New scheme to build energy supply chains in emerging world

The World Bank has launched a new investment scheme with Japan and several other developed countries to foster the clean energy production potentials of emerging economies and diversify related supply chains away from China.

The partnership scheme has a starting budget of $40 million. It is intended to boost global defences against the surging economic cost of extreme weather events in recent years. An influential study published on the same day as the launching of the Japan-backed scheme, estimated global economic losses to be $5 trillion due to climate change in the next five years.

The scheme will offer financial and technical support to help emerging market and developing countries boost production of clean energy goods and "increase their participation in global mineral value chains," Japan's Ministry of Finance and the World Bank said in a statement.

Japan plans to contribute a total of $25 million to the scheme, Finance Minister Shunichi Suzuki said in a ceremony on the scheme's launch held on the sidelines of the International Monetary Fund and World Bank meetings in Marrakech.

Along with contributions from Canada, Italy, South Korea and the United Kingdom, the total initial contribution will be more than $40 million, according to the statement.

Japan, as this year's G7 chair, has initiated the scheme, named "Partnership for Resilient and Inclusive Supply-chain Enhancement" (RISE), reflecting concern among some advanced nations over their reliance on China for key mineral resources and goods related to energy security.

Losses from extreme weather to hit $5t

Global economic losses could reach $5 trillion under a "plausible increase" in extreme weather events linked to climate change that cause crop failures and food and water shortages, insurance marketplace Lloyd's of London said on Wednesday.

Lloyd's, which carried out the research alongside the Cambridge Centre for Risk Studies, stressed that its "systemic risk scenario", which models the global economic impact of extreme weather, was hypothetical. But it said the work would improve business and policymaker understanding of their exposure to critical threats such as extreme weather.

When adjusting the estimated $5 trillion in losses over a five-year period for the probability of those extreme weather events occurring, the expected global economic losses were $711 billion, Lloyd's said.

"The global economy is becoming more complex and increasingly subject to systemic threats," said Trevor Maynard, Executive Director of Systemic Risks at the Cambridge Centre for Risk Studies.

He added that the research would "help businesses and policymakers explore the potential impacts of these scenarios".

Lloyd's modelled global economic losses of extreme weather events by estimating the impact of food and water shocks on global gross domestic product over a five-year period.

The weighted average loss across the three severities it modelled – major, severe and extreme – was $5 trillion over the five years, ranging from $3 trillion in the lowest severity scenario up to $17.6 trillion in the most extreme.

Lloyd's also modelled for events concentrated in regions – it said extreme weather events centred in Greater China would lead to the biggest losses, of $4.6 trillion.

The Caribbean region would lose 19% of its GDP over five years if the extreme weather events were concentrated there, Lloyd's estimated.