Balancing Carbon Reduction and Economic Growth

The poorest people of the world will undoubtedly be affected the most by climate change and the current global economic crisis, according to Kathy Sierra, the vice president for sustainable development at the World Bank. Ironically, climate change will have a disproportionate impact on the poor in developing countries, who even though they have done the least to cause it, are the least prepared to deal with it and will suffer the soonest and perhaps the most from it, she told The Commonwealth Club’s Climate One audience this past Tuesday.

In conversation with The Club’s Climate One Director Greg Dalton and Awais Khan, the director of KPMG’s Clean Tech Venture Capital Practice, Sierra outlined the new dual mandate of the World Bank: help the world’s poor and simultaneously confront global climate change issues. In short, she said, successful global carbon reduction and economic growth, inextricably linked, will require “finance, technology, partnerships and a new way of thinking about development.”
When Dalton asked how the current financial crisis is affecting the work of the World Bank, Sierra responded, “It is harder now, because there is less capital out there.”

Sierra responded to queries about the bank’s mission and it major accomplishments by explaining how the bank seeks to get “knowledge out there, bring together different financial flows, and create partnerships.” She said the World Bank is strongly urging developing nations -- including India, China, Brazil, Mexico, and South Africa -- to consider the changes that need to be made to reduce their carbon footprint and create better energy efficiency. She cited Mexico as an example of where climate change is being tackled aggressively. With a loan from the World Bank, Mexico is transforming urban transport, working on its rapid-bus mass transport system to get cars off the road and implement a lower emissions bus system. She noted that if they are successful there, other Latin American countries will surely take their lead and consider that those solutions might work for them as well.

Sierra lauded the efforts of Turkey as a leader in sustainable energy development. She said that Turkey is very interested in meeting European standards and that the World Bank is working closely with it to introduce smart grids and other energy-saving advancements.

Khan added that the private sector supplements World Bank efforts by looking at attractive technologies and commercializing them. He described some of the most promising energy-saving technologies currently being funded by Silicon Valley Venture Capitalists: the electric car in China, waste management technologies, and plastics recycling. “However,” he added, “the World Bank is more active than we think in Silicon Valley.” He emphasized how closely the bank must work with the governments of countries to implement change of any kind. When asked what corporations can do to help lower negative environmental emissions, Khan responded, “they can do a lot.” He used Nike as an example of a company that has pulled back from regions of the world where energy standards are lower.

With its new climate-change agenda, Sierra said the World Bank is taking more risks. She said that many developing countries, as well, are now more likely to take risks because they want diversified energy portfolios.

Knowledge, partnerships and financial packages are crucial to orchestrating the critical changes the World Bank believes need to take place. “Part of our collective job is to get the cleanest technologies in place,” Sierra said. “Our mission at the World Bank is not just to help countries do no harm, but to help them get on the right path and move toward cleaner energy solutions. It’s already happening in wind and geothermal. ... The big challenge now is how to scale it up. It’s very expensive, time-consuming -- and complicated -- but do-able. ... Carbon credits and microfinancing, this is where the world is going.”

With 1.6 billion people in developing countries living without access to electricity, Sierra said that those countries’ leaders are more motivated than ever to provide their citizens with electricity. Moving to cleaner energy will be attractive to them, especially if there is financing and technology available. Helping these countries to get on this low-carbon growth path is key to sustainable development and poverty reduction and, therefore, key to the mission of the World Bank.

--Commonwealth Club Media and Public Relations Department