Integration of climate mitigation and resilience in key sectoral strategies

Explanation

The IDB has Sector Framework documents which outline the directives that are applied to IDB loans in numerous economic sectors. All four sectors being investigated (water, energy and transport, and cities) are included within the framework documents. Moreover, the IDB has a ‘Climate Change Sector Framework Document’ which is important because the Bank explicitly recognises that climate change measures must be considered for all sectors to ensure sustainable growth. This is best practice among the MDBs.  IDB was the only bank that has an overarching climate change sector framework which explicitly links all sectors to climate change.  However, IDB has not been ranked as ‘transformational’ since the sectoral strategies do not yet integrate the priorities of supporting deep decarbonization pathways and structural, systemic resilience in all sectors.

Energy

Within its 2015 Energy Sector Framework, two key sections cover climate change and the challenges it poses for this sector. Both climate mitigation and climate adaptation are well integrated in the strategy, with the exception of stronger measures around fossil fuels.

With regards to climate adaptation, it states that:

“[The IDB Integrated Strategy for Climate Adaptation and Mitigation] highlights the vulnerabilities of infrastructure to climate change and calls for adaptation measures that will lead to greater resilience in projects financed by the IDB, as well as plans to address vulnerabilities in the energy sector. It requires additional efforts in investments that mitigate climate change, particularly renewable energy and energy efficiency.”

And

“To improve the climate resilience of energy systems, governments need to encourage supply and demand-side adaptation, while the private sector needs to consider these impacts on its operations. Energy system vulnerabilities include sudden and destructive effects to facilities caused by extreme weather events. Other impacts are gradual, such as changes to heating and cooling demand, sea level rise that affects coastal infrastructure, and the effects of shifting weather patterns on hydropower production and water availability for power plants.”

Transport

The IDB 2016 Transport Sector Framework focuses on climate mitigation and adaptation in a balanced way.

It mentions that “urban transportation can help to mitigate climate change given the potential reduction in fuel consumption and the promotion of nonmotorized transportation” and that the “modal shift in favour of nonmotorized transportation is a relevant strategy for mitigating the impact of climate change”. In terms of its own role, the Bank states that it “will promote collective public transportation and foster climate change mitigation through the streamlining of services, fuel savings, energy efficiency, and reductions in pollution.”

The framework also elaborates on how IDB intends to integrate adaptation aspects into its transport lending. Specifically, “adaptation  strategies  in  the  transportation  sector  may  be separated  into  three  main  categories: (i) those  seeking  to  identify  risks  and vulnerabilities; (ii) those that aim to protect and strengthen vulnerable infrastructure; and (iii) those with the objective of creating other means of improving the resilience of the transportation system.” Remarkably, IDB also acknowledges that it still needs to improve this area, stating that “the work done in this area is still limited and the [Office of Evaluation and Oversight’s] evaluation indicates that the Bank needs to explore innovative ways of integrating  risks  and  opportunities  in  activities  to  promote  adaptation  as  part  of infrastructure development.”

The Paris Agreement is referenced in the strategy but there is no mention of how to approach investments in airports or aviation from the perspective of climate change and the Paris Agreement.

Water

The IDB 2017 Water Sector Framework focuses mostly on climate resilience and the need to consider this in infrastructure planning. The framework further details which sectors are most affected by climate risks associated with the water sector.

On mitigation the framework outlines the source of GHG emissions from the water sector and how the IDB intends to tackle this issue. It acknowledges that “several of the goals of the Paris Agreement of the United Nations Framework Convention on Climate Change are related to the [water and sanitation] sector”.

The framework further elaborates lessons learned from the previous Water Sector Framework 2007 – 2016, such as a direct integration of climate change aspects in water sector projects and the use of climate scenarios to mitigate risks.

Cities

The IDB 2016 Urban Development and Housing Framework integrates both mitigation and adaptation, and recognises the multi-sectoral nature of cities and housing policy. For example, it states that the IDB should “consider how these interventions act to boost the resilience and minimize the contribution of urban areas to climate change”.

The framework elaborates on lessons learned with regards to integrating climate change from previous lending in the sector.