Europe and Central Asia – Vulnerability to Climate Change
The Europe and Central Asia region faces increasing vulnerability to climate change, as warmer temperatures and more volatile weather patterns disrupt ecosystems and increase the frequency of extreme droughts, floods, heat waves, and forest fires. The poorest countries and most vulnerable households are likely to face the worst impacts of climate change, through lost livelihoods and environmental degradation.
While the financial cost of protecting and strengthening the resilience of countries in the region to the impacts of climate change is substantial, it is far outweighed by the cost of inaction or delayed investments. If no action is taken, economic damages from droughts and floods in Central Asia are projected to be up to 1.3% of GDP per annum, while crop yields are expected to decrease by 30% by 2050, leading to around 5.1 million internal climate migrants by that time.
Even European Union countries will experience large impacts – without adaptation more than 400,000 jobs are expected to be lost annually by 2050, with the overall cost of climate-related extreme weather reaching €170 billion by the end of the century.
However, many of the investments needed to protect countries from climate change generate large economic dividends and can also be sources of jobs and earnings opportunities.
Low Carbon Transition – Risks and Opportunities
Energy-hungry economies, substantial demands for heating, and a high energy and fiscal reliance on fossil fuels mean that countries in Europe and Central Asia are a major source of greenhouse gas (GHG) emissions. In fact, 10 of the 20 most GHG emissions intensive economies in the world are in this region, and around three-quarters of those emissions come from energy production and use – especially natural gas and coal.
Countries in Europe and Central Asia have all made commitments to decarbonize and will face significant challenges in a rapidly changing global policy environment. With many countries in the region still needing to make substantial progress in transitioning toward market economies, structural and institutional reforms must accompany climate action to ensure that public investments are productive and to unlock billions in potential private climate finance.
At the same time, the climate transition also creates opportunities to accelerate much-needed economic diversification and promote modernization in countries across the region. Moreover, many countries have a unique opportunity to make use of their landscapes – countries in Europe and Central Asia are the world’s largest source of carbon absorbing boreal forests and grasslands – as a source of climate mitigation.
In addition, the climate transition in the region can be catalyzed by the European Union’s Green Deal, which creates market incentives for countries in the region to accelerate decarbonization – through the carbon border adjustment mechanism (CBAM), for example.
A People-Centered Transition
The market and climate transition in Europe and Central Asia will have large and uneven impacts, with some workers and communities hit especially hard, as labor markets shift from brown to green jobs, and energy prices adjust to new market realities.
While all countries in the region stand to benefit over time, there will be short- and medium-term challenges. Moreover, governments are approaching the climate transition in a post-pandemic context of slower growth, higher poverty, and diminishing fiscal space – raising both fiscal and political economy challenges to the transition.
World Bank Group Climate Change Action Plan
The World Bank Group’s Climate Change Action Plan 2021–2025 aims to advance the climate change aspects of the Group’s Green, Resilient, and Inclusive Development (GRID) approach, which pursues poverty eradication and shared prosperity with a sustainability lens. The Action Plan sets out how the World Bank Group will support countries to deliver climate transitions by prioritizing transformations in five key areas – Energy; Agriculture, Food, Water and Land; Cities; Transport; and Manufacturing.
Over the period 2021-2025, the World Bank Group will significantly enhance its support to the Europe and Central Asia region’s climate transition, including through:
Knowledge and Technical Assistance
- Helping countries in Europe and Central Asia establish and implement enhanced Nationally Determined Contributions (NDCs).
- Rolling out Country Climate and Development Reports (CCDRs) across the region, assessing options for efficient and socially inclusive pathways for the climate transition.
Financing and Private Capital Mobilization
- Supporting policy reforms that are critical to ensuring the effectiveness of public investment and promoting an enabling policy environment to catalyze private investment.
- Scaling-up adaptation finance, including through innovative public and private investments in human capital and nature-based solutions.
- Mobilizing expanded sources of concessional financing to support affordability of key investments.
Engagement and Convening
- Deepening partnerships and expanding investment to support Coal Transitions in countries across the region.
- Supporting partner and citizen engagement around national and local implications and sharing global and regional experience to inform the public discourse.
- Enhancing dialogue with the private sector on implementation of sustainable mitigation and adaptation strategies.
To be socially, politically, and financially sustainable, the climate transition must support countries’ development needs and ensure Just Transitions for workers and communities.