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

of some technologies, such as landfill gas, and supportedfirst-of-kind technology investments in some countries.The BioCarbon Fund and the Community DevelopmentCarbon Fund have supported small-scale, rural, and forestryprojects—and learned in the process that this is difficultto do.In contrast, much of the CFU’s support for energytechnologies has gone to projects where its financialleverage—and hence its catalytic impact—was relativelysmall. In addition, two-thirds of carbon fund purchasecommitments have been for projects that destroy HFC-23,a highly potent, industrially generated GHG. The projectstapped a Chinese low-cost GHG abatement opportunityand gave participating companies high profits, 65 percentof which were then taxed for development purposes. Althoughthis was an allowable use of the carbon market, analternative would have been to use international funding topay only for the low marginal costs of destroying the gas,deploying carbon funds with higher leverage elsewhere.Technology transferTechnology transfer is one of the pillars of the Bali ActionPlan (under the United Nations Framework Convention onClimate) and of the SFDCC. The WBG has contributed tothe transfer of existing clean technologies through projectsthat pilot, debug, demonstrate, and diffuse innovations inengineering and finance. These have been successful whenthe logic of demonstration and diffusion has been wellthought out.The Renewable Energy Development Project (China),for instance, used a combination of quality-contingentsubsidies, research and development grants, and technicalassistance to foster the growth of a competitive solarphotovoltaic industry. The Energy Conservation Projectsupported China’s first ESCOs, with strong emphasis onknowledge sharing and diffusion. The Regional SilvopastoralProject in Latin America piloted different approachesto integrating trees with pasture, rigorously documentingthat some techniques were highly profitable even withoutreckoning carbon and biodiversity benefits, and was ableto convince the Colombian government to scale up theproject. In all these cases, GEF support was essential tomitigate up-front risk and to pay for global benefits ofknowledge created.Conversely, technology transfer has foundered in theabsence of a solid logical framework that links interventionsto technological diffusion, especially in the case ofadvanced technologies. Early efforts to support concentratedsolar power, for instance, incorrectly assumed thata few scattered projects would spur cost reductions at theglobal level. (A new concentrated solar power initiativeunder the Clean Technology Fund is more appropriatelyscaled.) Projects incorrectly assumed that private beneficiariesof technology (such as recipients of technology licensesin the China Efficient Boilers Project) would shareproprietary technology with competitors. Several IFC investments,pursuing multiple but conflicting objectives,tackled an insurmountable combination of inexperiencedentrepreneurs, unfamiliar technology, and an uninterestedtarget market. Finally, both the concentrated solarpower and efficient boiler projects underestimated the difficultyof procurement when technology suppliers are fewand costs are poorly known—an inherent feature of newertechnologies.Learning and incentivesRapid feedback and learning is essential for adapting technologyto new sites, for deciding which technologies toscale up, and for ensuring that they are working as planned.Technology demonstration projects work best when itis clear what is being demonstrated, how, and to whom.Although recent demonstration projects have good plansPhoto by Kenneth M. Chomitz. Used with permission.Executive Summary | xiii