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have had limited causal impact on these reductions. Thelarge client firms enjoyed good credit and were respondingin part to China’s vigorous pursuit of energy efficiencygoals in the Five-Year Plan. Still, if CHUEE countedall its project costs, but counted as beneficiaries only theminority of clients who said they had no other potentiallender, CHUEE’s overall ERR was 38 percent (about halfof which was carbon emission reductions, valued at $19/ton of CO 2).Economic and financial returns fromsubprojects are not consistently monitored.Economic and financial returns from subprojects are notconsistently monitored across projects. The energy efficiencyprojects in Bulgaria and Romania, unlike the others, monitorex post results. In Romania, where most projects wereindustrial, financial returns ranged from 15 to 87 percent. InBulgaria, which had a more diverse portfolio, returns rangedfrom 13 to 37 percent. The Russian project (still in progress)reports a mean ratio of annual energy cost savings to projectcost of 20 percent, but this value is problematic, reflecting anabstruse but crucial methodological issue. 2Projects with energy savings targets arefalling short of those targets.All the projects with energy savings targets are falling shortof those targets, often by a large margin. Croatia stands at3 percent, Bulgaria energy efficiency at 6 percent, and OTPat 19 percent. (Note, however, that these projects are stillongoing through 2010 or 2011, and final outcomes may differas experience progresses and data are reexamined.) Theshortfall is evident even after allowing for the low disbursementrate of some projects.Appraisal of potential GHG savings appears to have usedinconsistent and, in some cases, erroneous values relatingCO 2to energy. Reported achievements of CO 2savings areroughly commensurate with actual energy savings, exceptfor the Bulgaria project. There the implied CO 2saving/energysaving ratio appears to be unusually high. Overall itis difficult to reconcile high financial rates of return withunderachievement of energy targets. Further investigationinto monitoring and appraisal methodologies is needed.Post-project sustainability and catalytic impacts. Theclearest case of sustainability is in Russia, where someparticipating banks have begun to make loans withoutIFC resources, using IFC’s energy efficiency CalculatorTool. For Central Europe the case is less clear. BeforeIFC’s Commercializing Energy Efficiency Finance Programstarted operation in 2003, there was no bank inmarkets like the Czech Republic, Hungary, or Slovakiathat specifically targeted energy efficiency or renewableenergy financing. With significant input from the financeprogram’s technical assistance team, two banks have createddedicated internal units and developed productsspecifically for the energy efficiency/renewable energymarkets. With the expiration of the subsidized guaranteeprograms, however, some of the banks involved in theenergy finance program have discontinued lending forstreet lighting and residential energy efficiency or havereverted to previous collateral requirements.The catalytic impact of the WBG projects on the broaderenergy efficiency finance market is difficult to evaluate becauseof the impact of the financial crisis, because monitoringand evaluation was not generally set up to track diffusion,and because rising energy prices throughout theregion (figure C.1) would be expected to encourage energyconservation regardless of WBG intervention. The RussiaSustainable Energy Finance Program does have as an indicatoradoption of energy efficiency lending by nonpartnerbanks and reports three instances. Observers of Hungarianbanking find it difficult to pinpoint diffusion impacts of theIFC projects.In Russia, joint IFC-IBRD technical assistance and analyticwork, including an enterprise survey, highlighted thetremendous scope for profitable energy efficiency in theRussian economy. This work estimated that up to 40 percentof energy consumption could be cost-effectively reduced.WBG analytic efforts provided key inputs to theRussian government as it drafted a new energy efficiencylaw, recently adopted. The impacts of the law will dependon yet-to-be-adopted implementation regulations.Direct Investments in Energy EfficiencyIFC’s energy efficiency emphasis has been on the use of financialintermediaries, but it also makes direct investmentsassociated with energy efficiency. Often energy efficiency isincidental to plant modernization or expansion. In othercases, energy efficiency is the main goal, as in installation ofwaste-heat recovery equipment.Mainstream investmentsIn 2005, IFC began to review projects to determine whetherthey could be claimed as having energy efficiency content.Over the period fiscal 2005–08, 48 such projects were identified.IFC assigned a notional proportion of each investmentto energy efficiency. In total, $392 million of IFC’s$1.96 billion investment (in projects valued at $3.96 billion)was considered to be energy efficiency. Ten projectsaccounted for more than 80 percent of the notional energyefficiency investments.IFC has supported some CO 2-intensive cement and steelcompanies in replacing obsolete, inefficient production38 | Climate Change and the World Bank Group