The challenges of the 21st century Achieve the Millennium Development Goals and move to solve climate change

Much attention is at last being paid to the severe challenge that climate change and its associated impacts will pose for all nations, particularly the developing countries. The Stern Review: The Economics of Climate Change and other studies have made it clear that while the poorer nations have done the least to cause global warming, they will suffer the earliest and most severe consequences (Stern et al, 2006). Access to modern sources of energy is at the base of all initiatives to realize the Millennium Development Goals (MDGs), which are aimed at significantly reducing poverty by 2015. So financing the energy transition in developing countries has the dual challenge of contributing to the solutions for global warming3 while at the same time providing more high-quality energy to the poor to safeguard their development aspirations.

The threat of global warming is now recognized as so serious that all international financial institutions must turn their attention to this priority. The major private-sector banks and other investors all have the opportunity to direct their lending priorities towards global warming solutions, as they make investment decisions. But financial institutions that have access to public funds or guarantees4 have an additional obligation to act with regard to the consequences for the future of the planet and to benefit the poorest. This applies to official development assistance funds, clearly, but also the export credit agencies, as well as the MDBs. The question for this chapter is: what should be the appropriate role for the World Bank and the other MDBs in helping the world to slow down climate change and move towards a sustainable energy future?

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