Technical assistance for implementing Paris goals

Explanation

Policy level, climate-related technical assistance

The WBG’s Climate Change Action Plan (CCAP) 2021–2025 marked a shift in the Bank Group’s approach to actively pursuing the alignment of climate and development, scaling climate finance, and prioritising key system transitions. As part of this, the WBG is now undertaking “major engagements on diagnostics and analytics to support national policy and planning for climate”.

Indicative of this, in 2022 IBRD launched the NDC and LTS Support programme as part of its Climate Support Facility (CSF). This replaced the NDC Support Facility which provided technical assistance for new NDC development and enhancement of existing NDCs across 12 countries between 2016 and 2021. A further 50 benefited from sector-specific technical assistance (TA) for policy development. The new NDC and LTS Support programme provides grants that support work across three themes:

1. NDC enhancement: provision of analytics and advisory services to bolster countries’ NDCs.
2. NDC implementation: support for planning, analysis, governance, and coordination efforts.
3. LTS development: promotion of country-owned development pathways aligned with domestic priorities and the Paris Agreement’s objectives.

By the end of 2022, the NDC and LTS Support program had approved a pipeline of 43 activity level grants worth USD 14.6 million across 35 countries.

Notably, there is no explicit indication that this programme will also proactively support countries with raising the ambition of NDCs. The “NDC enhancement” thematic area appears focused on strengthening the robustness of existing NDCs. For example, through support with developing planning, implementation, and monitoring capacities, as well as innovative implementation solutions. There is no indication that the programme will include targeted support for countries with strengthening the ambition level of NDCs, such as through strengthening forward-planning and target-setting capacities that can enable increased ambition. In view of the number of current NDCs falling short of limiting warming to 1.5 °C, increased ambition will be critical to maintaining a “livable planet”. The WBG is well equipped to complement its current extensive engagement on implementation with dedicated support for ambition increase in coordination with other MDBs and other relevant actors to avoid duplication.

The WB also launched the CSF Whole-Of-Economy programme in 2021. This programme aims to help developing countries tackle climate change through a whole-of-economy approach, focusing on cross-sectoral policy reforms to support the implementation of NDCs and LTSs. To do so, it offers:

• Enhanced analytical tools and diagnostic capabilities to provide informed policy recommendations considering a whole-of-economy approach.
• Coordination support for national financial institutions and central banks to integrate climate considerations into the development, execution, and oversight of public policies and investment strategies.
• Additional national capacity to formulate and execute macroeconomic, fiscal, financial, trade, and private sector development policies that are informed by climate considerations, aiming for a green recovery and fair transition.

The program will in total support 46 climate-informed, country level core diagnostics covering 61 countries. Moreover, activities funded by the program will provide inputs for the recommendations of the Bank Group’s CCDRs, and TA support will be provided for their implementation.

Fossil fuel subsidy reform

In the WBG’s CCAP (2021–2025), energy subsidy reform is highlighted as a key priority. This is primarily undertaken through the Bank Group’s Energy Subsidy Reform Facility (ESRF). This facility, set up in 2013 through the Energy Sector Management Assistance Programme (ESMAP), provides TA to countries for reforming, reducing, or eliminating fossil fuel subsidies. It notably features dedicated considerations for strengthening social safety nets. Between 2013 and 2021, the ERSF provided TA support to 65 countries.

However, despite its work through the ESRF, the WBG continues to provide TA that facilitates the expansion of fossil fuels. Between 2016 and 2020, the Bank Group allocated more than USD 450 million in technical support for fossil fuel ventures. Moreover, the WBG’s pledge to halt investments in upstream oil and gas notably does not extend to its TA provision. Supporting expansion of fossil fuel infrastructure (through TA, even if not with direct investment) risks exposing client countries to stranded asset risk and locking in carbon-intensive assets that compromise the transition to a low-carbon economy.¹

Other technical assistance

The WBG has scaled up its cross-sectoral climate-related technical assistance offer beyond policy level NDC support. Illustrative examples include:

• The WB’s Sustainable finance and ESG Advisory Services sustainable bond support: This includes support for the development of green, blue, and social bond markets in emerging countries with pre- and post-issuance technical assistance, as well as capacity building for institutional investors on setting up Environmental, Social, and Governance (ESG) strategies.
• The Extractives Global Programmatic Support Multi-Donor Trust Fund (EGPS): The EGPS is leading technical assistance and advisory activities for coal mine closures and coal plant decommissioning and repurposing. To foster a just transition, the WBG also aims to help national and sub-national authorities develop transition roadmaps with a focus on governance structures and community welfare in coal regions.
• The Financial Sector Assessment Program (FSAP): this financial stability TA offering (led jointly with the IMF) undertakes activities on climate risk and stress testing advisory services, with an emphasis on transition risks.
• IFC’s Green Bond Technical Assistance Program (GB-TAP): Launched in 2018, this programme provides assistance to financial institutions in developing countries for green bond issuances.
• The Partnership for Market Implementation (PMI) of carbon pricing: Through the PMI, the WBG provides TA support for countries to prepare for, design, and implement carbon pricing instruments, including for domestic carbon markets. The Bank Group has a target to support 30 countries and jurisdictions through the programme.
• Climate Toolkits for Infrastructure PPPs: The WBG offers TA to support the integration of climate mitigation and adaptation in the structuring of PPP projects. This includes through an overarching multi-sector “umbrella toolkit”, and five specific sector toolkits.

The Bank Group also has an extensive subnational level TA offering through a series of programs aimed at helping cities to decarbonise and build resilience. This includes:

• The Europe and Central Asia Cities & Climate Change Program, which provides technical assistance in preparing and implementing urban climate mitigation and adaptation investments.
• The Global Facility for Disaster Reduction and Recovery (GFDRR), which aids communities and countries, including through the City Resilience Program, to reduce risk of, prepare for, and recover from disasters. It provides assistance by integrating disaster risk management and climate adaptation considerations into development strategies and capital investment plans.
• The Building Regulation for Resilience, which promotes activities to improve regulatory systems for a resilient built environment, including through capacity building and knowledge exchange.

Recommendations:

• The WBG should consider phasing out all TA for fossil fuel expansion (not including any TA that is specifically supporting the energy transition), as part of aligning its TA exclusions with those on fossil finance.² Any exceptions for circumstances where TA for fossil fuel projects is considered permissible must be strictly defined, as part of a clearly defined decision making process requiring establishing a clear rationale for its necessity in a given context, and consideration of clean energy alternatives.
• The WBG is well equipped to complement its current extensive engagement on NDCs and LTS enhancement and implementation with dedicated support for ambition increase in coordination with other relevant actors. At the policy level, this could straightforwardly be achieved by developing (or adapting) a thematic area of its existing NDC and LTS Support Programme to support ambition increase. This should also involve the WBG meeting differences in countries’ capability with a differentiation in support at the investment level. In cases where national strategies compatible with 1.5 °C may not yet be in place, the WBG should commit to providing dedicated technical assistance for ensuring the pipeline of projects presented by the country for financing is 1.5 °C aligned.  
• Given the potential scarcity of concessional finance in the coming years following cuts to budgets at a number of major trust fund donors, the WBG should engage pro-actively with clients, trust fund donors and other providers of support to ensure effective prioritisation, coherence and effectiveness of the technical assistance landscape with a greater focus on information sharing and the avoidance of duplication. This also means there will be a greater need for the WBG to integrate advisory services related to the transition and climate risk into its core operations.

¹ See the “Non-fossil to fossil energy ratios” and “Fossil fuel exclusions” metrics for more details.

² See the “Fossil fuel exclusion” metric for details on how the WBG’s fossil fuel financing exclusions could also be strengthened.