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

Scale up high-impact investmentsEnergy efficiency offers high economic and carbon returns.The WBG should—• Place greater emphasis on large-scale energy efficiencyscale-up, as measured by savings in energyand reduced need for new power plants. This includessupport for efficient lighting and for exploringthe scope for accelerating the global phase-out of incandescentlight bulbs. It also includes continued andexpanded support for reductions in transmission anddistribution losses. And it includes a proactive searchby IFC for large-scale, catalytic investments in energyefficiency. There is scope to coordinate World Banksupport for demand-side energy efficiency policieswith IFC support for more efficient manufacturing andmore efficient products.The WBG should, wherever possible, help clients findcleaner, domestically preferable alternatives to coal power.Moreover, the WBG faces strategic choices in staffing andprogramming between building up expertise in “sunrise”sectors of broad applicability and limited private sectorcompetition (energy efficiency, land use management forcarbon, energy systems planning) versus “sunset” sectorssuch as coal power. The WBG should—• Help countries find alternatives to coal power whileretaining a rarely used option to support it, strictlyfollowing existing guidelines (including optimal use ofenergy efficiency opportunities) and being restrictedto cases where there is a compelling argument for povertyor emissions reductions impacts that would not beachieved without WBG support for coal power.The WBG cannot tackle this issue alone. Complementaryfinancing for renewable energy and investments in technologyR&D are needed from the developed world to providebetter options for the WBG’s clients.Protected areas—especially those permitting sustainableuse—reduce tropical deforestation, providing local environmentalbenefits as well as carbon emissions reductions.The WBG should—• Continue to explore, in the REDD context, ways tofinance and promote forest conservation and sustainableuse, including support for indigenous forestareas and maintenance of existing protected areas.In terms of its instruments—• MIGA’s upcoming FY 2012–15 Strategy should outlinethe role and scope for MIGA to provide politicalrisk insurance to catalyze long-term financing forrenewable energy projects, building on its expertiseand existing portfolio of climate-friendly guaranteeprojects.• The World Bank should enhance the delivery of itsguarantee products by taking actions to improve policiesand procedures, eliminate disincentives, increaseflexibility, and strengthen skills for the deployment ofthe products. It should assess the potential for greateruse of partial risk guarantees to mobilize long-term financingfor renewable energy projects, particularly inthe context of feed-in tariffs or other premiums to supportinvestment in renewable energy.• The Carbon Partnership Facility and other post-Kyoto carbon finance efforts should focus on demonstratingeffective technical and financial approachesto boosting low-carbon investments. Funds and facilitiesshould have clear exit strategies.Reorient incentives toward learning and impactThere is an urgent need to better understand the economic,social, and GHG impacts of a wide variety of scalable interventions.How can REDD programs incorporate the lessonsof protected areas, environmental services payments,and community forestry? What is the best way to encourageenergy efficiency in the building sector?Traditional evaluation cycles are too slow when tens ofbillions of dollars may be deployed annually for climatefinance and where there is a danger of lock-in to highcarbongrowth. At the same time, information costs areplummeting, remote sensing resources are multiplying, andcell phone access is nearly universal. By wiring up projectsto return early information on impacts, global innovationcan be accelerated and the WBG can optimize project supervisionand new project design.The WBG’s extensive project portfolio and support forcountry strategies makes it a natural nexus for this globalpublic good. The WBG should—• Measure projects’ economic and environmental impactboth during execution and after closure and aggregatethis information for analysis. For instance,renewable energy projects should monitor capacityutilization, and energy efficiency projects should monitorenergy savings. This may require the use of concessionalfunds to defray additional costs of monitoring bystaff, 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 transitshare of urban trips, rather than on money spent.Executive Summary | xv