Today's date:
Summer 2007

Don't Make the Poor Pay for Reducing Global Warming

Paul Wolfowitz was ousted as president of the World Bank Group in May. He authored this article during his last week in office.

Washington —Climate change can no longer be considered an issue that can wait for future generations to confront. There is an emerging global consensus among policymakers, private sector leaders and the public that we must act before the challenges become even greater.

At a recent climate change summit in Brussels, European Union leaders announced they will cut carbon emissions by 20 percent by 2020.

And in the United States, a remarkable coalition of major companies and nongovernmental organizations, calling itself the United States Climate Action Partnership (USCAP), has called for a groundbreaking national policy to tackle climate change.

Such determination is promising, but this needs to become truly a global effort that matches the scope of the challenges we must confront. In the developing countries, the task is all the more demanding. How can they meet their growing need for energy while reducing the impact on the environment?

Instead of viewing emission reductions as a costly activity that simply reduces the burden of climate change, we should also view it as an opportunity to generate funds to invest in a different energy path—one that not only makes less use of carbon, but which diversifies the world's energy sources, preserves the world's forests and enables a long-term shift away from finite and limited fossil fuels and toward greater reliance on renewable energy and technological innovations. That's the opportunity to be grasped, and the predicament facing the world's poorest people demands that we act quickly.

It is sad that more than one billion people around the world struggle to survive from one day to the next on less than a dollar a day. There are even more people worldwide who have no access to electricity. In rural areas of the developing world, particularly in South Asia and sub-Saharan Africa, as many as four out of every five people live without electricity.

Overcoming this poverty and misery will require energy demand in the developing world to increase. But we need to be prepared to respond to this rising demand with a smaller carbon footprint.

Poor countries have argued that they should not have to pay the price for fossil-fuel-dependent growth in the rich countries. And they are right.

Rich countries need to lead by example. Today, Organization for Economic Cooperation and Development (OECD) countries are moving forward with plans to renovate and replace virtually their entire power plant infrastructure. The decisions made in capitals across Europe and North America today will affect generations to come, so it is essential that they make the right choices and invest in clean technology and move toward low carbon strategies.

Reducing greenhouse emissions will require a long-term, equitable, global regulatory framework in which rich countries show leadership by supporting developing countries in exchange for the global benefit of greener, smarter growth. This framework needs to provide certainty to stimulate research and development in transformational technologies, and it must allow carbon markets to thrive and bring financial flows to developing countries—flows that could reach the level of $100 billion within a few decades.

Whatever solution emerges for reducing carbon emissions, one thing is clear. We will need to generate significant resources to help developing countries grow, while reducing the impact on the environment.

The UK's environment secretary, David Miliband, recently suggested that carbon trading could generate resource flows on the order of $200 billion a year, half of which would go to the developing world.

Even $100 billion is, of course, an enormous amount of money. It exceeds what is currently spent on official development assistance by all the bilateral and multilateral institutions. But it is dwarfed by what the world spends every year on fossil fuels. It is only 7 percent of the $1.5 trillion that the world spends each year just on oil alone, not to mention gas and coal.

There are better uses for these funds. Instead of importing fossil fuels, we could be investing in innovation that will allow us to meet our energy needs from more diverse sources and without damaging the environment.

At the World Bank Group, we are placing greater emphasis on renewable energy in our own support to developing countries. We are promoting geothermal energy in Kenya and small hydropower projects in rural areas in Uganda. In Nepal, we are supporting a biogas program that replaces firewood for cooking in rural households, thus reducing indoor air pollution as well as reducing carbon emissions. We are working on the commercialization of fuel cells in remote areas in Africa. And in India, Kenya and Morocco, we are promoting the use of solar panels for electricity.

If governments, the private sector and international development institutions work together, we can turn the emerging global consensus on climate change into concrete action. We can fund innovation and find solutions.

And we could look more confidently toward a very different future—one where we do not have to choose between prosperity and a healthy environment, because both would be within our reach.