Renewable Energy

Road to net zero: Developing countries can cut 70% emissions with modest investments, says World Bank

High-income countries responsible for historical emissions must rapidly decarbonise, says World Bank report

By Rohini Krishnamurthy
Published: Friday 04 November 2022
The road to low-carbon and resilient economies demands significant investments. Photo: iStock
The road to low-carbon and resilient economies demands significant investments. Photo: iStock The road to low-carbon and resilient economies demands significant investments. Photo: iStock

Developing countries can reduce their greenhouse gas emissions with relatively smaller investments, but they require more assistance, according to a new World Bank report.

Channelling 1.4 per cent of developing countries’ gross domestic product (GDP) for adaptation and mitigation can help cut emissions by as much as 70 per cent by 2050, read the Climate and Development: An Agenda for Action report.

The report, published November 3, comes days before the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change in Egypt, where climate adaptation will be discussed.

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The investment requirements of developing and emerging economies vary. Low-income countries typically have greater investment needs. They require up to 8 per cent of GDP for the same.

At the same time, it is 5.1 per cent in lower-middle-income and 1.1 per cent in upper-middle-income countries, the report highlighted.

“Climate-development financing needs are larger as a percentage of GDP in the countries that have contributed least to global warming and where access to capital markets and private capital is more limited,” read the report.

It is impossible to separate climate-related needs from development needs in Sahel, Rwanda, Cameroon and Pakistan. Climate change vulnerabilities can only be addressed by plugging the infrastructure gaps, the report added.

The Sahel extends south of the Sahara from Senegal in the west to Ethiopia in the east of Africa. It is is particularly vulnerable to land degradation, droughts, floods and other climate shocks. 

The report covered over 20 countries, which accounted for 34 per cent of the world’s greenhouse gas emissions. Both low-income and low-middle-income countries are not equipped to protect themselves from the impact of climate change.

Achieving climate and development objectives must go hand in hand, said World Bank Group President David Malpass in a statement.

The road to low-carbon and resilient economies demands significant investments. But the transition can offer benefits that wholly or partially nullify costs, the report claimed.

For example, Turkey will be able to gain $146 billion (1 per cent of GDP), between 2022 and 2040, from reduced energy imports and lower air pollution

Well-prioritised climate actions, strong participation of the private sector, substantial international support and a just transition can help achieve positive impacts, Malpass claimed.

Renewable energy projects in low-income and some middle-income countries require huge investments. Countries with poor credit ratings or high perceived risks receive little funding for mitigation projects.

The World Bank recommended strengthening institutions and policies to reduce such risks. Access to concessional capital can encourage investments from the private sector, it added.

High-income countries responsible for historical emissions must rapidly decarbonise while ramping up financial support to lower-income countries, it added.

Current climate finance and mitigation targets are not enough. “It is important for developing countries to raise their ambition,” Manjeet Dhakal, head of the least developed countries’ (LDC) support team at the non-profit Climate Analytics, had told Down To Earth.

The World Bank report also said significant current and future emitters in the developing world, too, have a crucial role to play in keeping the UN-mandated Paris Agreement’s emission-reduction goals alive.

Further, the analysis highlighted that technology is key to climate action. Technological advancements occurred in higher-income countries and a few upper-middle-income countries, including China.

“These countries play a key role by investing in high-risk, high-potential technologies that can be transferred to low-income countries,” the report read.

However, World Bank’s Country Climate and Development Reports 2022 had focussed on technologies that are yet to become commercialised. For example, green steel, carbon capture and sequestration, or green hydrogen.

Country Climate and Development Reports also suggested concrete and priority actions for enabling low-carbon and resilient transition. New or maturing technologies create uncertainties that countries must consider while designing climate strategies, the report pointed out.

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