"There are real opportunities to shape our climate future for an inclusive and sustainable globalisation, but we need a new momentum for concerted action on climate issues before it is too late."
The World Development Report 2010: Development and Climate Change, says that between $100bn and $700bn would be needed annually to make the world's energy systems fuel efficient and eco-friendly, a major leap from the $13bn of public funds and the $40bn to $60bn of private funds currently invested.
Kirk Hamilton, co-author of the report, said: "We're going to need finance to make this happen. Finance really is the way to square equity and efficiency."
He added the majority of funds were expected to come from the private sector, rather than public funds.
The World Bank said tackling poverty remains its global priority, but the effects caused by climate change are likely to make the challenge even more difficult.
Estimates suggest developing nations would bear 75 to 80 per cent of the costs of damage caused by global warming, in nations already suffering from a lack of electricity and access to clean water.
But the report suggests climate-smart policies, which enhance development and reduce vulnerability to climate change, be implemented as a way to tackle both problems together.
Aside from investment, it found immediate action could be taken by industrialised nations to help reduce carbon emissions to free "pollution space" for developing countries looking to grow.
For example, it said switching from high fuel consumption 4x4 vehicles in the US to more efficient European-style cars "would nearly offset the emissions generated in providing electricity to 1.6 billion people", who currently lack it.
The authors also called for an equitable agreement to be made at the UN climate conference in Denmark later this year, and warned against using the current financial crisis as an excuse to commit more funds.
It added that political thinking on the issue must change for real differences to be made, calling on the world's richest nations to change public policy to encourage citizens to take positive action.
Professor Lord Anthony Giddens, a former director of the London School of Economics and author of The Politics of Climate Change, said: "We have to set up a political system where climate change is not divided between left and right.
"Climate change is politically polarised and this inhibits action. We need something that positively motivates citizenry. We need a new set of mobilising ideals."