Robert Watson, the environment director for the World Bank,
said the
agency's most important role will be in helping to guide the policies
of
developing countries, which he said should include eliminating subsidies
for fossil fuels and improving energy efficiency.
He also said that the World Bank would only ask developing
countries
to pay for the amelioration of local and regional environmental
problems. Addressing issues such as air pollution would also help
prevent climate change to a certain extent, noted Watson, and further
funding to address climate change directly could come from multilateral
sources such as the Global Environmental Facility (GEF).
"We don't believe our clients [developing countries] should
pay to be
climate-friendly," he said.
Noting that carbon dioxide
can last in the atmosphere for more
than a hundred years, Watson, who also sits on the Intergovernmental
Panel on
Climate Change, declared that "the time for action is now" on the issue
of climate change.
He suggested that renewable
energy sources could make up half
the world's energy mix by the middle of the next century, and that
fuels
should be carbon-free by the year 2100. Meanwhile, natural gas, the
burning of which releases relatively small amounts of greenhouse gases,
is expected to play an important transition role.
However, while the World Bank has reduced
the amount of its
loans for power plants using high-carbon fuels, Watson said it would
not halt its
funding of, for instance, coal-fired power plants.
"We do fund fossil fuels,
but we will do so by promoting their
clean and efficient use," he said. "We see no dichotomy there so long
as we
are pushing the envelope of efficient use."
As an example, he pointed
to the construction of a coal-fired
power plant in China which will achieve 40.5 per cent efficiency, a
relatively
high figure.
Watson also noted that while
the cost of renewable energy
sources is dropping, so is the cost of fossil fuels, and he expressed
a great deal
of concern at the fact that research and development budgets for energy
has declined drastically in recent years in every industrialised country
except Japan.
In terms of funding, he said
it was critical that the GEF be
replenished. "We are talking about US$2.5 billion for the next four-year
period," he said. "Half of its funding goes toward climate change
projects, around 40 per cent for biodiversity and the rest for ozone
issues and water."
But such publc-sector funding
won't be enough to carry out the
massive task of transforming the energy sector in developing countries,
he
added.
The World Bank is therefore
eager to mobilise private-sector
funding through the establishment of a Carbon Investment Fund - "kind
of
like a carbon mutual fund to by and sell carbon," he said.
Prices would be set through
market-based trading, and dependent
on the lowest marginal cost of reducing greenhouse (or carbon-based)
gas
emissions in developed countries.
"In order for it work, however,
there has to be crediting for
Joint Implementation (JI), or we won't see funding from the private
sector," Watson explained. "We believe that JI is a regime that is
useful to developing countries and will help produce technology
transfer."
Responding to a question
from a Bangladeshi delegate, Watson
acknowledged that too little attention had been paid to the issue of
how
the bank could help developing countries to adapt to climate change,
particularly rising sea levels.