76069 Energizing Climate Friendly Development: World Bank Group Support for Renewable Energy and Energy Efficiency Climbs to US$2.7 Billion in Fiscal Year 2008 I n fiscal 2008, the World Bank Group (WBG) committed US$2.7 billion to the promotion of low carbon energy in the “Climate change policies cannot be the frosting on the cake of form of renewable energy (RE) and energy efficiency (EE) in development; they must be baked into the recipe of growth and social development. The World Bank has already been building developing countries. This corresponds to an increase of 87 percent on synergies between climate action and development—working from the previous year and underlines the WBG’s role as one of on energy security and efficiency, encouraging renewable energy, the largest financiers of sustainable energy in the world. Through protecting urban air quality, helping with the management of piloting new approaches, overcoming market barriers, and providing arid lands, and assisting with adaptation of agriculture. “ technical assistance, the WBG has been able to act as a catalyst for the development of RE and EE in client countries and thereby leverage Robert B. Zoellick, President large additional investments by both public and private sectors. World Bank Group Opening Plenary Session Statement to the 13th Conference Addressing climate change is one of the key global challenges of the Parties to the UNFCCC of the coming decades—a challenge that lies at the very heart Bali, Indonesia; December 12, 2007 of international development. It is very clear that developing countries are the most vulnerable to climate change, putting years of hard-earned progress at risk. Because of their great potential Finance—has in recent years considerably increased its investment to provide energy that is low-carbon, clean, safe, and reliable, RE and advisory services focused on helping its partner countries in and EE technologies play an important role in addressing this exploiting RE and EE opportunities. challenge. In fiscal 2008, total World Bank Group financial commitments The benefits of RE and EE in international development go well for RE, including hydropower of all sizes, and EE rose to US$2.7 beyond climate change and the environment. In fact, high and billion (Table 1). Ninety-five RE and EE projects in 51 countries, volatile fossil fuel prices and energy security concerns have increased and two cross-border projects were supported in fiscal 2008; their attractiveness in a large number of diverse applications. EE accounting for 35 percent of the total Bank Group energy lending measures, for example, through energy-efficient lighting, are a commitments in fiscal 2008 (see Figure 1).1 This represents an 87 highly effective tool not only in reducing energy costs, but also percent scale up in financing for RE and EE from US$1.4 billion in in quickly reducing peak loads and therefore power generation fiscal 2007. The GEF has been an important partner, contributing requirements to address the acute power crises many developing US$149 million in cofinancing for World Bank projects. countries are currently experiencing (Box 1). RE technologies are least-cost energy alternatives in many rural, sparsely populated At the Bonn International Conference on Renewable Energies in areas where grid electricity connections remain elusive and the 2004, the World Bank Group made a commitment to accelerate economics of diesel generators—the most widespread distributed its support for new RE and EE.2 We pledged to increase our electricity technology—are affected by high fuel costs. As a result, financial commitments for new RE and EE at a rate of 20 percent demand for such solutions has grown significantly in client per annum between fiscal 2005 and 2009, compared to a baseline countries in recent years (Box 2). In response, the World Bank Group—comprising the World 1 In addition to RE and EE, total WBG energy lending includes thermal electricity generation, oil, gas, and coal production and transport, electricity Bank, International Finance Corporation (IFC), and Multilateral transmission and distribution, and policy reform projects. Investment Guarantee Agency (MIGA), as well as cofinancing 2 New RE comprises energy from solar, wind, biomass, and geothermal, as well as from the Global Environment Facility (GEF) and Carbon hydropower from facilities with capacities up to 10 MW. wb renewable energy bro 10-2-08.indd 1 10/2/08 10:28:18 AM Table 1: World Bank Group Commitments for RE and EE in Fiscal 2008 Commitments in fiscal 2008 (millions of US$) Hydro > 10 Source of funds New RE MW EE Total World Bank 272 625 719 1,616 • IBRD/IDA 117 601 624 1,343 • GEF 90 - 55 145 • Carbon Finance 65 24 40 128 IFC 115 361 473 949 • Own Funds 72 361 473 906 • Carbon Finance 39 - - 39 • GEF 4 - - 4 MIGA 88 21 - 110 “Concerns about energy Total 476 1,007 1,192 2,675 security and climate changes Note: Some columns may not add up exactly because of rounding. and increasing energy prices Source: WBG databases make many renewable energy and energy efficiency measures and applications commitment of US$209 million (equal to the US$1,000 million was committed for hydropower very attractive in a number average of the previous three years). This baseline projects greater than 10 MW per facility. of different settings and wide methodology was selected to allow a meaningful array of applications. This interpretation of investment trends that would The cumulative World Bank Group financial is reflected in the increased balance the lumpy nature of investments in the commitments for RE and EE from fiscal 1990 to investment demand, and energy sector. As in previous years, the World Bank fiscal 2008 now exceed $14 billion (Figure 2). also for technical assistance Group has outperformed its Bonn commitment. to strengthen regulatory From fiscal 2005 to fiscal 2008, the WBG Strengthening Support for Development and frameworks providing committed close to US$3.7 billion for new RE and Climate Change Management incentives to climate change EE compared to the Bonn commitment goal of friendly applications.” Jamal US$1.3 billion for the same period. As shown in RE and EE also feature prominently in the WBG Saghir, Director, Energy, Table 1, in fiscal 2008 commitments for new RE strategy going forward—most prominently Transport and Water, The and EE were US$1,700 million and an additional in the Sustainable Infrastructure Action Plan World Bank Box 1: Rapid Rise in Demand for EE Interventions Rising energy prices, acute power crises in a number of client countries and climate change concerns have increased demand for EE programs. The WBG responded to these demands through a considerable scale- up in its efforts, leading to a quadrupling of its EE investments. The World Bank has made significant strides in helping client countries in institutional development, policy reforms and regulations, such as tariff rationalization and building energy conservation codes, to create an enabling environment for ramping up EE investments. Among the EE projects in fiscal 2008, the China Energy Efficiency Financing (CHEEF) Project (IBRD US$200 million and GEF US$13.5 million) stands out as the single largest EE project of the WBG in recent years. The project will onlend funds through two domestic financial intermediaries to Chinese industries for implementing EE improvements in some of the country’s 1,000 most energy intensive enterprises. The fiscal 2008 Bank portfolio also includes a number of demand-side EE projects that include the bulk procurement and distribution of CFLs, end use capacitors, and advanced metering systems. In fiscal 2008, such projects were approved for Pakistan, Argentina, Ukraine, Burundi and Zambia. Based on the lessons learned, the World Bank is developing toolkits and standardized approaches to further scale-up EE projects. wb renewable energy bro 10-2-08.indd 2 10/2/08 10:28:23 AM )LJXUH  6KDUHRI5(DQG(( )LJXUH  :%*5(DQG((&RPPLWPHQWV)LVFDO² RIWRWDO:%*HQHUJ\OHQGLQJ         &XPXODWLYH86PLOOLRQV  $QQXDO86PLOOLRQV