1 00:00:00,160 --> 00:00:00,680 Speaker 1: Let's just talk. 2 00:00:00,680 --> 00:00:03,000 Speaker 2: In the first few months of your role, you've made 3 00:00:03,040 --> 00:00:05,680 Speaker 2: climate finance a priority. I mean, can you talk to 4 00:00:05,760 --> 00:00:08,280 Speaker 2: us about where you've seen progress and whether you think 5 00:00:08,280 --> 00:00:10,440 Speaker 2: this is really a turning point for this discussion. 6 00:00:10,600 --> 00:00:12,920 Speaker 1: You know, I think it's very important because the reality 7 00:00:13,080 --> 00:00:15,600 Speaker 1: is that you've had the hottest year on record, we're 8 00:00:15,600 --> 00:00:18,440 Speaker 1: aiming for another hot year. Clearly this has to change, 9 00:00:18,640 --> 00:00:21,520 Speaker 1: and you can't make climate and fight the climate issue 10 00:00:21,640 --> 00:00:24,120 Speaker 1: without money coming to work on it. So it's one 11 00:00:24,120 --> 00:00:26,320 Speaker 1: of the most important things. When I traveled around the world, 12 00:00:26,480 --> 00:00:29,840 Speaker 1: I picked up the impression that dealing with poverty cannot 13 00:00:29,840 --> 00:00:34,000 Speaker 1: be by itself. You have to deal with climate, pandemics, fragility. 14 00:00:34,120 --> 00:00:36,840 Speaker 1: These are all inter twining crisis. That's why we change 15 00:00:36,880 --> 00:00:40,879 Speaker 1: our mission to include livable planet in addition to eradicating poverty. 16 00:00:41,040 --> 00:00:43,040 Speaker 1: So this is what we're on and what I'm trying 17 00:00:43,080 --> 00:00:45,600 Speaker 1: to do here to show you the progress, is to 18 00:00:45,640 --> 00:00:48,000 Speaker 1: make a commitment that we will get to forty five 19 00:00:48,000 --> 00:00:51,360 Speaker 1: percent of our financing annually. We'll go to climate by 20 00:00:51,400 --> 00:00:54,480 Speaker 1: twenty twenty five, two years from now, not ten years 21 00:00:54,480 --> 00:00:57,200 Speaker 1: from today. That's forty billion dollars a year working on 22 00:00:57,240 --> 00:00:58,400 Speaker 1: climate finance. How do you do that? 23 00:00:58,440 --> 00:01:00,280 Speaker 2: How do you adjust your balance sheet to that? 24 00:01:00,400 --> 00:01:03,400 Speaker 1: Yeah, the good news is there's also raising capital along 25 00:01:03,440 --> 00:01:06,440 Speaker 1: the way thanks to this whole capital adequacy framework to 26 00:01:06,520 --> 00:01:09,160 Speaker 1: the G twenty got ess going with, and we're also 27 00:01:09,240 --> 00:01:12,280 Speaker 1: doing things like looking at whether we can securitize parts 28 00:01:12,280 --> 00:01:15,520 Speaker 1: of our baran sheet existing balance sheet, free up some capital, 29 00:01:15,760 --> 00:01:18,560 Speaker 1: and then partnerships so you don't really do all that 30 00:01:18,560 --> 00:01:21,640 Speaker 1: financing yourself. You can also get partnerships going. You know, 31 00:01:21,680 --> 00:01:24,600 Speaker 1: I have great partners with the other multilateral banks, aid 32 00:01:25,040 --> 00:01:28,560 Speaker 1: eib ebr D, These are all people who work with us, 33 00:01:28,600 --> 00:01:31,360 Speaker 1: So there's multiple ways to go at this. But at 34 00:01:31,360 --> 00:01:33,560 Speaker 1: the end of the day, the much bigger issue here is, 35 00:01:34,120 --> 00:01:36,039 Speaker 1: even if I do all that, even if the other 36 00:01:36,160 --> 00:01:38,920 Speaker 1: multilateral banks do what they can, even if governments do 37 00:01:39,000 --> 00:01:41,720 Speaker 1: all they can, you do need the private sector. You're 38 00:01:41,720 --> 00:01:45,280 Speaker 1: going to need their ingenuity and technology and numbers, right. 39 00:01:45,200 --> 00:01:47,480 Speaker 2: And that's what you've been spending the past few days 40 00:01:47,880 --> 00:01:49,720 Speaker 2: talking a lot with the private sector. This is your 41 00:01:49,720 --> 00:01:52,720 Speaker 2: first Cough, can you talk to us about I mean, 42 00:01:52,840 --> 00:01:54,160 Speaker 2: give us a sense of what it's like in the 43 00:01:54,280 --> 00:01:57,720 Speaker 2: room where there's consensus and where there's still gaps within 44 00:01:57,760 --> 00:01:59,080 Speaker 2: the private sector in the collaboration. 45 00:01:59,360 --> 00:02:02,160 Speaker 1: It's a great question. So the private sector issue is 46 00:02:02,200 --> 00:02:05,240 Speaker 1: the private sector now knows that solar and wind power 47 00:02:05,280 --> 00:02:08,960 Speaker 1: per unit is cheaper than fossil fuel. That's proven with 48 00:02:09,080 --> 00:02:13,280 Speaker 1: scale and technology. They know that it takes longer sometimes 49 00:02:13,280 --> 00:02:15,240 Speaker 1: as a gestation period, and they know they may have 50 00:02:15,440 --> 00:02:18,120 Speaker 1: some higher capexet firm because they've got to build grids 51 00:02:18,160 --> 00:02:21,360 Speaker 1: and you can't just build the installed capacity. So they 52 00:02:21,480 --> 00:02:24,800 Speaker 1: understand that. So why is it then that they aren't 53 00:02:24,880 --> 00:02:27,480 Speaker 1: burning down the doors of countries to go do this? 54 00:02:27,680 --> 00:02:30,160 Speaker 1: For two or three reasons. One is does the country 55 00:02:30,200 --> 00:02:33,000 Speaker 1: have the capacity to absorb this kind of projects coming in? 56 00:02:33,160 --> 00:02:35,000 Speaker 1: Can they connect the grids up? Can they do all that? 57 00:02:35,480 --> 00:02:38,360 Speaker 1: But second, and much more critical is the two kinds 58 00:02:38,400 --> 00:02:41,560 Speaker 1: of risks that private sector investors don't like, which they 59 00:02:41,560 --> 00:02:45,280 Speaker 1: don't understand. They don't understand political risks and they don't 60 00:02:45,360 --> 00:02:49,639 Speaker 1: understand foreign exchange risk in the emerging markets. Now political risk, 61 00:02:49,680 --> 00:02:52,840 Speaker 1: we can help it. We have this institution called Mega 62 00:02:52,919 --> 00:02:56,040 Speaker 1: our Interviews or our Guarantee Agency. We've now got approval 63 00:02:56,280 --> 00:02:59,560 Speaker 1: to use that for every multilateral development bank. They can 64 00:02:59,639 --> 00:03:03,040 Speaker 1: use our back office to issue guarantees. This does political 65 00:03:03,160 --> 00:03:06,400 Speaker 1: risk guarantees and then lays them off. In the reinsurance market, 66 00:03:06,800 --> 00:03:09,720 Speaker 1: we need to scale that. It's the FX risk that's 67 00:03:09,720 --> 00:03:10,280 Speaker 1: the much harder. 68 00:03:10,320 --> 00:03:11,760 Speaker 2: Well, how do you get around that? I mean, because 69 00:03:11,760 --> 00:03:13,359 Speaker 2: that's not going away in a lot of them right now. 70 00:03:13,360 --> 00:03:16,240 Speaker 1: So in fact, people keep talking about local currency markets 71 00:03:16,240 --> 00:03:18,840 Speaker 1: as the way to do it. The reality is developing 72 00:03:18,880 --> 00:03:21,480 Speaker 1: a local currency market the right depth and width to 73 00:03:21,520 --> 00:03:24,320 Speaker 1: be able to do this well can take five ten years. 74 00:03:24,480 --> 00:03:26,359 Speaker 1: We don't really have five or ten years. So I 75 00:03:26,400 --> 00:03:28,800 Speaker 1: think we have to find instruments like could we do 76 00:03:28,919 --> 00:03:32,240 Speaker 1: some local currency bond issuance that we subsidize the difference 77 00:03:32,280 --> 00:03:35,480 Speaker 1: in costs through our balance sheet or our concessual financing. 78 00:03:35,760 --> 00:03:38,400 Speaker 1: Can we do things with others where there's an institution 79 00:03:38,480 --> 00:03:41,520 Speaker 1: called TCX which is created to help take some of 80 00:03:41,560 --> 00:03:44,600 Speaker 1: the FX risk in these markets. Can we scale them 81 00:03:44,680 --> 00:03:46,440 Speaker 1: up and so on and so forth. Can we do 82 00:03:46,680 --> 00:03:49,600 Speaker 1: creative swaps where using our rating we are at a 83 00:03:49,640 --> 00:03:53,600 Speaker 1: lower price and of the country world it's hard. FX 84 00:03:53,680 --> 00:03:54,960 Speaker 1: risk is the hardest one. 85 00:03:55,080 --> 00:03:57,360 Speaker 2: Yeah, I mean, so then a jay when we talk 86 00:03:57,400 --> 00:03:59,760 Speaker 2: about the progress then at the end of COP twenty eight, 87 00:04:00,080 --> 00:04:02,200 Speaker 2: first COP, I mean, what does that look like for 88 00:04:02,240 --> 00:04:04,080 Speaker 2: you what is it that you're shooting for, Because there 89 00:04:04,120 --> 00:04:06,640 Speaker 2: have been a number of initiatives and pledges. Of course 90 00:04:06,680 --> 00:04:08,280 Speaker 2: the World Bank has been a part of some of those. 91 00:04:08,280 --> 00:04:10,320 Speaker 2: I mean, what then, does progress look like in the 92 00:04:10,360 --> 00:04:11,040 Speaker 2: next few days. 93 00:04:11,040 --> 00:04:13,760 Speaker 1: So I've got five very clear things I'm measuring on 94 00:04:13,920 --> 00:04:15,840 Speaker 1: what we are doing. And the first one was getting 95 00:04:15,880 --> 00:04:18,600 Speaker 1: that forty five percent of financing that we talked about 96 00:04:19,520 --> 00:04:22,839 Speaker 1: in that fifty percent for mitigation, fifty percent for adaptation, 97 00:04:23,320 --> 00:04:26,039 Speaker 1: So we don't only do emission avoidments. We also care 98 00:04:26,040 --> 00:04:29,840 Speaker 1: about adapting and resilient infrastructure in the global cyll thing 99 00:04:29,920 --> 00:04:33,719 Speaker 1: that's very important. The second big one is methane. Methane 100 00:04:33,800 --> 00:04:37,120 Speaker 1: is eighty times more toxic than carbon dioxide, but it 101 00:04:37,160 --> 00:04:40,080 Speaker 1: only gets two percent of climate financing. So what we 102 00:04:40,120 --> 00:04:41,960 Speaker 1: are doing is we've got actual projects on the ground 103 00:04:42,080 --> 00:04:46,320 Speaker 1: on rice piddy cultivation, livestock management, and waste management. Is 104 00:04:46,360 --> 00:04:48,719 Speaker 1: scaling those, is saying we're going to get to fifteen 105 00:04:48,760 --> 00:04:51,080 Speaker 1: countries in eighteen months and over the course of these 106 00:04:51,080 --> 00:04:55,680 Speaker 1: projects take out ten million tons of methane from the system. 107 00:04:55,920 --> 00:04:59,040 Speaker 1: Third one is Africa. Six hundred million people in Africa 108 00:04:59,080 --> 00:05:01,760 Speaker 1: don't have access to a life. We've got a project 109 00:05:01,800 --> 00:05:04,719 Speaker 1: approved by our board five billion of financing from IDA, 110 00:05:04,880 --> 00:05:09,359 Speaker 1: our lowest price guarantee, kind of the cheapest fund location 111 00:05:09,760 --> 00:05:12,520 Speaker 1: ten billion through governments in private sector. We're going to 112 00:05:12,520 --> 00:05:16,720 Speaker 1: connect one hundred million people in seven years to power 113 00:05:16,880 --> 00:05:20,320 Speaker 1: solar power, including the grids that need to be existing 114 00:05:20,520 --> 00:05:23,560 Speaker 1: to make this happen at scale. The fourth one is 115 00:05:23,600 --> 00:05:26,200 Speaker 1: voluntary carbon markets. So I think the only way you 116 00:05:26,279 --> 00:05:29,599 Speaker 1: transfer resources at scale from the developed world to the 117 00:05:29,600 --> 00:05:32,520 Speaker 1: developing world for what the developing world deserves to be 118 00:05:32,520 --> 00:05:35,960 Speaker 1: paid for, which is forests and natural resources, is voluntary 119 00:05:36,000 --> 00:05:36,599 Speaker 1: carbon markets. 120 00:05:36,600 --> 00:05:38,720 Speaker 2: So there's a lot of criticism about carbon market. 121 00:05:38,600 --> 00:05:41,560 Speaker 1: Yes, there is, because people felt that the credits were 122 00:05:41,600 --> 00:05:44,600 Speaker 1: coming weren't genuine credits. So you just picked on exactly 123 00:05:44,640 --> 00:05:50,320 Speaker 1: the topic that's really important, verifiable genuine credits, of integrity. 124 00:05:50,960 --> 00:05:53,920 Speaker 1: How what determine whether these markets will work. So what 125 00:05:53,920 --> 00:05:56,160 Speaker 1: I'm doing is I'm not doing a carbon market where 126 00:05:56,200 --> 00:05:59,200 Speaker 1: I'm not involved. I'm doing carbon markets with projects for 127 00:05:59,279 --> 00:06:02,000 Speaker 1: the World Bank is doing a forestry project in a country. 128 00:06:02,400 --> 00:06:04,960 Speaker 1: So we're starting with four, going to fifteen by the 129 00:06:05,040 --> 00:06:07,680 Speaker 1: end of next year. We think these countries will generate 130 00:06:07,920 --> 00:06:11,039 Speaker 1: twenty four million credits next year itself and one hundred 131 00:06:11,040 --> 00:06:13,839 Speaker 1: and twenty five over five or six years. I'm certifying 132 00:06:13,839 --> 00:06:17,520 Speaker 1: the environmental integrity through a jurisdictional laudic, and I'm also 133 00:06:17,560 --> 00:06:20,720 Speaker 1: certifying the social integrity that most of the money they 134 00:06:20,760 --> 00:06:23,960 Speaker 1: earn will go to the communities and the indigenous people 135 00:06:24,120 --> 00:06:26,960 Speaker 1: in that area. I think if you do things like that, 136 00:06:27,520 --> 00:06:30,719 Speaker 1: and you do them with consistency, you will create the 137 00:06:30,800 --> 00:06:33,880 Speaker 1: right kind of carbon markets for tomorrow. You're only getting 138 00:06:33,880 --> 00:06:34,520 Speaker 1: five bucks. 139 00:06:34,279 --> 00:06:37,479 Speaker 2: A cress, yes, but still a lot to go. But 140 00:06:37,600 --> 00:06:39,440 Speaker 2: glad to have you here at jay Bonga with the 141 00:06:39,440 --> 00:06:39,960 Speaker 2: World Bank.