69424 Towards a Sustainable Energy Future: The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Proposal submitted to The President’s Contingency Fund Submitted by Energy and Water Department June 30, 2004 Confidential Contents: The Challenge: Meeting Energy Needs in a Sustainable Way ........................................................... 3 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan ........................... 5 Key Elements of the Action Plan ............................................................................................................. 7 Action Plan Implementation Management.............................................................................................. 8 Required and Committed Resources ...................................................................................................... 9 ANNEXES ............................................................................................................................................ 11 Annex 1: World Bank Group Renewable Energy and Energy Efficiency Support ......................... 12 Annex 2: The World Bank Group Commitment as Noted in the International Plan of Action ...... 14 Annex 3: Summary of Key Actions, Responsibilities, Schedule ....................................................... 16 Annex 4: Costs of Implementing the Action Plan ................................................................................ 17 Towards a Sustainable Energy Future: 2 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential Towards a Sustainable Energy Future: The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan The World Bank Group is committed to nothing less than a revolution at the rate and scale with which sustainable clean energy services are expanded to those who lack them, and the new dimension in global partnerships that is needed to bridge the modern energy divide.� James D. Wolfensohn, President, The World Bank Group, May 2004 The Challenge: Meeting Energy Needs in a Sustainable Way Energy is vital for social and economic development. Modern societies depend on reliable energy supply to sustain their productive capacity and social cohesion. Use of modern energy is strongly correlated with economic growth and human development. Countries that do not use modern forms of energy efficiently cannot realize their potential for creating wealth to lift their populations out of poverty. Moreover, unsus- tainable use of energy in developed countries damages livelihoods in developing countries through cli- mate change. The challenge for the development community is to exploit the links between energy and poverty to com- bat global poverty. The human scale of this challenge is huge. Today, 1.6 billion people lack access to electricity and 2.4 billion rely on traditional biomass for cooking and heating. Indoor air pollution is among leading causes of illness and death in developing countries. It leads to 2 million premature deaths a year. In 2004, the richest 20 percent of the world’s population consume 58 percent of total energy, while the poorest 20 percent consume less than 4 percent. The majority of those underserved are the poor in Sub-Saharan Africa and South Asia. And, with increasing populations, 25 years from now, business-as-usual energy scenarios project that even after an expenditure of US$16 trillion on energy investments of which half will be in developing countries, 1.4 billion people will still lack access to electricity (see also figure 1). This is a reduction of only 200 million people from today. Over 2.6 billion people in developing countries will continue to rely on traditional forms of biomass for cooking and heating in 2030, even more than today. This scenario ex- pects renewable energy share to increase from 2 percent to 3 percent between 2000 and 2030. Figure 1: Developing Countries’ Projected Energy Use – IEA Business-as-Usual Scenario Under this scenario, by 2030, the more than 00 R e ne w a ble s 8 ,0 doubling of coal, oil and gas consumption will H yd ro N u cle ar 0 ,0 0 lead to increases in greenhouse gas emissions 7 G as from the energy sector. The impacts will affect 6 ,0 00 O il C o al the developing countries the most, and hence 0 0 5 ,0 rendering the poor more vulnerable. Projected MTOE impacts are increased deaths and risk of infec- 4 ,0 00 tious disease epidemics; increased floods, mud- 00 3 ,0 slides and coastal and soil erosion; increased 00 property and infrastructure damage; decreased 2 ,0 crops, higher crop damages and a general drop 1 ,0 00 in agricultural productivity. 0 20 00 201 0 2 020 20 30 Renewable energy and energy efficiency can Source: International Energy Agency, World Energy provide solutions to remedying energy poverty Investment Outlook, 2003 and enhancing the environment in developing countries. There are many forms of renewable energy that are already economic and commercially viable Towards a Sustainable Energy Future: 3 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential vis-à-vis more conventional alternatives for specific energy applications.1 If countries are to take full ad- vantage of their renewable energy resources, they need support to overcome financing constraints, im- prove technical and institutional capacities, improve knowledge, remove policy and market constraints and regulatory bottlenecks. At the same time, some forms of renewable energy are not economic today, but they have considerable future potential should their costs decline and performance improve. Commer- cializing these could benefit from innovative approaches that deploy GEF and other ODA assistance to- gether with regulatory reforms. Energy efficiency measures are often “no-regret� measures, which lead to net savings. Renewable energy and energy efficiency investments also help meet both global and local environmental improvement goals. This includes curbing hazardous climate change. Further, sustainable energy can en- hance energy security by reducing dependence on fuels with significant price volatility, and availability concerns arising from international or local transportation barriers. Such developments can also improve balance of payments accounts and generate substantial local employment benefits. In recognition of the beneficial role that renewable energy and energy efficiency can play, the World Bank Group, in cooperation with our multilateral and bilateral partners, has become one of the larger fi- nanciers of sustainable energy during the last 15 years. The World Bank Group activities since the early 1990s have laid the foundations for a scale-up effort. The World Bank Group has actively supported re- newable energy development with cumulative IBRD, IDA, IFC and associated GEF commitments of about US$2.7 billion in direct investments plus leveraged financing using MIGA guarantees and renewa- ble energy-based carbon emissions reduction purchases through the Carbon Finance Business. The cumu- lative committed investment by the World Bank Group in energy efficiency since 1990 amounts to about US$2.2 billion. Details are given in Annex 1. In comparison, total bilateral ODA from OECD countries for renewable energy was US$9.7 billion from 1990 to 1999.2 The primary contributors of bilateral ODA funding for renewable energy was Japan (US$5.9 billion) followed by Germany (US$1.2 billion) and France (US$0.6 billion), accounting for 80% of the bilateral ODA. Multilateral and bilateral ODA represent but a small share of the investments already made in renewable energy in developing countries which is estimated at US$70-90 billion, just for grid-based renewable en- ergy.3 Therefore, even in the future, ODA would need to be used to leverage considerably more financing from domestic and international financial markets. Even so, much more must be done to exploit sustainable energy’s potential in developing countries. To this end, the World Bank Group has – at the International Conference on Renewable Energies in Bonn in June 2004 – committed to a Renewable Energy and Energy Efficiency Action Plan with the aim of accel- erating such activities in developing countries. This is in line with the Extractive Industries Review (EIR), which has drawn attention to the importance of renewable energy for sustainable development and has forcefully recommended a stronger World Bank Group role. This not withstanding, the World Bank Group continues to support the development of all forms of energy consistent with the principles of eco- nomic rationality, sustainability and sound environmental practices. 1 These include biomass fuels for cooking and heating, biomass cogeneration at, for example sugar mills, to supply heat and electricity, hydropower, geothermal energy for power and heating, solar hot water, small wind for water pumping or remote area electrification, and solar PV for remote area electrification. 2 G8 Renewable Energy Task Force Report, Annex 2, July 2001. 3 G8 Renewable Energy Task Force Report, July 2001, page 37. Towards a Sustainable Energy Future: 4 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential Given the scale of the challenge ahead, what is needed is a global effort with the aim of moving into ac- tion. Not only resources are required but more importantly the coordinated intellectual leadership of key actors – public and private – to bring about sustainable energy access for everyone. A consultative effort would take intellectual and managerial leadership, and harmonized policies and programs among multiple actors. This challenge has been recognized by the over 150 countries present at the International Renewa- ble Energies Conference in Bonn. The World Bank Group is committed to actively engaging in the fol- low-up process to this conference. The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan At the International Conference on Renewable Energies that took place in June 2004 in Bonn, the World Bank Group committed to an Action Plan to foster renewable energy and energy efficiency as part of the World Bank Group’s portfolio. This Action Plan is supportive of the commitments towards energy made at World Summit on Sustainable Development held in Johannesburg in 2002. The commitments made at Bonn are the following: 1. The World Bank Group’s strategy – through programs and policies – will aim to ensure that renewable energy and energy efficiency are seen as economically viable and essential ingre- dients in the energy choices of our member nations, not marginal considerations. 2. With the aim of ensuring an institutional focus on the transition toward cleaner energy sources, the World Bank Group commits with the concurrence of its Board of Directors to a target of at least 20 percent average growth annually – in both our energy efficiency commit- ments and our renewable energy commitments – over the next five years (FY05 – FY09).4 This is equivalent to doubling the World Bank Group’s current annual commitment of about $200 million.5 Thereafter, this goal will be reassessed. The 20% per annum growth rate pledge made by the World Bank Group in Bonn, will apply to the World Bank Group as a whole, which includes World Bank (IBRD and IDA), IFC and MIGA together with GEF co- financed amounts in projects executed by the World Bank Group. This level of commitment will result in a very significant scale up in World Bank Group support for renewable energy and energy efficiency over its five-year commitment period. Renewable energy and energy efficiency lending is expected to increase to $1.44 billion in the 2005 to 2009 period. This constitutes an increase of 35 percent compared with the five-year period 2000-2004, which preceded the commitment period. During 2000-2004 renewable energy and energy efficiency lending amounted to $1.07 billion.6 4 This growth target for renewable energy includes solar energy for heat and power, wind energy for mechanical and electrical power generation, geothermal and biomass energy for power generation and heat, and hydropower plans less than 10 MW per facility. The growth target for energy efficiency will include both demand-side and supply-side options. While this target applies only to a subset of energy options that can be considered as renewable energy or energy efficiency, it will not restrict the World Bank Group in any way to support other renewable energy, energy efficiency or mainstream power projects in line with requests from our clients and their country assistance strategies. 5 The baseline against which the performance of the target is to be measured represents USD200 million. This was the World Bank (IBRD and IDA) approximate average lending commitment in the 3 years, FY02, FY03 and FY04. This is also not much different from the average since 1990. The baseline includes exclusively solar energy for heat and power, wind energy for mechanical and electrical power generation, geothermal and biomass energy for power generation and heat, and hydropower of less than 10MW. 6 The level of a 20% increase annually over the coming 5 years constitutes the largest increase that can realistically be implemented by the World Bank Group given the resources that can be made available, as well as taking into account the demand for renewable energy and energy efficiency lending and implementation capacity in our client countries. Based on a three year average analysis (which smoothens the stark changes that may occur year-on-year Towards a Sustainable Energy Future: 5 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential As discussed in the Extractive Industry Review (EIR) management response, the Bank would be seeking during Board review of management response in July 2004 the endorsement of the Board for pledging the World Bank Group to a 20 percent per annum average annual growth rate in renewable energy and efficiency commitments. 3. Nations, academic and research institutions, civil society, business associations, and interna- tional financial institutions must come together to lead the transition to a cleaner energy fu- ture. The World Bank Group is open to participating in, or convening a steering group to help frame this broader agenda, and we welcome discussing ideas and suggestions for this coordi- nating mechanism. This effort should be directed, in part, toward making subsidies transpar- ent and focusing the financial commitments of donors. However, above all, it must focus on creating enduring market-based solutions for renewable energy. Renewable energy projects must demonstrate more than the optimism of technological innovators; they should demon- strate the efficient, clean, low-cost delivery of power to the poor. The Bonn conference adopted a political declaration to work within a “global policy network� together with representatives from parliaments, local and regional authorities, academia, the private sector, international institutions, international industry and consumer associations, civ- il society, women’s groups, and relevant partnerships worldwide. The conference noted that such networks need to address: (a) Policy: The need for coherent regulatory and policy frameworks that support the development of thriving markets for renewable energy technolo- gies and recognize the important role of the private sector; (b) Capacity Building, R&D and Technology Transfer to support the strengthening of human and institutional capacities for re- newable energy and efficiency; (c) Financing: Substantially increasing the global share of re- newable energy combined with increased energy efficiency in the total energy supply will re- quire considerably greater increase in financing for investment. The conference steering committee requested, and the Bank Group agreed to lead a study to develop the concept of a Global Renewable Energy Financing Policy Network. 4. To foster greater collaboration across national and institutional lines, the World Bank Group will commit to reporting its annual performance in renewable and energy efficiency programs against the figures of other leading organizations. 5. As part of the World Bank Group’s improved reporting regime, the Group will aim to provide sector-specific information, so we can better engage a wide range of stakeholders on trends regarding specific technologies, whether those are hydroelectric, wind, solar, geothermal, or biomass. 6. Finally, the World Bank Group will increase not only the Group’s staff capacity but also the resources at their disposal and the incentives within their programs so that the Group can more effectively help country and sector teams succeed in renewable energy and energy effi- ciency projects, as well as more rapidly transfer best practice across sectors and regions. The Action Plan will build on the foundations that the World Bank Group has already laid through its conventional IBRD, IDA and IFC financing operations, MIGA guarantees, together with co-finance from the Global Environment Facility (GEF), and more recently with carbon financing. The Action Plan as in the lending portfolio and better captures the cyclical nature of the World Bank Group project cycle), the average annual increase of the combined renewable energy and energy efficiency commitments in the period from 1990 to 2004 has been 3%. Thus the target constitutes a net increase of 17% compared to a situation without targets. Towards a Sustainable Energy Future: 6 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential submitted for inclusion to the International Action Plan at the International Renewable Energy Confer- ence in Bonn is included as Annex 2. Key Elements of the Action Plan The Action Plan will address several critical issues in order to accelerate sustainable energy development, specifically by addressing the commitments made by the WBG in Bonn. 1. Meet the WBG 20% per year growth target. In its 20 percent growth target, the World Bank Group makes a clear and measurable commitment to scaling up sustainable energy. Meeting this growth target will be done explicitly within the context of addressing energy as- pects that most directly relate to the MDGs, poverty reduction and meeting environmental goals: - Enhancing modern energy access and promoting economically and socially productive uses of energy; - Enhancing local environments; - Capturing new North-South climate change financial flows; and - Enhancing macroeconomic growth and stability through assuring availability of afforda- ble energy supplies. Through this dialogue renewable energy and efficiency energy is expected to become an es- sential component of poverty reduction strategies and of Country Assistance Strategies.7 2. Mobilize Financing. In order to meet the WBG’s own commitment to increase lending for renewable energy and energy efficiency at an annual pace of 20% as well as support the commitments made by developing countries in Bonn to add more than 70,000 MW of renew- able energy investments over 10 years will require mobilizing about $120 billion. In close cooperation and partnership with the private sector, GEF, bilateral donors and others, this Ac- tion Plan proposes to facilitate a significant increase financial resources, and providing greater support to private sector financing by IFC and MIGA. In this regard, the WBG would, among others: a. Develop a new strategic partnership with GEF. There has been close and successful collaboration between the World Bank Group and the GEF. Accelerated sustainable en- ergy development will require an enhanced partnership. Lessons learned from past expe- riences in implementing strategic partnerships that are leading to significant new renewa- ble energy projects in Uganda, China and Mexico need to be disseminated internally. IFC’s efforts to utilize GEF funds in non-grant financing modalities could continue to be expanded especially through collaborative activities with industry investment depart- ments. Any new efforts could also seek to take advantage of the new Climate Change Convention funds – Least Developed Country Fund and the Special Climate Change Fund – to be administered by the GEF. Even further leverage would be possible by ex- ploiting synergies between GEF and carbon financing funds. 7 This will require working more integrally with rural, social and environmental sectors. Sustainable energy applica- tions are more closely associated with demand-side applications than conventional energy options. Moreover, the energy and environment sectors have a common interest on issues involving global and local environment. There- fore, the Bank would work closely across sectors in order to meet energy needed for services such as rural develop- ment, health, clean water, education, and telecommunications and doing so in an environmentally sustainable man- ner. Towards a Sustainable Energy Future: 7 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential b. Adopt new commercial financing instruments. A primary lesson from international sustainable energy development efforts – one that was also recognized by the G8 Task Force - has been the need for more effective and efficient financing and risk mitigation instruments to leverage financial resources and to do so efficiently. Experience from World Bank Group operations shows that some of the existing public sector programs and private business models have high transactions costs and that better approaches are needed. Also, successful examples of working in partnership with local financial institu- tions and for leveraging local financial resources needs to be mainstreamed. c. Increase private sector outreach. The domestic and foreign private sector needs to be actively brought into this process to leverage its financial resources, access technology and management skills, provide risk mitigation, and aid continued research and develop- ment. 3. Enhance international cooperation by supporting the Global Policy Networks. Sustaina- ble energy development will require consultation and cooperation with bilateral and multilat- eral development partners, public and private sector agencies and institutions, and civil socie- ty. Specifically, the WBG would support all three proposed policy networks. The WBG will lead the scoping study of the Financial Policy Network and if invited, lead its implementation. 4. Improve knowledge and learning, and analytics. Improved knowledge and analytical tech- niques are especially important in technology choice decisions and reducing the transaction costs associated with implementing sustainable energy projects. Such knowledge is demanded from within and outside the World Bank. Over the past decade a tremendous base of experi- ential knowledge of sustainable energy development and good practice has emerged. The WBG will make this knowledge easily accessible and widely available. In addition, there is a need for improved analytical work to adopt and use sustainable energy more effectively. 5. Improve communication with the international community. This is essential so that pro- gress and achievements are better known, timely and constructive feedback is received and more cooperative development takes place. Specifically, the WBG will: a. Report its annual performance in renewable and energy efficiency programs against the figures of other leading organizations. b. Provide sector-specific information, so we can better engage a wide range of stakeholders on trends regarding specific technologies, whether those are hydroelectric, wind, solar, geothermal, or biomass. Action Plan Implementation Management The Energy Anchor will guide the implementation of the Action Plan. It will work closely with GEF, IFC, MIGA, ENV, ESMAP, regional operations as well as key external partners. Knowledge manage- ment will be led by the Anchor in close cooperation with ESMAP and WBI. Outreach and coordination, monitoring and reporting, and external resource mobilization will be led by the Anchor. Developing and implementing a communication strategy is an important part of this function. A key responsibility is to monitor and report annually to the World Bank Group’s Board on progress in achieving the goals set for the Action Plan. At the end of the commitment period, a more detailed report is to be prepared, which will evaluate the lessons of the Plan of Action, and will give a recommendation for a future Plan of Action. Towards a Sustainable Energy Future: 8 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential A summary of key actions, responsibilities and schedule is presented in Annex 3. Required and Committed Resources Estimated Cost The additional cost of implementing the Action Plan over a six year period, from FY05 to FY10, is esti- mated at $7.5 million for the deliverables noted previously. For FY05, the cost is estimated at $1.6 million. Proposed sources and amount of funds for FY05 are as follows:  $ 0.5 million from the President’s Contingency Fund  $ 0.1 million from BBGEF;  $ 0.55 million from ESMAP;  $0.2 million from the INF Credit Line for project preparation and  $ 0.25 million from BB Detailed breakdown of estimated costs is given in Annex 4. Sources of incremental financial resources for six year period: FY05 to FY10  The President’s Contingency Fund is requested to provide $0.5 million for FY05, primarily to jump-start the Action Plan during FY05. These funds would be mainly used for upstream sec- tor work for supporting the enhanced lending operations.  Establishment of a INF project preparation credit line of $2 million to cover the incrementally higher preparation cost of scaling up of the renewable energy project pipeline – for the CMUs that express a need.  In addition to the $ 0.25 million from BB for FY05, another $ 1.75 million for future years is requested from sources yet undetermined.  An additional $2.6 million (beyond funds already committed to ESMAP, ASTAE and Africa Multi-Donor Energy Trust Fund), are to be sought from bilateral and other donors who are committed to the same objective. This money could be channeled through a new ESMAP window which recognizes that these funds would be used, primarily to engage country deci- sion-makers and Bank staff in recognizing the important role of energy for development; for sector work to better integrate renewables into the planning process; for knowledge and learn- ing, and analytical work; and to develop more effective financial instruments.  An additional $ 0.4 million of BBGEF funds would be sought from GEF to support the addi- tional costs associated with accelerated renewable energy development. This is over and above the BBGEF funds that GEF currently provides. In addition to these BBGEF project preparation funds, GEF PDF funds would be needed to support country-executed project preparation, and BBGEF funds for project supervision. Towards a Sustainable Energy Future: 9 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential Additional human resources a. Additional WBG renewable energy staff. An inventory of staff skills will be conducted in order to identify skill gaps and with the aim of bridging this skill gap through training or recruitment. Anchor staff may need to be strengthened to support knowledge management and Action Plan implementation. b. Improve staff capability through learning. As noted above, with ESMAP and WBI support, pro- vide the necessary tools, knowledge, and training to enable Bank staff and others outside the Bank to deliver on the scale up commitments. Towards a Sustainable Energy Future: 10 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential ANNEXES Towards a Sustainable Energy Future: 11 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential Annex 1: World Bank Group Renewable Energy and Energy Efficiency Support Direct IBRD, IDA and IFC investment commitments  IBRD & IDA. Since 1990, the World Bank renewable energy commitments comprise US$1.3 bil- lion in loans and credits. Demand-side energy efficiency commitments since 1990 comprises US$1.7 billion in loans and credits. The renewable energy investments include all forms provid- ing heating and cooking services, and electricity to rural and urban populations. Decentralized energy projects benefit more than 1.2 million households while several thousand MW of renewa- ble energy generation supplement power supplies. Energy efficiency investments displace or de- fer several thousands of MW of generation capacity and also help improve energy productivity.  IFC. The value of the IFC’s commitments in renewable energy during this same period is US$0.75 billion. These are predominantly run-of-river hydro projects with several biomass co- generation projects and one geothermal project totaling more than 1,000 MW. They include one operation that involves IDA resources and several that included GEF co-financing. IFC also has a sizeable portfolio of solar photovoltaic (PV) operations funded by the GEF and an energy effi- ciency portfolio of US$93 million.  Bilateral donors support contributed significantly to the progress made to date in sustainable en- ergy. Their support was used for sector analytic work, and for project preparation and supervi- sion. Grant funding from these external bilateral sources to the World Bank has been more than US$30 million since 1990.  GEF. The GEF is a critically important co-financing partner in these sustainable energy opera- tions. Since its inception in 1991, the GEF Council has committed about US$694 million in co- financing for World Bank Group renewable energy operations. The GEF commitments for energy efficiency amounted to US$363 million. MIGA investment business  MIGA has provided US$600 million in gross coverage in support of US$2.3 billion of investment in renewable energy projects. These include seven hydro projects totaling 2,500 MW, and five geothermal projects totaling 400 MW. MIGA has received a number of applications for similar projects, and is underwriting several more. The risks developers and lenders are primarily inter- ested in protecting themselves against are breach of contract and transfer restriction. Carbon finance business8  IBRD carbon finance business has US$410 million of funds approved under management and has committed US$295 million in carbon emissions reductions purchases, of which about US$234 million are for carbon emissions reductions purchases from renewable energy – these projects are able to leverage 5 to 6 time their purchase commitments in investment capital, mainly from the private sector. The remainder is for energy efficiency.  IFC carbon finance business has US$55 million under management. 8 Carbon finance is not synonymous with renewable energy, and can support fossil fuels also, e.g., the switch from coal to gas or energy efficiency improvements can reduce greenhouse gas emissions and thus qualify for carbon finance. Towards a Sustainable Energy Future: 12 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential Amounts since 1990 (US$ Million) Renewable Energy Total Energy Efficiency Direct Investment World Bank (IBRD and IDA) a 3,054 1,320 1,734 International Finance Corporation b 845 752 93 GEF climate change commitments approved by GEF Council 1,057 694 363 for World Bank Group implementation c Financing that leverages investments d IBRD Carbon Finance Business - Under Management 410 n.a. n.a. IBRD Carbon Finance Business - Committed 295 234 61 IFC Carbon Finance Facility - Under Management 55 n.a. n.a. Multilateral Investment Guarantee Agency e 600 600 - Gross Coverage for investments valued at: Source: World Bank Group. April 13, 2004. n.a. Not applicable. a- IBRD and IDA loan and credit Board approvals in 45 countries up to World Bank Group fiscal year 2004. World Bank figures include only hydropower of less than 10MW. b – IFC mainstream investment portfolio. The value of these investments is measured at gross original commit- ment levels (IFC equity and loans) and excludes the value of any associated financing within the transactions (i.e. sponsors equity, other cofinancing, GEF cofinancing or carbon finance). c – GEF Council cofinancing commitments for 98 projects implemented, or to be implemented by the World Bank Group. This includes all climate change projects approved by the GEF Council for work program entry. For renewable energy, the following have been grouped together: OP6 - Promoting the Adoption of Renewable Ener- gy by Removing Barriers and Reducing Implementation Costs; OP7 - Reducing the Long-Term Costs of Low Greenhouse Gas Emitting Energy Technologies; STRM – Short Term Response Measures. For energy efficiency the following have been grouped together: OP5 – Removal of Barriers to Energy Efficiency and Energy Conver- sation; and OP11 - Promoting Environmentally Sustainable Transport; and Short-term Response Measures. d – CFB and MIGA financing leverages mainly private sector investments – they do not directly invest in a pro- ject. CFB typically leverages 5-6 times the value of the carbon emissions reduction purchases in investments. Figures since CFB inception in 2000. e – MIGA guarantees in support of $2.3 billion of total investment in renewable energy. Figures state gross cov- erage for investments. Towards a Sustainable Energy Future: 13 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential Annex 2: The World Bank Group Commitment as Noted in the International Plan of Action World Bank Group – Renewable Energy and Energy Efficiency Scale-Up Region / country Global Leading actor(s) World Bank Group Participating actor(s) World Bank Group client countries Main objective(s) Contribute to the challenges of eradicating energy poverty through en- hanced economic growth, and improving the environment Contents  Work in partnership with the global community to lead to a transition to cleaner energy environment.  Ensure that renewable energy and energy efficiency are seen as eco- nomically viable and essential ingredients in the energy choices of our member nations, not marginal considerations.  Increase World Bank Group staff capacity, the resources at their dis- posal and the incentives within their programs to more effectively as- sist the World Bank Group’s country teams to succeed in renewable energy and energy efficiency projects, as well as more rapidly transfer best practice across sectors and regions. Expected results  Commit – with the concurrence of the World Bank Group Board of Directors – to a target of at least 20 percent average growth annually in both World Bank Group renewable energy and energy efficiency commitments over the next five years. Target area / place Global Arrangement(s) for fi- World Bank Group nancing Monitoring process and Progress will be monitored through the following mechanisms: time frame  Report on the World Bank Group’s annual performance in renewable energy and energy efficiency programs against the figures of other leading organizations.  Provide sector-specific information to better engage a wide range of stakeholders on trends regarding specific technologies, whether those Towards a Sustainable Energy Future: 14 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential are hydroelectric, wind, solar, geothermal, or biomass. Contact person Jamal Saghir Director Energy and Water Department World Bank jsaghir@worldbank.org Link http://www.worldbank.org/energy Towards a Sustainable Energy Future: 15 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential Annex 3: Summary of Key Actions, Responsibilities, Schedule Action Prime Responsibility Key Partners Schedule Comments Strategic Initiatives 1. Meet the WBG 20% per year growth target CMU, regional energy sector EWD, other sector Beginning FY05 and To ensure renewable ener- (integration into PRSP, CAS etc.) staff, IFC, MIGA, CFB units, GEF annually thereafter gy/efficiency is considered and included, as appropriate in PRSP and CASs To lead to a 2 to 3-fold increase in WBG renewable ener- gy/efficiency commitment by 2010 from a baseline of about $200 million/year. 2. Mobilize Financing EWD, IFC GEF, ENV, CFB, ex- Begin in FY05 ternal partners 3. Support the Global Policy Networks, and EWD ENV, IFC, MIGA, Scoping Study – Oct Implementation of Financial Poli- specifically lead the Global Financial Policy CFB and external 04 cy Network will depend on re- Network partners sults of scoping study 4. Improve knowledge and learning, and ana- EWD, ESMAP WBI, external part- FY05-F06 Design & Flagship Product for EWD in lytical work ners (GVEP, REEEP Development of FY05 etc.) products 5. Improve communications EWD EXT FY05 and beyond Management Strategic Staffing Plan HR INF FY05 First Quarter Action Plan implementation, resource mobili- EWD FY05 to FY10 zation, progress monitoring, and reporting Towards a Sustainable Energy Future: 16 The World Bank Group’s Renewable Energy and Energy Efficiency Action Plan Confidential – Draft Only Annex 4: Costs of Implementing the Action Plan E s tim a te d A d d itio n a l C o s t o f I m p le m e n tin g th e R e n e w a b le E n e r g y A c tio n P la n - F Y 0 5 to F Y 1 0 I n T h o u s a n d s o f D o lla r s Sources of F unds P r e s id e n t's I N F C r e d it F Y 0 5 -F Y 1 0 BBGEF C o n tin g e n c y ESM A P L in e To be A c tiv ity E s tim a te d C o s t BB (p r o p o se d ) (r e q u e ste d ) (p r o p o se d ) (p r o p o se d ) d e te r m in e d S tr a te g ic I n itia tiv e s 1 . M e e t th e W B G 2 0 % p e r y e a r g ro w th ta rg e t (in te g ra tio n in to P R S P , C A S e tc .) 1 .1 S e c to r W o r k b y R e g io n s 2 ,7 0 0 300 400 2 ,0 0 0 1 .2 E n h a n c e d L e n d in g P o r tfo lio - A d d itio n a l P re p a ra tio n C o s ts R e q u ire d * 2 ,0 0 0 2 ,0 0 0 2 . M o b iliz e F in a n c e 2 .1 D e v e lo p a n e w s tr a te g ic p a r tn e r s h ip w ith G E F 125 25 100 2 .2 N e w c o m m e r c ia l fin a n c in g in s tr u m e n ts 175 25 150 2 .3 I n c r e a s e d p r iv a te s e c to r o u tr e a c h 625 25 50 50 500 3 . S u p p o rt th e G lo b a l P o lic y N e tw o rk s , a n d s p e c ific a lly le a d th e G lo b a l F in a n c ia l P o lic y N e tw o rk # 650 25 50 100 475 4 . Im p ro v e k n o w le d g e a n d le a rn in g , a n d a n a ly tic a l w o rk 750 50 300 400 5 . C o m m u n ic a tio n s s tra te g y d e v e lo p m e n t & im p le m e n ta tio n # 300 50 250 S c a le U p M a n a g e m e n t (a ) S tra te g ic S ta ffin g P la n 25 25 (c ) A c tio n P la n im p le m e n ta tio n m a n a g e m e n t 150 25 125 T o ta l 7 ,5 0 0 250 400 500 2 ,6 0 0 2 ,0 0 0 1 ,7 5 0 Towards a Sustainable Energy Future 17 Confidential – Draft Only E s tim a te d F is c a l Y e a r E x p e n d itu r e s (T h o u s a n d s o f D o lla r s ) A c tiv ity FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 S tr a te g ic I n itia tiv e s 1 . M e e t th e W B G 2 0 % p e r y e a r g ro w th ta rg e t (in te g ra tio n in to P R S P , C A S e tc .) 1 .1 S e c to r W o r k b y R e g io n s 500 500 500 500 500 200 1 .2 E n h a n c e d L e n d in g P o r tfo lio - A d d itio n a l P re p a ra tio n C o s ts R e q u ire d * 200 500 500 300 250 250 2 . M o b iliz e F in a n c e 2 .1 D e v e lo p a n e w s tr a te g ic p a r tn e r s h ip w ith G E F 125 - - - - - 2 .2 N e w c o m m e r c ia l fin a n c in g in s tr u m e n ts 175 - - - - - 2 .3 I n c r e a s e d p r iv a te s e c to r o u tr e a c h 125 100 100 100 100 100 3 . S u p p o rt th e G lo b a l P o lic y N e tw o rk s , a n d s p e c ific a lly le a d th e G lo b a l F in a n c ia l P o lic y N e tw o rk # 175 100 100 100 100 75 4 . Im p ro v e k n o w le d g e a n d le a rn in g , a n d a n a ly tic a l w o rk 200 150 100 100 100 100 5 . C o m m u n ic a tio n s s tra te g y d e v e lo p m e n t & im p le m e n ta tio n # 50 50 50 50 50 50 S c a le U p M a n a g e m e n t (a ) S tra te g ic S ta ffin g P la n 25 (c ) A c tio n P la n im p le m e n ta tio n m a n a g e m e n t 25 25 25 25 25 25 T o ta l 1 ,6 0 0 1 ,4 2 5 1 ,3 7 5 1 ,1 7 5 1 ,1 2 5 800 * F u n d s n e e d e d to s u p p o rt a n in c r e m e n ta l in v e s tm e n t g ro w th ra te o f 2 0 p e rc e n t o f a n n u a l re n e w a b le e n e rg y c o m m itm e n ts . D o e s n o t in c lu d e B B a n d B B G E F p re p a ra tio n c o s ts to m a in ta in b u s in e s s -a s -u s u a l g ro w th . P ro je c t s u p e rv is io n c o s ts a re a ls o n o t in c lu d e d a s th e s e a re e x p e c te d to b e p ro v id e d a s p a rt o f n o rm a l o p e ra tio n s . # A d d itio n a l fu n d in g m a y b e re q u ire d , d e p e n d in g o n o u tc o m e o f th e d e s ig n p h a s e . P r e s i d e n t 's c o n t i n g e n c y f u n d e x p e c t e d t o b e d i s b u r s e d f u l l y i n F Y 0 5 . Towards a Sustainable Energy Future 18 Confidential – Draft Only F Y 0 5 S o u r c e s o f F in a n c in g (T h o u s a n d s o f D o lla r s ) P r e s id e n t's I N F C r e d it BBGEF C o n tin g e n c y ESM A P L in e To be A c titiv ty BB (p ro p o sed ) (req u ested ) (p ro p o sed ) (p ro p o sed ) d e te r m in e d S tr a te g ic I n itia tiv e s 1 . M e e t th e W B G 2 0 % p e r y e a r g ro w th ta rg e t (in te g ra tio n in to P R S P , C A S e tc .) 1 .1 S e c to r W o r k b y R e g io n s 400 100 1 .2 E n h a n c e d L e n d in g P o r tfo lio - A d d itio n a l P re p a ra tio n C o s ts R e q u ire d * 200 2 . M o b iliz e F in a n c e 2 .1 D e v e lo p a n e w s tr a te g ic p a r tn e r s h ip w ith G E F 25 100 2 .2 N e w c o m m e r c ia l fin a n c in g in s tr u m e n ts 25 150 2 .3 I n c r e a s e d p r iv a te s e c to r o u tr e a c h 25 50 50 3 . S u p p o rt th e G lo b a l P o lic y N e tw o rk s , a n d s p e c ific a lly le a d th e G lo b a l F in a n c ia l P o lic y N e tw o rk # 25 50 100 4 . Im p ro v e k n o w le d g e a n d le a rn in g , a n d a n a ly tic a l w o rk 50 150 5 . C o m m u n ic a tio n s s tra te g y d e v e lo p m e n t & im p le m e n ta tio n # 50 S c a le U p M a n a g e m e n t (a ) S tra te g ic S ta ffin g P la n 25 (c ) A c tio n P la n im p le m e n ta tio n m a n a g e m e n t 25 T o ta l 250 100 500 550 200 0 Towards a Sustainable Energy Future 19