low-capacityLICsfaceaparticularchallengeandneedscaled-upsupportfromtheinternationalcommunity,coveringfinance,technicalassistance,technology,andreducedGHGemissions.WhiletheCCDRsidentifyopportunitiestoacceleratedevelopmentthroughclimateactioninLICs,thesecountriesalsofacedifficultbarriers.Aswellashavinghigheradditionalinvestmentneeds,especiallyforresilienceandadaptation,LICsoftenhavelimitedabilitytomobilizeprivatecapital,limitedaccesstocapitalmarkets,anunder-developedprivatesector,andlimitedcapacitytoimplementmanycomplexandpoliticallychallengingreformsinparallel.Asaresult,prioritizingandsequencinginvestmentsiscrucial,andtheCCDRsrecommendastrongfocusonpolicieswithlargedevelopmentbenefits.CountrieswillneedinternationalsupportthroughtechnicalassistanceandfinancewithconcessionalelementstoimplementtheCCDRrecommendations.Atthesametime,acceleratedemissionreductionsinHICsandlargeemitters,includingactiononshort-livedclimatepollutantswithhighglobalwarmingpotentiallikemethane,wouldalsoslowdownclimatechangeandreducethegrowingchallengeLICsface.Althoughmiddle-incomelargeemittershaveurgentdevelopmentneeds,theworldcannotstabilizeclimatechangeorachievetheParisAgreementobjectiveswithoutrapidemissionsreductionsinlargeUMICs.Largeemitters’financialneedsareusuallysmallcomparedwiththeireconomicsize,butlargeinabsoluteamounts,creatingasignificantchallengebothfortheireconomyandglobally.Assuch,minimizingtheseinvestmentneedsandmobilizingdomesticandinternationalprivatecapitalwiththeappropriatepolicyenvironmentareessential.Withhigherinstitutionalcapacity,moreresources,andastrongerprivatesector,thesecountrieswillnotonlybebetterabletoimplementreforms;theywillalsobebetterplacedtobenefitfrominnovation,greenvaluechains,energyefficiencygains,andotherbenefitsofclimateaction,suchasimprovedairqualityandmoreproductivecities.Buttheyfacedifficultpoliticaleconomychallenges,andthesemustbeplacedatthecoreofclimatepolicydesign,engagingwiththeprivatesectorandcivilsocietyandbuildingthepolicyandfinancingpackagesthatprovidethesupporttheyneedforajusttransition.5.2.MainrecommendationsintheCCDRsAnanalysisoftherecommendationsinalltheCCDRsshowsthemultisectoralandmacroeconomicdimensionofresilientandlow-carbondevelopment.Althoughthenumberofrecommendationsineachsectorisapoormeasureoftheirimportanceorurgency,figure17showsthattheCCDRrecommendationsspanallsectors,witheconomywiderecommendationsmakingupthebiggestcategoryintermsofnumberofrecommendations.Thishighnumberofeconomywiderecommendationsconfirmstheneedtomainstreamclimateadaptationandmitigationintodevelopmentandeconomicpolicies,includingonfiscalandfinancialissues.Intheforestry,environment,andagriculturesectors,thereisabalancebetweenadaptationandmitigationrecommendations,whileothersaremorefocusedononeortheother.Forexample,therearemoremitigationrecommendationsintheenergysector,andmoreadaptationrecommendationsforwaterandhealth.53ClimateandDevelopment:AnAgendaforActionThetopfiveissuestackledbytheCCDRrecommendationsareclimatefinance,decarbonizingpowergeneration,economywideresilienceandadaptation(includingsocialaspects),water-relatedresilience,anddecarbonizingtransport(figure18a).Intermsofinstrumentsforimplementingtherecommendations,strategicplanningandmainstreamingclimateobjectivesintodevelopmentandeconomicpoliciesareinthetopthree,confirmingboththeimportanceofthemainstreamingagenda(figure18b)andthatsiloswithingovernmentaremajorobstaclestocost-efficientaction.Someofthemostimportantdimensionsofclimateaction—includinginfrastructureinvestmentandbuildingcodesandstandards—andthesoftinfrastructurenecessaryforclimateaction,suchasinformationprovision,monitoring,andinstitutionalcreation,alsofeaturehighly.Sectoralinterventions,suchasthegridandrenewableenergy,urbanplanning,andclimate-smartagriculture,allinthetop30aswell.Otherimportantrecommendationstoaccelerateandfacilitatethetransitionincludeinnovationandtechnologydiffusion,greenfinance,socialprotectionsystems,andactivelabormarketpolicies.25FIGURE17:Distributionofadaptationandmitigationrecommendations,bysectorEconomywideEnergyTransportWaterAgricultureFinanceBuildingsForestryIndustryEnvironmentHealthEducationWasteMining0306090120150NumberofpolicyrecommendationsAdaptationMitigationBoth25Policyrecommendationsrelatingtoearlywarningsystemsweregroupedbasedonthetextofthepolicyrecommendation,withmostgroupedunderthe‘economywideresilienceandadaptation’andacoupleunder‘socialprotection’and‘urbanplanning’.54ClimateandDevelopment:AnAgendaforActionFIGURE18:KeypolicyissuestackledandrecommendedimplementationmechanismsintheCCDRsa)MainpolicyissuesClimatefinanceDecarbonizepowerEconomywideresilienceandadaptationWater-relatedresilienceDecarbonizetransportGovernanceClimate-smartagricultureJusttransitionClimatefiscalpoliciesDeforestationUrbanplanningDecarbonizeenergy(general)EnergyefficiencyImprovemacroeconomicandenablingenvironmentEcosystemservicesandnaturalresourcemangementDisasterriskmanagementSocialprotectionWastemanagementGreentradeCleancookingGreenbuildingsDecarbonizeindustryAirqualityNumberofpolicyrecommendationsAdaptationMitigationBoth020406080100b)RecommendedimplementationmechanismsStrategicplanningInfrastructureinvestmentsMainstreamclimateobjectivesInformationprovisionMonitoringCapacitybuildingInstitutionalcreationSocialprotectionsystemsTechnologydeploymentanddiffusionNewfinancialproductstosupportgreenfinancePoliticalandnon-bindingclimatestrategyActivelabormarketpoliciesTechnologydevelopmentBarrierremovalSectoralstandardsBuildingcodesandstandardsFormalandlegallybindingclimatestrategyTaxorsubsidyadjustments/removalsEnvironmentalconservationandrestorationProfessionaltrainingandcertificationNegotiatedagreements(public-privatesector)AdviceoraidinimplementationOtherregulationCO2taxesDisasterriskmanagementTransit-orientedurbandevelopmentGridaccessandpriorityforrenewablesClimate-smartagricultureGrantsandsubsidiesNature-basedsolutionsNumberofpolicyrecommendationsAdaptationMitigationBoth05010015020055ClimateandDevelopment:AnAgendaforAction6.ConclusionTheCCDRs—WorldBankGroupdiagnosticsthataimtohelpcountriesachievetheirdevelopmentandclimategoalstogether—representbutonestepandonecomponentinalongerandbroaderprocess.Agovernment-ledprioritizationandsequencingexerciseisanessentialnextsteptotranslatethediagnosticintoanimplementable,country-ownedstrategyandinvestmentplan.ForthecountriesinthefirstsetofCCDRs,wewillstrivetousetheanalysistoengagewithourpublicandprivatesectorclientstotranslatekeyrecommendationsintodevelopmentandclimateprioritiesgoingforward,includingthroughtheWorldBankGroupcountryengagementframeworkandoperationalportfolio,aswellastargetedsupporttowardNDCsorLong-termStrategies.Incountrieswheretheyareavailable,CCDRswillalsoinformthedesignofinterventionssupportedbytheInternationalMonetaryFundResilienceandSustainabilityFund.TheCCDRswillsupporttheachievementoftheotherCCAP2.0objectives,includingsupportingthefivetransitionsandreachingourobjectiveof35percentofclimateco-benefitsonaverageovertheCCAPperiod.BeyondtheWorldBankGroupportfolio,aCCDRlaunchcanbeanopportunityforgovernments,privatesectorinvestors,citizens,internationalfinancinginstitutions,andWorldBankpartnerstoengageondevelopmentandclimateaction,withbettercountry-levelcoordination.Despitethechallenginginternationalenvironment,andasnotedintheWorldBankCCAP,thereisawindow—andanimperative—totransitiontolow-carbonandresilientdevelopmentpathwayswhilealsosupportingeconomicgrowthandjobcreation.Throughourglobaladvocacy,conveningpower,andsupporttoclientcountriesandtheprivatesector,theWorldBankGroupwillparticipateinthiseffortthroughvariouschannels,includingsupportingCCDRactionsandrecommendations.Throughourcountryengagementandoperations,weareusingtheCCDRstostepupsupportforapeople-centeredapproachtoclimateaction,withambitiousactionsinsectorsthataccountforthebulkofglobalGHGemissionsandincreasesupportforhigh-impactadaptationaction,whiledeliveringonourcorporatemandatetoeliminateextremepovertyandboostsharedprosperity.

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