Development banks pledge US$15b in new climate funds: officials

World Bank Group President Jim Yong Kim delivers a speech during 2015 IMF/World Bank Annual Meetings in Lima, Peru on Oct 9, 2015. 

PHOTO: AFP

OCT 10, 20157:54 AM

[LIMA] Development banks including the World Bank have pledged an additional US$15 billion a year by 2020 to fight climate change, taking the world closer to the clutch target of US$100 billion, officials said on Friday.

Just two months before key UN climate talks in Paris, world leaders are scrambling to reach the magic number of US$100 billion in funding to combat global warming and help vulnerable nations cope with the impact of climate change.

The figure, agreed in previous rounds of talks, is seen as a make-or-break issue in the years-long negotiations to reach a comprehensive carbon-cutting pact to save the planet from the potentially catastrophic impacts of global warming.

The World Bank announced it would increase climate financing from 21 per cent of its total funding to 28 per cent in 2020.

In dollar terms, that would be an increase from an average of US$10.3 billion a year now to US$16 billion a year in 2020, at current funding levels.

"We are committed to scaling up our support for developing countries to battle climate change," World Bank president Jim Yong Kim said in a statement.

"As we move closer to Paris, countries have identified trillions of dollars of climate-related needs. The Bank, with the support of our members, will respond ambitiously to this great challenge."

French finance ministry officials said other development banks including the European Investment Bank, Asian Development Bank and Inter-American Development Bank had made similar pledges for a total of around US$15 billion in new funds.

"We were expecting a lot from the multilateral banks... and they rose to the challenge," said French Finance Minister Michel Sapin as he left a climate meeting that brought together some 50 countries and institutions in the Peruvian capital Lima.

"We still haven't reached the end of the road. The last steps are often the most difficult," he added.

PRESSURE TO DELIVER

Mr Sapin had criticised the development banks for not doing more on climate-related funding as world economic leaders met in Lima this week for the annual meetings of the International Monetary Fund and the World Bank.

"They haven't done a lot," he told journalists Thursday.

"If we want the Paris conference to be a success, the question of funding has to be nine-tenths settled, if not 100 percent." US Secretary of State John Kerry had also called on the World Bank and other institutions to step up their climate finance targets.

A new report this week found the world was less than two thirds of the way to the US$100-billion-a-year target last year.

The Organisation for Economic Cooperation and Development (OECD) calculated a total of US$61.8 billion in climate funding in 2014, including US$23.1 billion from governments, US$20.4 billion from multilateral institutions and US$16.7 billion from the private sector.

Since the start of the year, a number of countries have pledged more climate funds, including France, Germany and Britain - taking the world closer to the US$100 billion figure, though the OECD has not yet updated its estimate.

Some activists are critical of the OECD's calculations, saying it counted money spent on projects not directly linked to climate change, such as agricultural programmes.

Others critics say the current funding mix includes too many loans and not enough grants.

AFP

    
 

Peru protesters tell IMF 'imperialists' to go home

Peruvian workers and activist protest against the 2015 IMF/World Bank Annual Meetings in Lima, Peru, Oct 9, 2015. 

PHOTO: REUTERS

OCT 10, 20157:26 AM

[LIMA] Activists marched through the Peruvian capital Friday to protest what they called the anti-poor policies of the International Monetary Fund and World Bank, which are holding their annual meetings here.

Around 2,000 demonstrators joined the march, carrying signs with angry slogans and at one point burning the flag of the United States, where the IMF and World Bank are based.

"Imperialists go home," said one sign decorated with swastikas. "World Bank, universal terror," said another.

Police in riot gear carrying shields and tear gas bombs accompanied the protesters on the three-hour march, but ultimately no clashes broke out.

When the march reached the meeting venues - which have been surrounded by a heavy security presence all week - a small group of protesters was allowed to go inside to hand a petition over to officials.

"Stop cutting payrolls to get out of the crisis," it said.

The demonstrators, some of whom wore traditional Andean indigenous garb, threatened to call a national strike if the Peruvian government continued to "blindly" implement IMF policy prescriptions.

The march was called by Peru's largest labour union, the Workers' General Confederation of Peru (CGTP).

"The economic growth the International Monetary Fund talks about in Peru in recent years hasn't been felt in the working class. It's gone to businessmen," said CGTP leader Domingo Cabrera.

The IMF and World Bank have long had thorny relations with Latin America, where they have faced accusations of forcing governments to cut programmes for the poor in exchange for access to loans.

This is the first time the institutions have held their annual meetings in the region since 1967.

IMF chief Christine Lagarde sought to downplay criticisms Thursday as she kicked off the meetings in a region long resentful of being seen as America's back yard.

"The world has changed ... The IMF has changed," she said.

"It's not the old Latin America. It's not the old IMF either. The relationship is one of cooperation and partnership."

AFP

    
 

20 photos that show how insanely crowded China has become

• Jack Sommer
 

• Oct. 8, 2015, 2:18 PM
• 548,039
 
• 9

Reuters/StringerTourists gather on the Great Wall outside Beijing.

China's population was approaching 1 billion when it enforced a one-child-per-family policy in the late 1970s. Exceptions were only made in the cases of ethnic minorities and rural couples, who were sometimes allowed two children.

The law is not the most popular, and there have been some unintended consequences, including a skewing of the population towards males and a disproportionate representation of elderly people. 

Still, many argue that it has been important for the country, as it has helped reduce famine and limited a population that was rapidly growing. 

With the policy in place for over 35 years, the current population still rests at around 1.4 billion. 

These photos from Reuters are good examples of how crowded the country has become. 

(Captions by Reuters and Jack Sommer)

View As: One Page Slides

Examinees walk into the entrance of a classroom building to take part in a three-day entrance exam for postgraduate studies in Hefei, Anhui province. A record 1.8 million people applied to attend this exam in 2013.

REUTERS/Stringer

Students take an exam at a high school's open-air playground in Yichuan, Shaanxi province. More than 1,700 freshmen students took part in the exam in 2015, which the school moved outside because of insufficient indoor space.

REUTERS/Stringer

Laundry hangs outside student housing at a university in Wuhan, Hubei province.

REUTERS/Stringer

Parents sleep on mats laid out on a gymnasium floor inside a university campus in Wuhan.

A woman collects her bicycle from a parking lot outside of a subway station in Beijing.

REUTERS/Reinhard Krause

People ride escalators and walk down the stairs on their way to a subway platform during rush hour in Beijing.

REUTERS/Kim Kyung-Hoon

Passengers wait to get into the crowded Zhengzhou Railway Station on the first day of "the Golden Week," a holiday that celebrates the founding of the People's Republic of China. According to the China Tourism Academy, a total of 480 million trips were estimated to be made within those seven days.

REUTERS/Stringer

Zhengzhou, Henan province

Taxi drivers line up in a parking lot while waiting for passengers at the new Beijing Capital International Airport.

REUTERS/Claro Cortes IV

Junior college students line up outside a job fair in 2014. Around 50,000 people attended this one job fair in Zhengzhou, Henan province.

REUTERS/Stringer

Thousands of job seekers visit booths inside a job fair in Chongqing.

REUTERS/Stringer

Over 1,000 paramilitary policemen take part in an exercise in Nanjing, Jiangsu province.

REUTERS/China Daily

People buy vegetables at a morning market in Beijing.

REUTERS/China News

Large crowds walk under a row of trees decorated with fans and red lanterns at a temple fair celebrating the Chinese New Year in Beijing.

REUTERS/David Gray

People crowd on a beach in Dalian, Liaoning province, to escape the summer heat.

A tourist resort in Daying County provides another escape from the summer heat.

REUTERS/Stringer

Visitors participate in the annual water-splashing festival to mark the New Year of the Dai minority in Xishuang Banna, Yunnan province.

REUTERS/Stringer

Worshippers wait at the entrance of Guiyuan Buddhist Temple in Wuhan to burn offerings on the fifth day of the Chinese Lunar New Year. Hundreds of millions packed temple fairs and set off fireworks for the traditional weeklong holiday.

REUTERS/Stringer

Visitors get in line to see the soaring tide near the bank of Qiantang River in Hangzhou, Zhejiang province. Tidal waves are at their highest during the month of September.

REUTERS/Steven Shi

Shoppers crowd under colorful neon lights along Shanghai's bustling Nanjing Road.

REUTERS/Claro Cortes

Vehicles are seen on a main Beijing avenue during the evening rush hour.

Energy

Environment

Infrastructure, Long-term Investing and Development

What is driving China’s investment in renewables?

By John Mathews and Hao Tan

Oct 1 2015

Comments

• 2K+Share on Facebook (Opens in new window)2K+
• 322Click to share on Twitter (Opens in new window)322
• 103Click to share on LinkedIn (Opens in new window)103

The narrative around renewable energy sources is typically framed almost entirely in terms of their contribution to reducing carbon emissions and thereby providing a means to tackle climate change. From this perspective, the drive for renewables is inseparably linked to international negotiations over reducing carbon emissions, which will come to a head at the United Nations summit in Paris towards the end of this year.

But this framing of the story struggles to explain the rise of China as the world’s renewables superpower. It is investing more in renewable energy production and manufacturing of renewable energy devices than any other country. Is China making these huge investments – not to mention launching a national emissions trading scheme – purely to accommodate the world’s desire to see carbon emissions reduced?

This is the question that we address in our new book, China’s Renewable Energy Revolution, published this month.

Our argument is that China is motivated by much more immediate concerns. Because of the dominant role played by coal in its rise as the world’s largest manufacturing economy, China suffers from catastrophic air pollution, particularly the toxic mix of tiny particulate matter that penetrates deep into the lungs of people breathing the air of Beijing, Tianjin, or other major industrial cities. The issue has prompted anger and social agitation, with the public demanding that environmental laws be enforced. (See, for example, the explosive impact of the documentary Under the Dome, by investigative journalist Chai Jing.)

Yet the real problem for China in continuing on a “business as usual” pathway is that it would become increasingly dependent on imports of coal, oil and gas – and therefore grow more vulnerable to price fluctuations and sudden interruptions to supply. More pointedly, as a relative newcomer to the global fossil fuel market, China is forced to locate supplies from more and more unstable parts of the world, putting it at financial risk from war, revolution and terrorism even in distant lands.

These concerns over energy security, and the immediate issue of air pollution, are in our view likely to be weighing more heavily on the Chinese leadership than concerns about climate change.

New paths to growth

Our view is that China is running into the limits of a predominantly fossil-fuelled expansion and now needs to find a new development pathway based on green growth and clean technology. This, we argue, is what lies behind its vast investments in renewables.

In per capita terms, China is of course not yet abreast of the developed countries in its overall energy consumption or its renewable energy use. But this is not evidence that China is going “light” on renewables; on the contrary, as a rising middle-level power, it still has plenty of room to grow its already large renewable energy industries.

Even though per capita use is still modest, the absolute size of the renewables investment in China allows new industries to scale up, which in turn leads to lower costs as efficiencies are captured. Through the principle of circular and cumulative causation, this leads to further market expansion and further cost reductions. The cost reductions then create opportunities for countries in the rest of the world to become involved in renewable energy as well.

China is already on the record in viewing its clean technology sectors as key drivers of future prosperity and export platforms. The 12th Five-Year Plan, which ends this year, set out the comprehensive goals for China’s economic development. It featured seven Strategic Emerging Industries (SEIs) that were earmarked for special promotion, including three industries closely related to the burgeoning energy transition: energy saving and environment protection; new energy sources; and new-energy-powered cars.

The plan laid out a target that production value-added from these seven SEIs should reach 8% of China’s gross domestic product (GDP) by 2015. This target has since been raised to reach 15% of GDP in 2020. There could be no clearer demonstration of how China views the link between building energy security, improving environmental protection and creating the export platforms of tomorrow.

China’s green business case

As we see it, China has a lot more riding on its renewables revolution than (just) climate change concerns. Important as these are, it is a profoundly convenient truth that the more China builds its export platforms around renewables, smart energy grids, and clean transport technologies such as fast rail and electric vehicles, the more it drives down its own carbon emissions and the costs of these clean technologies for everyone else.

The lesson for industrialised countries such as Australia is that renewables do not have to be framed solely as an issue of climate change and its mitigation. In keeping with the new emphasis of the Turnbull government on a 21st-century agenda, with the focus on tackling the challenges and seizing the opportunities created by industries of the future (such as renewables) rather than sticking with those of the past (coal), it is the business case that needs to be made.

China has shown very clearly that renewables make excellent business sense in the 21st century. Now it is up to Australian leaders, such as the new energy minister, Josh Frydenberg, and assistant innovation minister, Wyatt Roy, to act on the same understanding and help build – finally – a great renewables industry in Australia.

This article is published in collaboration with The Conversation. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with the Agenda subscribe to our weekly newsletter.

Author: John Mathews is a Professor of Strategic Management at the Macquarie Graduate School of Management. Hao Tan is a Senior Lecturer at the Faculty of Business and Law, University of Newcastle.

Image: A worker inspects solar panels at a solar Dunhuang. REUTERS/Carlos Barria.

Russia sees US$5b capital inflow in Q3 as conditions stabilise

OCT 10, 201512:02 AM

[MOSCOW] Russia saw a net capital inflow of US$5.3 billion in the third quarter, central bank data showed on Friday, a turnaround from steep outflows in preceding quarters that suggests financial conditions are stabilising.

The last time Russia saw a comparable quarterly capital inflow was in the second quarter of 2010. Since then, the price of oil has halved and sanctions over the Ukraine conflict have spooked investors. "This time around, foreign debt repayments were almost completely financed by banks and companies using foreign-currency assets they had accumulated," said Oleg Kouzmin, an economist at Renaissance Capital. "That allowed for a significant improvement in indicators on the financial account." Since last year, Russian companies have had restricted access to international capital markets because of sanctions over Ukraine, so money flowing out of the country for foreign debt repayments has barely been counterbalanced by new international lending to Russia.

But in the third quarter, Russian firms selling foreign-currency assets helped bring an inflow of capital on the financial account.

Despite the third-quarter figures, Russia registered a capital outflow for the first nine months of US$45 billion, versus an outflow of US$76.8 billion in the same period of 2014, the central bank's preliminary balance of payments data showed.

Some analysts said the improvement in the third-quarter data also reflected better market sentiment towards Russia. "The market might be getting ahead of itself in that latter respect, depending on Syria outcomes, but it is what the market thinks," said Tim Ash, senior CEEMEA desk strategist at Nomura. "They seem to think that Russian actions will create leverage with the West to secure concessions over sanctions and Ukraine." Markets have so far shrugged off Russia's military campaign in Syria, but some analysts have said it could lead to a compromise with the West over the Ukraine conflict.

Russia's current account surplus in the third quarter was US$5.4 billion, the central bank data also showed. Russia's balance of trade was at US$28.2 billion, sharply lower due to weak oil prices.

REUTERS