The Challenge of Low-Carbon Development - World Bank Internet ...

significant barriers, such as entering new markets andapplying new technologies and new business models.The facility provided technical assistance grants andinvestment funding to projects with significant environmentalbenefits or projects that led to cleaner production.As of 2009, only 4 projects have been committed, and 25received technical assistance grants. High cost, low buyinfrom bilateral donors, unfocused strategy, and resourcelimitations led to under achievements in placing funds.As a pilot facility, the program aimed to demonstrate theviability of early-stage cleaner production projects. However,case studies and dissemination workshops appearto have had little impact on technology diffusion.• Sustainable Energy Facility with E&Co. In 2005, IFCestablished the Sustainable Energy Facility Project. Theproject consists of $14 million of investment capitaland up to an additional $ 2.6 million for technicalassistance and capacity building. Based on a mid-termself- evaluation, this facility appears to have learned thelessons of its predecessors, incorporating greater flexibilityin technology and attention to making sure productsare demanded by markets. Like some of its predecessorsit combines technical assistance and investment,taking a quasi-venture capital approach.One of IFC’s furthest ventures into upstream technologiesis its GEF-supported Fuel Cell Initiative, initiatedin 2001. The pilot phase was expected to supportthree companies with different fuel cell technologiesand help increase their supply of fuel cells, reduce theirmanufacturing and installation costs, and demonstratethe viability of the technology. The target market wasbackup and remote-location power for telecom companies.The program was supposed to close in December2008, but to date only about 85 systems have been installed,against a target of 400. There was no demand forthe remote-location fuel cell.In sum, IFC’s GEF-funded projects seem to have sufferedfrom a persistent set of design flaws. They have often supportedcompanies with the double handicap of inexperiencedmanagement and technology that is not locallyfamiliar. They have supported products that are too advancedor expensive for the target market. And they havesometimes presumed overoptimistically that providingtechnology to specific firms would lead to spontaneousdiffusion of that technology.IFC’s GEF projects have suffered frompersistent design flaws.There are, however, indications of a fresh approach thatrecognizes these past shortcomings. A new initiative onearly-stage clean-tech venture capital is led by staff whowere involved in IFC’s high-risk but ultimately high-returninvestments in African telecom. The new approach seeks tosupport experienced management in adopting technologiesthat are proven elsewhere in the world; it is prepared to takesome risks for prospectively high returns. At the same time,an investment in one of the developing world’s first largegrid-connected solar photovoltaic power plants also stressesworking with a well-qualified company, and the projectprovides for the construction of a “knowledge platform” toshare project results.A fresh approach emphasizes transferof well-proven technologies and creation ofknowledge platforms to share results.Demonstration and piloting in recent low-carbonenergy projectsTechnology transfer can occur through piloting and demonstration.Existing technologies face new challenges whenput in a new context. For instance, biomass technologiesmay require technical, logistical, contractual, and regulatoryadjustments to adapt to a novel location with untriedfeedstock. An effective pilot project will have a coherentlogical framework for demonstration. So, for instance, ifthe goal was to demonstrate the technical and financial viabilityof a biomass technology so as to induce spontaneousreplication, the project should specify the technical andfinancial indicators that will be collected at the plant level,the target audience, how the results will be communicated,and how uptake of the technology will be tracked.Recently initiated pilot projects had goodplans for monitoring internal projectoutcomes.To gauge the extent and practice of such projects, IEG dida desk survey of low-carbon energy projects over 2007–09for this evaluation. It found 21 projects that contained eitherpilot or demonstration in their project objectives, withtotal commitments of roughly $1.4 billion (see table H.1).Eleven of these projects were GEF supported; eight hadsolely GEF support. Nearly all project designs containedgood plans for monitoring internal project outcomes, butonly eight projects displayed a strong logical frameworkfor demonstration; few project designs contained any measurementof external demonstration effects. Although thethree carbon finance project designs included excellent internaloutcome measures (through the CDM), they lackeda coherent mechanism for demonstration and contained nomeasurement of demonstration impacts.Only 8 of 21 projects had strong logicalframeworks for demonstration, andfew contained any measurement of externaldemonstration effects.70 | Climate Change and the World Bank Group