Remarks by World Bank Group President David Malpass at the Seventh
Ministerial Meeting of the Coalition of Finance Ministers for Climate Action


April 19, 2022




Hello everyone. It is my pleasure to participate in this gathering of the Coalition of
Finance Ministers for Climate Action.

The World Bank Group is fully committed to mitigation and adaptation through our
Climate Change Action Plan. The key elements are to integrate climate and
development by identifying the most effective projects and interventions to achieve
mitigation and adaptation; and to help countries implement them through incentives,
regulations, bankable investments, and financing from the global community for global
public goods.

Last week, we briefed our Board on the status of our new core diagnostic, Country
Climate and Development Reports, or CCDRs. We have now held reviews for many of
these internally and expect to publish the first generation of these reports ahead of
COP27. The first batch of CCDRs includes countries that are home to more than 3
billion people and contribute roughly 39% to global GHG emissions. The batch also
includes countries that are considered among the most vulnerable in the world to
climate change.

Many climate interventions and projects offer large global public good benefits but
require substantial resources and compensations and may offer no financial returns.
The challenge is how to incentivize these activities.

For example, a just transition away from coal may need to include payments for coal
power plant decommissioning, early termination of contracts and social compensations
to workers and affected communities. Grant support is an essential element to support
these emissions reductions.

As carbon markets scale, they may provide part of the flow of financial benefit to
support projects that reduce carbon emissions. To address this part of the challenge,
we have prepared a concept note that proposes pooling private sector contributions in
support of GHG emission reduction projects into a financing platform in exchange for
verified carbon credits. We are now in market sounding stage to further tailor the
proposal to be sizeable and impactful.

Getting to the right incentive structure is critical yet problematic. Minister Saarikko just
explained Finland’s experience with carbon taxes. I’ll mention two other examples. A
country that wants to decommission a coal power plant faces a trade-off between
accounting for those reductions either as part of its NDCs or selling those reductions as
carbon credits to finance the closure. Another example is compensating the holder of a
permit for a coal power plant when the permit is rescinded.
Effective regulation can help provide the right incentives to deploy the appropriate
technical and commercial solutions to curb methane emissions. Last month, we issued
a report on reducing methane emissions. It focused on midsized flares that are typically
too small to be prioritized by companies. These sites account for nearly 60 percent of
associated gas burned wastefully each year. With improved regulatory oversight and a
better focus from companies, the necessary investments for gas flaring reduction can
be mobilized from private investors and cost-effectively tackle more than 2,000 flaring
sites.

Globally, Finance Ministries also need to catalyze the private sector to help close the
financing gap for investments in mitigation and adaptation. A comprehensive policy
framework is required to send clear signals to the private sector and set the right
incentives — including removing widespread contradictions in fiscal policy that today
often subsidize green and carbon-intensive technologies at the same time.

These various reforms and incentives can attract more funding for global public goods
and put it to work in ways that have the most impact. Our goal throughout is to build the
diagnostics that identify the most impactful interventions and then create financing
vehicles to bring in the large-scale global funding needed for successful GHG reduction
and adaptation.

The actions which Finance Ministers take hold the key to low-carbon, resilient growth.
The World Bank stands ready to continue working with you and the Coalition on these
goals. Thank you.