46793 An Investment Framework for CleanEnergyandDevelopment a platform for convergence of public and private investments t h e w o r l d b a n k P oweringeconomicgrowthusingcleanandrenewableforms ofenergyisoneofthemostchallengingtopicsindevelop- menttoday.Howwillwemeettheburgeoningenergyneeds of the developing world without causing irreversible dam- agetotheearth'sclimateorexposingeconomiestoenergy shortages?Theanswerrequiresconcertedactionoverthelongtermby manypartnersinindustry,finance,government,academia,andinterna- tionalorganizations.Remarkableachievementshavebeenmade,asthe examplesonthesepagesdemonstrate.Butthoseachievementswillnot enterthemainstreamunlessnewapproaches--onthepolicyfront,and infinance--cometocomplementexistinginitiatives.Theproblemisthis: sustainabledevelopmentthroughcleanenergyisstillbeingaddressed through short-term financing and regulatory frameworks that are not alignedtotheimmensescaleofthechallengefacingtheglobe. figure 1 since 1990 the wbg has committed more than us$10 billion toward renewable energy and energy efficiency i energyefficiency i hydro>10mw i newrenewableenergy -- cumulative commitment 1,400 12,000 1,200 10,000 1,000 millions millions 8,000 800 us$ us$ 6,000 600 annual 4,000 400 cumulative 200 2,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 renewable hydro energy world bank commitments source of funds energy > 10mw efficiency total for renewable energy and energy efficiency in fiscal WorldBank(IBRD/IDA) 135.7 118.6 115.3 369.5 year 2006 WorldBank inus$millions (GEFandCarbonFinanceUnit) 54.7 6.0 1.2 62.0 IFC(ownfunds) 17.4 67.0 309.0 393.4 note:ibrdinternationalbankforreconstructionand development,idainternationaldevelopment IFC(GF,CarbonFinance, association,ifc internationalfinancecorporation, andothertrustfunds) 13.0 0.0 20.1 33.1 migamultilateralinvestmentguaranteeagency. MIGA 0.0 0.0 1.8 1.8 total 220.8 191.6 447.4 858.8 genesisInJuly2005,theleadersoftheG8countries,meetinginGlenea- The World Bank's gles,Scotland,launchedanewdialogueonclimatechange,cleanenergy, Investment Framework andsustainabledevelopmentinvolving20energy-intensiveeconomies.The goalwastocreateaforum,outsidetheformalnegotiationsontheUnited for Clean Energy and NationsFrameworkConventiononClimateChange,todiscusswaystore- Development duceemissionsofgreenhousegasesandpromotegreaterlevelsofinvest- mentingreentechnologies,whileexpandingaccesstotheenergyneeded forgrowthandpovertyreductionindevelopingcountries. AttheGleneaglesSummit,theG8andtheso-called+5countries(Brazil, China,India,Mexico,andSouthAfrica)agreedontheGleneaglesPlanof ActiononClimateChange,CleanEnergy,andSustainableDevelopment. Aspartofthatplan,theyaskedtheWorldBanktoprepare,inconsultation withotherinternationalfinancialinstitutionsandmultilateraldevelopment Our goal is to provide our banks,anInvestmentFrameworkforCleanEnergyandDevelopmenttoad- partners with funding options dresstheinvestmentchallengesahead. and programs to accelerate Followingconsultationsthatincludedtheprivatesector,civilsociety,and investment so that developing anetworkoflegislatorsfromtheG8and+5countries,earlyversionsofthe countries can meet energy InvestmentFrameworkwerefavorablyreviewedbytheministersoffinance demands for growth and andofdevelopmentthatmakeuptheWorldBank'sgoverningbody,the poverty alleviation in an envi- DevelopmentCommittee. ronmentally sustainable way. TheBank'sDevelopmentCommitteehasvoicedbroadsupportforthe --paulwolfowitz,president, approachtakenintheframework,whichisorganizedaroundthreelinked theworldbank pillarsthatrepresentkeypolicyissues: 1. Meeting the energy needs of developing countries and widen- ing access to energy services for their citizens in an environ- mentally responsible way 2. Reducinggreenhousegasemissionsandspeedingthetransition to a low-carbon economy 3. Helping developing countries adapt to climate risks We are now facing the reality goalTheoverallgoaloftheInvestmentFrameworkistocatalyzeinvest- ofclimatechange.Thecommon mentsfrompublicandprivatesourcestoincreaseaccesstoenergyinde- manknowsalreadywhatscience velopingcountriesand,thereby,tospurdevelopment,whileusingcleaner is concluding as he faces the technologiesthatprotecttheenvironment.Toachievethatgoal,theBank reality--severe summers, poor isexploringthepotentialvalueofnewfinancialapproachestoacceleratein- harvests, increased water vestmentinclean,sustainable,cost-eective,andecientenergy.Asits scarcity, cyclones, floods, and roadmapforacceleratinginvestmentsthatwillbringmodernandecient droughts. This is the window energyservicestopeoplewhoneedthemmost,theInvestmentFramework showing us our future. rearmstheprimacyoftheUnitedNationsFrameworkConventiononCli- --hon.sureshprabhu,formerindian mateChange,includingtheemphasison"common,butdierentiatedre- cabinetministerfortrade,energy,and sponsibilities"amongrichanddevelopingcountries. development Energy for p i l l a r 1 Development and energy for developmentTheInternationalEnergyAgencyestimates Energy Access for thatdevelopingcountriesneedanannualinvestmentforelectricitysupply the Poor of$160billionthrough2010,increasingatabout3percentperyearthrough 2030.Presently,underinvestmentinenergyreducesGDPgrowthinsome countriesbyasmuchas1to4percentannually. Unfortunately,onlyhalfofthenecessaryfinancingisreadilyidentifiable, leavingafinancinggapintheenergysectorofabout$80billionperyear (figure2).Theinternationalfinancialinstitutions,aiddonors,andthepri- vatesectorcanclosethegapby$11billionperyearthroughadditionalin- vestmentsusingexistingfinancialinstruments.Butclosingtheremaininggap canoccuronlyinanenvironmentconducivetoinvestmentandsustained profitableoperations.Buildingthatenvironmentwilldependonacombina- tionofpolicyadvice,technicalassistance,andlendingtosupportacceler- atedreformsofnationalpowersectors--notablypoliciesgoverningpricing, subsidies,andenergyeciency. figure 2 mind the gap--financing the electricity needs of the developing world through 2010 source:internationalenergyagencyandpricewaterhousecoopers financing gap $160 billion is needed available financing $80 billion $80 billion annually to meet the electricity needs of the developing world. $80 billion is presently available. internally generated $32 billion how will the gap be filled? private investments $18 billion government funds international $19 billion donors $11 billion international donors $11 billion Ifthosereformscanbeachieved,thefinancinggapcanbeconvertedinto The Investment Framework's animportantinvestmentopportunity. emphasis on energy access is most welcome. We can talk access to energyTodaysome1.6billionoftheworld'speoplelackac- about low-carbon economies, cesstotheelectricitytheyneedtoworkandlearnecientlyandhealthily. reducing energy consumption, Unlessinvestmentisincreased,thatnumberwillnotbemuchchangedby and so on, but that makes 2030.Somecountries,suchasIndia,areaggressivelytacklingtheproblem absolutely no sense to people ofaccesstoenergy,butinSub-SaharanAfricatherateofelectrificationis who don't have access to stilllessthantherateofnewhouseholdformation. electricity at all. TheWorldBankhasdesignedanAfricaEnergyAccessActionPlanthat --vallimoosa,president,world ithopeswillbeimplementedinpartnershipwiththeAfricaInfrastructure conservationunion,andformer Consortium,theAfricanDevelopmentBank,theEuropeanUnion,interna- ministerofenvironment,southafrica tionalfinancialinstitutions,andbilateraldonors. ActiononthefiveparalleltracksoftheActionPlanwouldincreasepoor people'saccesstoenergyinSub-SaharanAfricafrom23percenttodayto 47percentby2030--adicultbutachievablegoal.Toimplementtheplan, concessionalsupport(grants,zero-interestloans)willneedtodoubleto$4 billionperyear--thusadditionalfinancingwillhavetobemobilized. lighting efficiently power to the people in timor-leste Large-scaledeploymentofenergy- ecientlightingtechnologieshas featuredinseveralongoingandnew WorldBankprojects.Hereisone example. Sinceitgainedindependencein May2002,Timor-Lestehasmade substantialprogressinrebuildingits powerinfrastructure.Still,almost80 percentofthepopulationhasnoac- cesstoelectricity,andthosewhodo payanelectricitytarithatisamong thehighestintheworld.Compound- ingthisisthelimitedcapabilityofthe nationalpowercompany,Electrici- dadedeTimor-Leste(EDTL),to operatethemainpowersystemona itybill,thecompanydistributescom- over,peoplepaylessfortheirpower commercialbasis. pactfluorescentlamps(CFLs).Since whentheyusetheseenergy-ecient Tocounterthecultureofnonpay- September2005,morethan27,000 lightbulbs. mentofbills,thegovernmentde- CFLshavebeendistributedfreeof Thissuccessfulinitiativewasa signedaprepaidmeterprogram. chargetoEDTLcustomerswhohave collaborativeeortoftheTimor- Todate,approximately23,000pre- acquiredprepaymentmeters.The LesteMinistryofNaturalResources, paidmetershavebeeninstalledin projecthashelpedtoreducethe MineralandEnergyPolicy,EDTL,the Dili,thecapital.Whencustomers peakloadforEDTLandtheneedfor WorldBank,andotherdonors. approachEDTLtopaytheirelectric- fuelimportsintoTimor-Leste.More- Toward a Low- p i l l a r 2 Carbon Economy Thedemandforprimaryenergyisprojectedtoincreasegloballybyafactor of1.6to3.5betweennowand2050,andindevelopingcountriesbyafac- torof2.3to5.2.Duringthisperiod,unlesspolicieschangeandwaysare foundtofacilitateinvestmentsinnewtechnologies,developingcountries areexpectedtofollowacarbon-intensivedevelopmentpath,similartothat takenbyindustrializednations. Thatwouldconstitutealostopportunityofimmenseproportions,be- causetheconsequencesoftheinvestmentdecisionsmadetodayandto- morrow will be with us for decades. By 2015, for example, fully half of China'surbanresidentialandcommercialbuildingswillhavebeenbuiltaf- ter 2000, and that stock will remain in use for another 50 to 100 years. Meanwhile,theeffectsofcarbon-intensivegrowth--includingairpollution andclimatechange--sabotagedevelopmentandstallprogressontheMil- lenniumDevelopmentGoalssetbytheinternationalcommunityattheturn ofthecentury. awindowofopportunityWehaveachancetodaytolinktheex- pansion of energy investments in countries such as China and India withstrategiestoreducelocalandregionalpollution,andsimultane- ouslytolowercarbonemissions. But"decarbonizing"futureinvestmentsisnotatrivialproposition. Doingsointhepowerproductionsector,forexample,willrequirein- crementalinvestmentsofupto$30billionperyearindevelopingcoun- tries(beyondthebasicneedsforelectricitygeneration).Tomeetthat need,asustainedprogramofincreasinglyconcertedactionbyauthori- tiesatalllevelswillberequiredtounlockthevastinvestmentpotential oftheprivatesector,withoutwhichtheworldhasscanthopeofkeeping eitherconsumptionoremissionsatsustainablelevels. protecting the right to grow Becausealow-carboneconomyisa globalbenefit,itisintheglobalinteresttoencouragerapidlygrowingde- velopingcountriestoinvestincleanertechnologies.Forexample,the"clean coal"technologiesknownasintegratedgasificationcombinedcycle(IGCC) andcarboncaptureandstorage(CSS)havethepotentialtodeliverplenti- ful energy (through very large reserves in China, India, and the United States)inanenvironmentallyfriendlyway.ButIGCCandCSSaremoreex- pensivethanconventionaltechnologies.Thechallengefortheinternational communityistoreducetheincrementalcostofcleantechnologiessothat developing countries can exercise their right to grow--in a cleaner and greenerway. scaling up: an imperative for reducing greenhouse gas emissions Presently,threesourcesoffundsareavailabletomitigategreen- housegasemissions:carbontradingmechanisms,internationalgrants,and voluntaryactions.Thesesources,andthefinancialmechanismsthatthey employ,mustbescaledupsignificantlyforgreaterimpactinthetransition toalow-carboneconomythroughthedevelopmentofmarketsthatreward the carbon market Thetotalvalue investmentsinenergyeciencyandrenewableenergy.Aspresentlycon- ofworldwidecarbontransactionswas figured,however,theexistingsourcesoffundscannotmakeameaningful $22billionin2006,havingrisen reduction in greenhouse gas emissions owing to governance and opera- sharplyinrecentyears.Mosttransac- tionallimitations. tionstakeoneoftwoforms: well-regulated carbon markets--a global good Theemis- allowance-basedtrading,in sionstradingmarketsenablelow-carbonenergyproducerstoreducetheir whichthebuyerpurchasesemission coststhroughthesaleofcarboncredits(figure3). allowancescreatedandallocated(or auctioned)byregulatorsundercap- Theusesofcarbonfundsareproliferatingquickly.Onepromisingpo- and-traderegimes,isprimarilydriven tentialapplication:tradablecreditsfordocumentedeffortstopreservefor- bytheEuropeanUnionEmissionTrad- estcover.Theprocessofclearing,burning,andotherwisedegradingtrop- ingScheme(EUETS)createdin2005. icalforestsisestimatedtoaccountforuptoaquarterofglobalemissionsof Inproject-based tradingthebuyer carbondioxide.Asystemoftradablecreditswouldrewardeffortstoreduce purchasesemissioncreditsfroma forestlosswhilegeneratinganadditionalincomestream. projectthatcancrediblyandverifiably Butdespiterapidgrowthandclearopportunitiestoextendcarbon-trad- demonstratethatitreducesgreen- ingmechanismstomanydevelopmentpurposes,thecarbonmarkethasyet housegasemissionscomparedtowhat tomakeasignificantdifferenceinmanydevelopingcountries.Amongthe wouldhavehappenedotherwise. constraints: Mostproject-basedtransactionsare currentlyexecutedthroughtheClean Higherinvestmentcostsrenderprojectslessfinanciallyattractive,re- DevelopmentMechanism(CDM) sultinginrelativelylittleequityand debtcapitalforcleanertechnologies. undertheKyotoProtocol,generating Currentcarbonpricesaretoolowtocatalyzethemobilizationofsub- CertifiedEmissionReductions. stantialprivatecapital. figure 3 chicago climate exchange 10 mtco2e uk emissions trading scheme 2 mtco2e structure of the worldwide new south wales certificates 19 mtco2e carbon market, 2006 iallowancemarkets iproject-basedtransactions MtCO2e=MetrictonsofCO2emissions clean development mechanism and secondary market for joint implementation, reductions under ji & primary market cdm 334 mtco2e 25­50 mtco2e european union voluntary & retail emission 8­10 mtco2e trading scheme 1,016 mtco2e other compliance- related reductions 8 mtco2e source: worldbank,decrg The Chinese government has Longleadtimesanduntestedtechnologiesincreaseprojectrisks,limiting made conserving resources and theamountoffinancingavailable,especiallyinmarketsalreadyseenasrisky. creating an environmentally Mostimportant,thelackofaglobalframeworkforemissionsreductions friendly society the basis of its after2012,whenthefirstcommitmentperiodundertheKyotoProtocolis future national development duetoexpire,discouragesinvestments,particularlyinlargeprojectswith model, and has made tackling longleadtimes. climate change a priority with its Tobeabletoperformonascalecommensuratewiththeproblem,car- national development strategy. bonmarketsmustoperatewithinaregulatoryframeworkthatisbothglobal --zhangwentai,vicechairman,com- andlongterm.Withinsuchaframework,theyarecapableofchanneling mitteeonenvironmentalprotection tensofbillionsofdollarstodevelopingcountrieseachyear. andresourceconservation,national people'scongressofchina a growing role for the world bank Almost10yearsofWorld Bankexperienceand$2billionofcarbonfundsundermanagement(for13 governmentsand63firms)haveshownthatcarbonfinancecancontribute tocleanenergyfinancinginthreeways:(a)bypurchasingcarboncredits fromlow-greenhouse-gasprojects,(b)byusingcarbonfinancetoleverage additionalinvestments,and(c)bysupportingthegrowthofaglobalcarbon marketthroughcapacitybuildingindevelopingcountries. The Bank's carbon funds support a diverse portfolio of projects, in- cludingwastemanagement,forestry,energy,chemicals,andtransport.Car- bonfinancehasalreadyhadamajorimpactonimprovingwastemanage- mentpracticesaroundtheglobeduetothemethaneemissionsassociated withtraditionallandfills,wastewater,andagriculturalrefusepractices. investinginrenewableenergyandenergyefficiency TheWorld Bankisreducingthecostsandremovingthebarriersfornear-commercial energyeciencyandrenewables.Atthe2004InternationalConferenceon RenewableEnergiesinBonn,theBankcommittedtoatargetofa20per- gas recovery in the world's carbon flows for clean eryandpowergenerationsystems largest steel industry thatuseafourth-generationcon- development TheNanjingIron&SteelCo.,Ltd. vertergasrecoverysystem.The (NISCO)inJiangsuProvinceof systemwillrecoverthegaspro- Chinahassignedanagreementto ducedbyNISCO'sconvertersinthe sellreductionsofgreenhousegas steelproductionprocessanduseit emissionstotheWorldBank,acting togenerate157gigawattsofelectric- onbehalfoftheItalianCarbon ityperyear,therebydisplacingan Fund,whichwillpurchasearound equivalentamountofelectricity 600,000tonsofemissionreduc- fromthecoal-firedEastChinagrid. tions. TheNISCOprojectwillbeapro- Theproject--thefirstenergyef- totypeforfutureenergyefficiency ficiencyprojectinChinaunderthe projectsintheChinesesteelsector, CleanDevelopmentMechanism-- theworld'slargest. willintroduceconvertergasrecov- centaverageannualgrowthinnew-renewableenergy(so- lar,wind,biomass,geothermal,aswellashydropowerup to 10 MW in capacity) and energy eciency commit- mentsbetweenfiscalyears2005and2009.TheBank metitsBonnCommitmentduringbothfiscalyears2005 and2006,committingmorethan$1.14billiondollars fornewrenewableenergyandenergyeciency.That represents32percentoftheBank'stotalenergy-related commitments,upfromjust14percentin1990­94. Overall,WorldBanksupportforrenewableenergy and energy eciency has exceeded $10 billion-- embracingmorethan100projectsinsome28countries(see figure1,insidefrontcover).Partneringwiththeprivatesec- toriscriticalinsuchprojects. the role of gef The Global Environment Facility (GEF) is the largestsourceofmultilateralgrantfinancingforlow-carbontechnologies, anditsworkisvital.GEF'smissioninthisareaistodevelopandtransform marketsforenergyindevelopingcountriessothat,overthelongterm,they willbeabletogrowandoperateecientlyonalesscarbon-intensivepath. I strongly believe that we GEFhasprovided$1billioninprojectfinancingsince1992.However,for need to build support...for a GEFtoachievesignificantandsustainedplacementofrenewable-energy clearframeworkthataccelerates technologiesatnear-commerciallevelsofeciency,itsfundingwouldhave a shift to low-carbon economies tobegreatlyincreased.EvenscalingupGEF'scurrentfocusonremoving ...to avoid dangerous climate barriersforsuchtechnologieswouldrequireatriplingofitsbudget.Pro- change. vidingsubstantialsupportforcapitalinvestmentsinnew,low-greenhouse- --tonyblair,primeministerofthe gas-emittingtechnologieswouldrequireanevenmoresubstantialcommit- unitedkingdom mentfromthedonorcommunity. mandating renewable energy tributetoanincreaseinrenewable tofundprojectsincompaniesthat on a national scale electricityfrom35TWh/yearto150 useoutdatedheatingsystemsand TheChinaRenewableEnergyScale- TWh/yearandraiserenewableca- antiquatedproductionlines.Asan UpProjectisa10­12year,three- pacityfrom7GWto29.6GW. example,Center-InvestBankin- phase,$400millioninitiative(includ- vested$1.1millioninUNKAgropro- ing$140millioninGEFgrants)to financing sustainable energy dukt,aproducerofsunfloweroil,for supportimplementationofanational Russiaconsumesabout10times anewboilerfueledbysunflower policyinwhich(a)amandatedshare moreenergyperunitofproduction seedhusks,resultingin660,000m3 ofelectricityconsumptionmust thandevelopedcountries,implyinga ofgassavedpermonthand$1.1mil- comefromrenewablesourcesor(b) greatpotentialforenergysavingsin lioninsavingsover10monthsofop- electricitysuppliersmustbuyrenew- itsindustrialsector.SinceNovember erations. ableenergy-basedelectricityataset 2005,theInternationalFinanceCor- TheIFCoerslong-termfinancing price.GEFfinancingforinstitutional poration,theprivatesectorarmof andguaranteestoaddressfinancing developmentandcapacitybuilding theWorldBank,hasbeenworking barriers,alongwithcapacitybuilding inPhaseI($40million)willcon- withRussianfinancialintermediaries fordevelopersandcompanies. Adaptation to p i l l a r 3 Climatic Change Eortstoalleviatepovertyarealreadythreatenedbyincreasinglysevere and Variability weatherpatternsandclimatevariability,theeconomiceectsofwhichare especiallysignificantindevelopingcountries.AccordingtotheIntergov- ernmentalPanelonClimateChange,partialestimatesoftheeconomicim- pactofatemperatureincreaseof2.5°C(amid-rangevalueassociatedwith a doubling of the atmospheric concentration of CO2), without osetting adaptiveeorts,rangefrom0.5to2percentofGDP,withhigherlossesin mostdevelopingcountries. Toensureanadequateresponsetogrowingclimaticvariability,major changesinbothpublicandprivateinvestmentstrategiesareneeded.Re- centanalysessuggestthat20to40percentofocialdevelopmentassis- tanceandotherpublicconcessionalfinancefordevelopment(some$20to betting on the weather $40billionperyear)issubjecttoclimaterisk,whileonlyasmallportionof mexico's catastrophe bonds aidprojectstakethisriskintoaccountintheirplanning.Theincremental Aninternationalhumanitarianrelief costsofactivitiestomakeprojectsmoreresilienttoclimateeffectsareesti- eortmayhelpwiththeimmediate matedat5to20percentoftheportfolioatrisk.Thiswouldsuggestthatat crisisthatfollowsanaturaldisaster. least$1billionperyearinadditionalfundingwillberequired. However,governmentsareleftto copewithshatteredtowns,uprooted Adaptationtoclimatevariabilityandchangealsoneedstobeintegrated farms,bankruptedbusinesses,and intosectoralandnationaleconomicplanning.Theinitialchallengeistoraise brokenbridges.Byissuing"catastro- fundstosignificantlyincreasetheknowledgebaseatthecountrylevelinor- phebonds,"developing-countrygov- dertodesignappropriateadaptationstrategies.Thiswouldhavetobefol- ernmentscanpurchaseinsurance lowedbyalargeincreaseinfundstoimplementadaptationstrategies,ata frominternationalinvestorswillingtocostinexcessof$1billionperyear. forfeitallorpartoftheirinvestment Theinternationalfinancialinstitutionscanhelpbyestablishingaframe- whenanaturaldisasterexceeds workinwhichpublicandprivateinvestmentprojectsindevelopingcountries definedlimits,whileearningan becomemoreclimate-resilient.Awarenessraising,knowledgesharing,and above-averagerateofinterestatother times--theequivalentofaninsurance capacitydevelopmentareallimportantpartsofthatframework.Im- premium. mediatetasksinclude(a)analyzingtheinstitutionalbarriers Mexicohaspioneeredinthisfield thatpreventclimate-relatedconditionsfrombeingin- byissuing$160millioninthree-year corporatedintodevelopmentplanningand(b) catastrophebondstoinsureagainst devisingnewstandardsforinfrastructure. earthquakedamage.Investorswho New insurance instruments (such as boughtthebondsarebettingthata weather-indexinsuranceforfarm- majorearthquakewillnothitMexico ers) and risk-pooling arrange- inthenextthreeyears.Iftheyare right,theirbondsarerepaidafter ments(suchastheGlobalIn- threeyears.Butifaquakehits,the dexInsuranceFacility)are governmentretainsthefullvalueof likelytobekey. thebonds.InMexico'scase,thegov- ernmentcollectstheinsurancepayout ifaquakemeasuringatleast7.5on theRichterscalehitsspecificregions, regardlessoftheextentofdamage. n e x t s t e p s MakingtheInvestment Framework a Reality TomaketheInvestmentFrameworkforCleanEnergyandDevelopmenta realitytheWorldBankwillcontinuetostrengthenitscooperationwithgov- ernments,otherinternationalfinancialinstitutions,regionaldevelopment banks,andtheprivatesectorwiththegoalofaligningoureortsforgreater We can build on the experience impact.TheBankwillworkcloselywiththeInternationalEnergyAgencyon of the United Nations Frame- ajointinitiativetoproducearelevantsetofenergyeciencyindicatorsthat work Convention on Climate willcontributetotheongoingeortsbeingimplementedbytheG8+5coun- Change,creatingframeworksfor triesandothermiddle-incomecountries.Inthemonthstocome,theBank marketsandincentives.Without willseektomobilizedonorassistancefortheAfricaEnergyAccessAction incentives private investment Plan,continuetoworkonfinancingoptionstosupportthetransitiontoa and flows of international low-carboneconomy,anddevelopastrategy(includingtoolsandfinance) finance of the required magni- tomeetthechallengeofadaptation. tude will not happen. Thegoalistoachieveaconvergenceofprivateandpublicsectoreorts --sirnicholasstern,advisertothe toscaleupinvestmentincleanerenergyproduction,renewableenergy,and britishgovernmentontheeconomicsof energyeciency. climatechangeanddevelopment Thismuchisalreadyabundantlyclear:Nowisthetimetoinvestinclean energyforsustainabledevelopment. to learn more: weighing policy options: practical guidance from the TheWorldBank'sInvestmentFrameworkforCleanEnergyandDevel- international energy agency opment: http://siteresources.worldbank.org/DEVCOMMINT/Documen InitsannualWorldEnergyOutlook tation/21046509/DC2006-0012(E)-CleanEnergy.pdf 2006,theInternationalEnergyAgency TheSternReviewontheEconomicsofClimateChange: presentedan"alternativepolicysce- nario"toaddressenergysecurityand www.hmtreasury.gov.uk/independent_reviews/stern_review_economics environmentalconcerns.Developedin _climate_change/sternreview_index.cfm cooperationwiththeWorldBankand IntergovernmentalPanelonClimateChange: otherinternationalfinancialinstitu- www.ipcc.ch/ tions,thescenariooerspractical guidancetopolicymakersaboutthe InternationalEnergyAgency: eectivenessandeconomicconse- www.iea.org quencesofpolicyoptions.TheAgency alsorecentlypublished"EnergyTech- nologyPerspectives,"whichshows howglobalCO2emissionscouldbere- ducedtoclosetotheirpresentlevelby 2050throughaccelerateddeployment ofcleanerenergytechnologythatisei- theralreadyavailableorunderdevel- opment.TheAgencyhasamajorwork programtoidentify"bestpractice" policiesforpromotinglowercarbon technologiesinallthekeyareasthat havebeenidentified,includingenergy eciency. TheWorldBank 1818HStreet,NW Washington,DC20433,USA Tel:202.473.1000 Fax:202.477.6391 www.worldbank.org © 2007 InternationalBankfor ReconstructionandDevelopment/ WorldBank.Allrightsreserved. ProducedbytheSustainable DevelopmentVicePresidency.