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

esidents, and of the post-project financial sustainabilityof management. Failure to document impacts or tolearn systematically from experience has kept the REDDinitiative from having a 20-year “head start.”Failure to monitor can also lead to skewed incentives. Forlack of an alternative, the WBG (and to some extent thisevaluation) uses dollar volume of commitments to measurethe organization’s orientation toward climate issues. Usingdollars as a scorecard was arguably important for the BonnCommitment in directing attention and resources towardrenewable energy and energy efficiency. But ultimately theuse of an input rather than an outcome measure risks drivingthe organization toward inefficient or ineffective activities.For instance, efficient lighting programs offer much higherreturns—in cost savings and GHG reduction—than investmentin renewable energy. But a hydro plant offers a muchhigher ratio of loan amount to staff preparation cost and istherefore potentially more attractive in a budget-constrainedorganization that scores achievement by dollars loaned.The CDM experience with monitoring points to a wayforward. Unlike most other development projects, carbonprojects are required to monitor their outputs. (Otherwisethey do not get paid.) Calculating carbon offset productionrequires stipulating a “business as usual” emissions level.This is difficult and has often been contentious. But it alsorequires measuring the project’s actual performance—forinstance, how many hours a wind turbine operates, or howmany CFLs are distributed and installed. This generatestimely, publically available, comparable information.Just as private sector firms derive value from monitoringthe performance of and customer satisfaction with theirproducts, the WBG has an interest in tracking the performanceand sustainability of its projects. At the same time,it can work with public and private clients, when requested,to help them implement benchmarking and monitoringsystems, so as to better define goals and track outcomes.This becomes increasingly feasible as information costsplummet; remote sensing resources multiply in number,sensitivity, and accessibility; and cell phone access becomesnearly universal. By wiring projects and sectors to returncurrent and reliable information on forest cover, T&Dlosses, household access to electricity, and so on, global innovationcan be accelerated, and the returns to investmentenhanced.The WBG is a natural nexus and starting point for thisglobal public good, which should eventually expand to aglobal network of information sharing. This is consistentwith the strategic objectives for knowledge creation and capacitybuilding.Specific recommendations include the following:• Measure projects’ economic and environmental impactduring execution and after closure and aggregate thisinformation for analysis. For instance, renewable energyprojects should monitor capacity utilization, andenergy efficiency projects should monitor energy savings.This may require the use of concessional funds todefray additional costs of monitoring by staff, clients,and project proponents.• Link these measures to a results framework that shiftsthe SFDCC toward a focus on outputs such as powerproduced, power access, forest cover, and transit shareof urban trips, rather than money spent.Table 6.1Summary of Sectoral FindingsSector Intervention Direct impacts Leverage and diffusionimpactsRenewableenergy — ongridLendingLonger loan terms significantlyimprove bankability.Better upfront planning hasbeen important to assure betteroutcomes in hydropower.Monitoring needs and issuesWhat are the economic and carbonimpacts?What are the reasons for over orunderperformance in capacityutilization?GuaranteesHydropower has generallyhigher returns than wind power.Guarantees against breach ofcontract could significantlyimprove bankability.84 | Climate Change and the World Bank Group