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An Assessement of the
World Bank’s Clean
Energy for Development
Investment Framework
Nannan Lundin and Linus Hagberg

Table of Contents

Preface from the Swedish Society for Nature Conservation 1
Executive Summary 3
1. Background and introduction 5
2. Project description 9
3. A developing country/An African context 10
4. A micro-level assessment – from a technical perspective 13
5. Macro-level assessment – from a socioeconomic perspective 18
6. Conclusions and policy implications 27
7. Selected references 30
Acronyms and Abbreviations 32

Author: Nannan Lundin and Linus Hagberg
Coordinator: Göran Ek, Naturskyddsföreningen
Layout: Eleonor Pedersen, Elli Production
Photo: Shutterstock
Print: PÅ Media
Order No: 9078
ISBN: 91 558 0717 8
Produced with economic support from Sida. Sida has not participated
in the production of the publication and has not evaluated the facts or
opinions that are expressed.

an assessement of the world bank’s clean energy for development investment framework

Preface from the Swedish Society
for Nature Conservation

2.4 billion of the world’s poorest people still lack access to billion US$ a year in greenhouse gas-producing energy
efficient, clean cooking and heating fuels and 1.6 billion are projects, which fuel climate change and often fail to help the
still without electricity. Lack of access to basic energy serv- world’s poor. Financing for renewable energy projects made
ices has serious social, economic and environmental conse- up less than 5 percent of the Bank’s overall energy financing
quences. In many developing countries, most women spend in fiscal year 2006. Whereas the World Bank (IBRD/IDA)
several hours collecting firewood every day. Indoor air pol- increased its lending to the energy sector from 1.8 billion
lution caused by open fires and inefficient stoves claims an US$ in FY 2005 to about 3 billion US$ in FY 2006, the lend-
estimated 2 million lives each year. Without electricity, chil- ing for new renewable energy (without GEF) decreased from
dren cannot learn after dark, medicine cannot be refriger- 139 million in FY 2005 to 136 million US$ in FY 2006.
ated, job development in rural areas is hindered, and safe As this report shows, we are now afraid that also the
drinking water cannot be supplied to many places. Bank’s “Clean Energy for Development Investment
Renewable energy technologies such as wind, solar, mod- Framework” will not deliver the desired benefits. It is based
ern biomass and geothermal could generate a double divi- on scenarios for global greenhouse gas emissions at levels
dend for the environment and poverty reduction, and as that would allow “dangerous climate change” as defined by
such present logical responses to the problems of climate the Intergovernmental Panel on Climate Change. The
change and energy poverty. Renewable energy sources pro- framework also promotes additional funding for energy
duce insignificant greenhouse gas emissions that lead to technologies that have negative social and environmental
climate change, and they do not produce the other air pol- impacts – such as large scale dams (and speaks favourably
lutants that the burning of fossil fuels creates to the same on nuclear power) – and that will in many cases further
amount, if at all. Renewable energy sources are available contribute to climate change – i.e. coal based technologies.
locally, create local jobs and do not usually have significant The framework does not catalyze the necessary massive
negative social and environmental impacts. shift to renewable energy technologies that could create the
As a key player in international development the World double dividend of environmental benefits and poverty
Bank could play a leading role in providing a framework for reduction.
“fast-tracking” renewable energy investments in the South. The Swedish Society for Nature Conservation (SSNC) ad-
Regretfully, however, it is the perception of the Swedish vises the Swedish government and its colleagues in like-mind-
Society for Nature Conservation that the Bank has not ful- ed countries to ask the World Bank to do the following:
filled these expectations. For many decades, the World • End subsidies for fossil fuels and redirect energy financing
Bank’s energy lending has focused on centralized, large- to renewable energy: More than 95% of WB energy financ-
scale, grid-based fossil fuels based thermal power and hydro­ ing is a subsidy to fossil fuels, and about 82% of this goes
power projects. In spite of many promises to “green” its to projects that export energy resources to the north and
energy lending over the past 15 years, the World Bank’s do not improve access of poor people to electricity and
energy sector portfolio still fails to reap the double dividend other energy sources. These resources should instead be
of renewable energy technologies that would fight both pov- directed to renewable energy technologies in developing
erty and climate change. The Bank continues to invest 2 to 3 countries.


it should draw on its rich experi- ence in development co-operation with LDCs. Sweden. and controlled by local people and based on their needs. make available for energy investment in the developing world should not be channelled through the World Bank. as well as provide a basis for our positions on how Sweden can support sustainable climate change poli- Until these recommendations are fully implemented. We therefore support rural off-grid electrification. and such are urgently attributed to the authors and not be seen as the official view- needed. SSNC has commissioned this report from IVL – The •A  dopt guiding targets for greenhouse gas emission reduc. The facts and conclusions in this report should be ommend that any additional resources. and Mikael Karlsson target resources more specifically and efficiently at climate President and poverty issues via bilateral programs. cies. clean and affordable cooking and technical assistance to low-income counties with the pri- heating fuels. an assessement of the world bank’s clean energy for development investment framework • Significantly step up efforts to meet the basic energy needs International Development Co-operation Agency (SIDA) of the poor: The rural poor are in greatest need of access to has long-standing experience in providing financial aid and electricity and efficient. Swedish Environmental Research Institute – in order to tions: A commitment to reduce emissions in line with the provide a scientific analysis on the development impacts of UN Framework Convention on Climate Change should the World Bank’s “Clean Energy for Development Investment guide the selection of investments by the World Bank. and has great compe- local availability are particularly appropriate options to tence in the fields of climate and environment. that Sweden and like-minded progressive countries points of SSNC. The Swedish Swedish Society for Nature Conservation 2 . The World Bank recommend that Sweden provide additional funding for should massively step up its efforts to support rural elec. and on its strong commitment to the international community. Renewable energy technologies based on mary objective of combating poverty. Sida’s climate change programme as an efficient and sustain- trification and renewable energy programs that are owned able way to provide energy and development to the South. In the case of. Framework”. we rec.

innovative and renewable energy sources (solar.g. Furthermore. mini-grid and various 2007 have put great emphasis on substantial. to a large extent. wind. Taking account of the complexity in to low-carbon economies in the SSA region. in general nological options in access and low-carbon projects. biomass. e. but suffer most from the adverse impact access for the poor as well as to support the transformation of climate changes. tunity of paving a genuine pathway for low-carbon and tion of natural resources and different stages of economic climate resilient development. Nevertheless. the support for energy efficiency and advanced clean coal tech- World Bank (WB). sustainable energy solutions can more efficiently improve igation and adaptation actions. who are geothermal) as technical solutions to increase the energy most vulnerable. prospect. has put forward and implemented with a certain degree of indigenous technical capacity and the “Clean Energy for Development Investment Framework” heavily depends on coal for its energy supply. proactive financial support to developing counties. Firstly. energy-poverty linkage and the energy-climate nexus. capacity and lack of both public and private investments in Secondly. the energy mix should be enhanced and small-scale and carbon technologies as well as for capacity building in mit. from a tech. low cated to fossil-fuel based installations and projects. While the SSA region. with a successful management and utilisation of carbon finance. The overall objective of the CEIF is to nical perspective we agree. the CEIF proposes the combi- Bali Roadmap from the UN Climate Change Conference nation of large-scale grid extensions. environmental impact. institutional barriers. the G-8 Gleneagles Summit 2005 and the recent Against this background. the dominance of large-scale projects and large 3 . an assessement of the world bank’s clean energy for development investment framework Executive Summary In the face of the pressing global climate change and the national power utilities. Even suffers from energy poverty and heavily depends on fossil more unfortunately. work and a substantial risk if missing the window of oppor- As a highly diverse continent in terms of uneven distribu. institutional hydropower projects and/or uncertain and expensive tech- and regional dimensions. the investment portfolio still favours large-scale opment in Africa involve many technological. the energy issues related to sustainable devel. hydro. with the pro- improve the access to clean and modern energy for the poor posed technological options. energy access for the poor at low cost and with minimal nical perspective and based on a socioeconomic analysis. In this report. have further deteriorated the po- contemporaneous need for safeguarding the development tential for development and improvement. The use of local resources in and to scale-up public and private investments for low. despite the increased we perform a critical assessment of the CEIF in the light of financial commitment to renewable energy sources and sustainable development and poverty alleviation. considerable resources are still allo- fuels such as coal and oil. nologies is also proposed for South Africa. particular focus on Least Developed Countries (LDCs) in there are serious shortfalls in the WB’s investment frame- the Sub-Saharan Africa (SSA) Region. as one of the most important multilat. development. which is equipped eral financial institutions. From a tech- (CEIF) since 2006.

both historical experience and current observations on the long-standing experience of development co-opera- have illustrated that the “private cash-flow-driven strategy” tion in Africa the Swedish government and agencies could does not work well in low-income and basic-need domi. The CDM does not necessarily guaran. Thirdly. while the role of sectoral reforms and private Finally.and local-specific institutional 4 . contribute to poverty alleviation. straints imposed by region. Instead. different channels of participation are important for mobilising private invest. financial and technical assistance should be explored. the con. both renewable energy and sustainable development. such as in the SSA-region. an assessement of the world bank’s clean energy for development investment framework project developers is still pervasive in the Clean Development and market conditions should be taken into account. of and adaptation to the adverse impact of climate change. policy reforms supported by the WB should integrate with tee the accessibility of the carbon market to Small and market liberalisation and sustainable initiatives in Africa Medium-sized Enterprises (SMEs) who are more active and and link the power access targets with potential targets for innovative in renewable technology markets. integrated with mitigation nated markets. Energy Mechanism (CDM). Based ment. from a Swedish perspective.

Delays can be due to narrowly defined national/ and adaptation to climate change as well as the support to political interests in developed and developing countries as developing countries. 1.and energy regime challenges: ing In the face of persistent poverty and increasing cantly in the coming decades (IEA. The complexities in energy-poverty linkage as well as in ment framework. but also to demonstrate a ter source. based on the principle of common but and provision of financial support that developing countries differentiated responsibilities. It national. It is. human and institutional capacity building in developing These numbers unfortunately will not decrease signifi. ing climate change challenges at the global scale on the other. the battle against climate change more costly and time- It emphasised the enhanced actions of both mitigation of consuming. the World Bank (WB). The environment space is becoming and to scale-up both public and private investments for increasingly limited.and energy policies Since the G-8 Summit in 2005. Development Banks were requested to develop a new invest.6 well as mobilising knowledge-intensive and network-based billion without electricity in the developing countries. In such a context. energy need in developing countries on one hand. The agenda threshold into account. and press- •  The climate and energy challenges: More than 300 mil. combat climate-induced poverty.1  Key elements of the new investment framework ing extent giving priority to climate. especially when taking the need for low-carbon technologies as well as for adaptation capacity preserving a reasonable likelihood of keeping the 2°C building and actions in developing countries.php for more details. g. will nevertheless continue to be the key energy proactive stance and innovative approach when promoting sources in many years to come (IEA. countries. the new investment framework is of great The WB as a multilateral financial institution plays an importance for addressing the manifold challenges faced by important role in international climate change actions. both ongoing emerge to be even more important in the context of the Bali and future delays of efficient and timely actions risk making roadmap from the UN Climate Change Conference 2007. 2006). low-carbon and climate-resilient development in develop- • The (emerging) climate. as the largest GHG emit. 5 . National governments and international communities (such as the EU) in developed countries are to an increas. Clean Energy and Sustainable Development” to establish an efficient but fair North-South burden-shar- in 2005. Coal.1 require when taking common but differentiated responsi- bilities. lion people per year in developing countries are affected the WB is anticipated not only to undertake swift actions to by climate-related disasters.and international policy-making bodies. together with other regional ing framework. Background and introduction As a significant outcome from the G-8 Gleneagles Summit on counties on board in the post-Kyoto agreement and how “Climate Change. such as: has the capacity of and long-standing experiences in provid- • The development/poverty challenge: More than 2 billion ing financial assistance. facilitating technology transfer as people are without clean cooking fuels and more than 1. e. the WB has presented the at home. http://unfccc. in terms of technology transfer and well as because of unsettled issues with technology transfer financial resources. however unclear how to bring developing outline of “Clean Energy for Development Investment 1 See. More importantly. The overall objective of this initiative is to the energy-climate change nexus are becoming more criti- improve the access to clean and modern energy for the poor cal in the near term. an assessement of the world bank’s clean energy for development investment framework 1. 2004).

•  Scaling-up ���������������������������� and climate-proofing�������������������������� investments in and ac. for an In addition to conventional financing sources. •  Assessment and Design for Adaptation to Climate Change tions of mitigation and adaptation. The key elements in both the CEIF and followed action plans are briefly presented in Table 1. an assessement of the world bank’s clean energy for development investment framework Framework (CEIF)” (World Bank. such as con- overview of the basic facts. the CEIF and its action plans focus on: scale up the use of carbon finance. – A prototype Tool (ADAPT) as a new technical support •  Private sector participation to fill financing gaps and spur for climate risk-screening and integrating adaptation into low-carbon technology innovation and diffusion. •  A ���������������������������������������������������� development dimension. as an important new instrument for adaptation actions. new financial instru- analysis are based. •  Global facility for Disaster Reduction and Recovery (GFDRR) cess and affordability for the poor. 6 . 2006a and 2006b) and •  Private-public partnership for accelerating policy and the subsequent proposal of and progress report on “The regulatory reforms and removing barriers faced by private World Bank Groups’ Action Plan on CEIF” (World Bank. investors. ments and approaches have been or are being created: With the objectives to make and mobilise environmen. •  Carbon Partnership Facility (CPF) and Forestry Carbon tally responsible and socially and economically sustainable Partnership Facility (FCPF) as new carbon facilities to investments. on which the assessment and cessional funds and public donations. with emphases on energy ac. 2007a and 2007b). project design.

New instruments: Country/ regional case studies Enhance generation capacity for clean on technology and other strategic Green Investment Schemes energy. Funding needs & $165 billion p. needed for electricity De-carbonising power production At least $1 billion p. Technical assistance enterprises. needed for existing funding gaps supply (incl. 7 . Current private & public resources generation. an assessement of the world bank’s clean energy for development investment framework Table 1 Key elements and action plan matrix of the CEIF Pillar 1 Pillar 2 Pillar 3 Access to clean. available. on top of basic costs for power development project portfolio. Adoption of multi-gas/multi- sector strategy Push for clean. Forest Carbon Partnership Facility (FCPF) Provide unconnected households with affordable lighting. in non-OECD coun. but with post-2012 uncertainty. sustainable cooking and heating technology. investments to climate-proof tries. safe and affordable Transition to low-carbon economy/ Adaptation to & Reduction of basic energy services for 250 million mitigation ( in G+5 countries) vulnerability people in Africa by 2030 Key elements Policy reform & regulatory framework Energy efficiency & Renewable Supporting necessary adaptation energy efforts Energy access for the poor Low-carbon technology & Carbon Climate proofing new finance development projects Integrating adaptation into national planning Development of risk sharing mechanism Action matrix Increase energy coverage for Scaling-up carbon finance. Resources from GEF are limited Concessional support needs to be doubled to $4 billion p. to $30 billion p.a.a. options Carbon Partnership Facility (CPF) Provision of energy services for public facilities.a. $35 billion for electricity needs incremental investments of up project planning and additional access for the poor). such as schools and clinics. households. Carbon finance with great potentials. $80 billion p.a.a.

“Financing for the energy sector in SSA increased signifi- cantly in 2007 in line with the Africa Action Plan”. able service to a large number of poor users in Nicaragua and tween 30–60% to the price tag of an ordinary coal burner. importance of policy and sector reforms are emphasised. Promotion of IGCC and CCS. 2006 tries. both the criticized. with low antici.2  Reactions from stakeholders and the civil society • W hile the urgent need for large-scale “buy-down” of in- Because of its high-profile and profound future impact. but add be. nificant risk. WB to contribute to the battle against climate change as well as to safeguard the development prospect of developing The two new financial instruments: Carbon Partnership countries. Bretton Woods Project. the reactions from stakeholders and the civil Facility and Forest Carbon Partnership Facility raised caution society. actions as well as financial resources devoted to address this vulnerability are considered highly insufficient. • W hile the fact that the vulnerability of developing coun- based and large hydropower projects are questioned and tries towards climate changes is well-recognised. 2007 ergy is emphasised in the CEIF and related action plans. it was estimated that 55% of the dams in Uganda ($360 million) and the Democratic Republic project are sensitive to climate risks and about 25% are at sig- of Congo ($297 million). the cremental costs and scaling-up of financial resources are CEIF has received great attention from interested parties. Christian Aid. – This For the World Bank entire project portfolio (sampling projects increase is mostly due to the approval of funding for two mega from FY2003 to FY2006). an assessement of the world bank’s clean energy for development investment framework 1. Furthermore. • W hile the role of decentralised renewable sources of en. OECD. 2007 papers do not address climate change and variability at all and often overlook the risks of natural hazards under current cli- • Despite the importance of technical innovations in the mate conditions. The process of energy sector privatisation has reduced which means more debt for the poorest… poor people’s access to energy because of increased tariffs and Wysham D. is nevertheless mixed in particular concerning the by many forestry experts who fear the FCPF may benefit indus- following technical and structural issues: trial scale logging.. transition to a low-carbon economy in developing coun. the role and the proportion of investments in fossil fuel. Bank’s country Assistance Strategy Global Policy Forum. afford- pated efficiency gains (7–13% for gasification). the suitability and feasibility of these “Washington con- mentation and technical equipments. 2006 8 . Nigeria. Full-cost recovery models are unlikely to deliver quality. which are two untested tech- nologies for use on coal fired power plants. ance improvement and huge expenses on project imple. sensus” – inspired approaches in energy sectors in develop- ing counties remain questioned. 2006 locked the countries into high oil imports and high carbon emission in its power generation. in particular in light of previous IFI-induced forestry disasters such as in Congo. the role played by carbon finance in devel- While acknowledging the important actions taken by the oping countries is considered far from satisfactory. the investments in Integrated Gasification Combine Cycle (IGCC) and Carbon Capture and Storage (CCS) are • W hile the role of private sector participation as well as the still controversial because of the uncertainty in perform. well perceived.

such as South Africa. be relevant for the Swedish government and agencies to •T o outline the feasibility of implementation in terms of assist with poverty alleviation and to promote low-carbon cost-effectiveness. particular focus on Least Developed Countries (LDCs) in the in terms of sustainable human and technological develop- Sub-Saharan African (SSA) region. Project description Against the above background. gap in developing countries. and based on CEIF. policy implications in the fol- lowing fields will be taken into consideration (Chapter 6). institutional conditions into account. The assessment of the not only generate sufficient emission reductions and cash CEIF is based on the combination of a micro-level analysis flow. energy portfolio towards clean. economic development when providing foreign aid and pacts associated with identified technical issues. access. • To what extent the carbon trading and carbon finance will est regions are facing (Chapter 3). the following key ques. e. •T  o address the short-run socioeconomic impact of the ment report is. social and •T o identify the technical issues involved in the CEIF. ficiency lag as well as the climate vulnerability that the poor. from a technical perspective. but also contribute to sustainable development in of different technical options included in the investment developing countries. region. as well as in the context ment on developing countries. the objective of this assess. which strategies/options can and its implied strategic priorities. in particular when taking tions are addressed: country-. the distribution of the technology investment portfolio •F  rom a Swedish perspective. ones. to examine the CEIF in the light the least developed countries in the SSA-region. an assessement of the world bank’s clean energy for development investment framework 2.and macro-level analyses. accessibility and environmental im. a policy-making perspective.g. in terms of market and institutional conditions on a socioeconomic analysis. More specifically. in particular in the least developed portfolio (Chapter 4) with a macro-level analysis of the in. meet the need for narrowing the energy demand-supply ment (Chapter 5). of sustainable development and poverty alleviation. and from counties in Africa. vestment performance and strategy from the standpoint of • To what extent the WB investment in clean energy will poverty alleviation and sustainable socioeconomic develop. with a • To assess the long-term socioeconomic impact of the CEIF. Prior to the detailed assessment. investment in Africa? 9 .and local-specific economic. renewable energy options. of the recent development of middle-income developing By integrating micro.and ef. we first provide a brief •T  o what extent and how quickly the WB has managed. or overview of a developing country/an African context in will manage to make a meaningful shift and scale-up of its terms of the structure of the power sector.

an assessement of the world bank’s clean energy for development investment framework 3. in these SSA countries. which implies as in many industrialised countries. Therefore. but also affects the financial performance of OPEC oil producers.1 The structure of power sector in Africa: Nigeria) accounted for less than 20% of production and technical. due to poor maintenance on the tonne per million US$ tonne per million US$ Region (value. because of with over 75% of the continent’s installed capacity coming absence of efficient introduction of clean technology and from South Africa and North Africa. the SSA-region has the least The Africa power sector is characterised by small systems. financial and institutional consumption. 2006) and the information from the UN Economic Commission for Africa website: http://www.6%. Both production and consumption of electricity were the energy issues in the sustainable development involve dominated by South Africa and five Northern African coun- various institutional. which is very high com. In the contrast to these The African power sector is also overwhelmingly domi- energy-rich countries. Table 2 Carbon dioxide intensity comparison (IEA. while hydropower gen- each other. performance2 In terms of carbon emission. fuel and electricity. tion (539 TWh) and consumption (477 TWh) in 2004. 2004 and climate change in the form of eration contributed 16. technological and regional economic tries. as well as coal-rich South Africa. of the power utilities. The installed capac. Europe 510 396 The poor technical performance in form of high level of USA 701 562 system loss not only further constrains the quantity of elec- 2 The facts on the power sector in Africa presented in this session are based on the information from the annual World Energy Outlook. the energy-poor countries in the nated by conventional thermal power generation. low energy efficiency.uneca.and gas-fired power plants in North Africa and Nigeria. in forms sub-Saharan region face great challenges and suffer from of large coal-fired power plants in South Africa and large grave poverty because of the lack of access to modern oil. A developing country/An African context African countries are highly diverse and include a number tricity delivered. Algeria and Libya. which is conducted by International Energy Agency (IEA. Thermal power generation thus accounts for 80% of Africa’s estation caused by the use of fuel wood mutually reinforce total electricity production in 2004. which account for above 80% of Africa’s total produc- dimensions. desertification and defor. that over 80% of SSA countries have small systems with less than 1000 MW of installed capacity. The remaining 46 SSA countries (excluding South Africa and 3. of which most are public-owned. year 2000) transmission and distribution systems as well as faulty de- sign factors. such as Nigeria. 2004) the effective power capacities are only a fraction of installed Co2 intensity 1990 Co2 intensity 2003 capacities. ured as national carbon emission per unit of GNP has re- In addition. which is meas- ity of most SSA countries ranges from 10 MW to 2000 MW. instead of decreasing installed capacity of 1000 MW and above. nuclear power 2. the carbon intensity.5%. In addition. only 14 out of the 53 African countries have an mained constant in the past decades. In recent years. can be as high as 41%. 10 . year 2000) (value. However. The system loss. It is also important to note that. Africa 444 441 pared with the international standard of between 10–12%. events has made the situation even more severe.5% and renew- higher temperature and more frequent extreme weather able energy sources 0. per-capita emission level worldwide.

increases in electrification rate and reduction in inefficient cient) and with limited return on investment.000 500 2002 2015 Reference Scenario 0 2015 MDG target People without electricity People relying on traditional biomass 11 . technically difficult (often ineffi. to reduce the proportion of people living capacity. the females (and children) in the labour and/or battery lighting. 3. The limited energy supplies with the above structural problems in the power sector are to rural areas in Africa made energy very expensive for the the key sustainability issues in the poorest countries in poor. As providing grid electricity to dispersed rural on less than $1 a day by 50% by 2015 is closely associated with population is expensive. If the MDGs were to be reached. Therefore.and efficiency lag and poverty Thus. to eradicate extreme poverty worldwide. Because of the ment-owned and operated. force suffer most from the health problem and unproductive labour utilisation. “energy has an explicit gender dimension when con- In year 2000 the United Nation (UN) adopted eight sidered from the poverty point of view” (EAC.and efficiency gap in power utilisation.500 People to switch away from traditional biomass to reach MDG 2. to date. the energy poor Africa spend about $17 billion a year would need to switch away from unsustainable biomass in on fuel-based lighting (such as fuel-based kerosene lamps) 2015. The urban areas have been the strong link between income-level and access to modern priorities for grid supplies and the location for generating energy services. Furthermore.000 1.500 People to gain access to electricity to reach MDG 1. the access. which aimed African Development Strategy). 2004) Million people 2. to bridge SSA countries has managed to provide a grid to reach a ma. East “Millennium Development Goals” (MDGs). together jority of the rural population. associated with traditional biomass. more would need to be electrified and 700 million people stance. 2006. For in. 500 million people expensive because of the oil price shock since 2006. no use of biomass for cooking and heating. Figure 1 Power poverty and the Millennium Development Goals (IEA.2  Access. an assessement of the world bank’s clean energy for development investment framework Most African electricity supply utilities have been govern. in relation to their income level and is getting more Africa.

the “adaptation deficit” is their GDP and more than 50% of their total labour force. 2008). an assessement of the world bank’s clean energy for development investment framework 3. hardly increased since 2004. in particular in the poor SSA. face constraints of limited arable land funds reached only $26 million by the end of 2006. the multilateral financial aid to region (also South Asia) are more vulnerable to climate Africa. 2008) Total net ODA to SSA in constant 2005 US$ billions 45 40 35 30 25 20 15 10 Net Debt Relief Grants 5 Humanitarian Aid Development Projects. ability of weather. Programmes 0 and Technical Co-operation 2000 2001 2002 2003 2004 2005 2006 estimates 3 The exact numbers for the SSA is 16% of GDP and 58% of total labour force. Figure 2 Core development aid to Sub-Saharan Africa 2000–2006 (UN. has change in form of extreme weather events and larger vari. Some as well as poor soil quality (UN. social safety nets and adverse impact of climate change (UN. which accounts for around 20% of change in developing countries. savings. on a “self-help” basis and they could easily be locked into a downward cycle of poverty. climate change actions.3 Climate vulnerability versus aid In the face of urgent and increased need for financial re- and adaptation deficit sources as well as enhanced effectiveness in international The developing countries. estimates show that the support to a new global investment sources available as well as the institutional capacity for in adaptation of at least $86 billion annually. 12 . Furthermore. the adaptation to the climate change of the poor population is to a large extent. excluding debt relief and humanitarian aid. 2008). with limited access to insurance.3 The economic re. and 17% of GDP and 55% of total labour force in South Asia in 2004. These countries are highly dependent on In terms of multilateral financial aid to deal with climate the agricultural sector. is needed to climate-proof poorest African countries. or 0. even more apparent. The amount of adaptation related but at the same time. at the household infrastructure and build the resilience of the poor to the level.2% of dealing with climate change are highly constrained in the OECD counties’ combined GDP.

Taking advantage of local renewable resources nologies with high initial cost will decline considerably such as wind. shown difficulties to attract private participation. it is not a question of “if. hydro. 4.” the goal constructing large-scale power plants. In the CEIF. 4–6/kWh and several biomass technologies (biomass gasi- fier. micro and pico hydropower system tion) are all estimated to cost around US¢ 5–7/kWh. the combination of both for grid. for the poor4 although they are still relatively expensive (US¢ 30–50/ 4.and district-level iso- energy sources (solar. Access to energy for the mental consequences. when both the leaning. urban areas in the least developed countries. Small run-off-river hydropower is an option or supply of fossil fuels. mini-grid or off-grid solutions based on for the poor as well as to support the transformation to low. at a cost level nologies is also proposed. mini-grid and various renewable Mini-grid applications are village. biomass. which are equipped with a certain degree of poor with minimal climate impact. as in ing smaller power stations may provide energy security and the case of conventional technologies.2 Mini. as the WB fuel prices as well as the risk associated with financing and (2007) states. no resettlement complications and poor in developing countries has. to a large extent. From the standpoint avoid some of the uncertainty associated with international of technological feasibility and cost-effectiveness. an assessement of the world bank’s clean energy for development investment framework 4. A micro-level assessment — from a technical perspective1 A majority of developing countries heavily depend on fossil social risks that have to be cautiously addressed and has fuels as coal and oil for their energy needs. biomass are often most cost-effective for rural and peri- support for energy efficiency and advanced clean coal tech. mini-grid or off grid applications kWh). been limited financial risk. mini-grid and off-grid applications. off grid solutions of renewable technologies (including solar PV.1. small wind. As the proposed as technical solutions to increase the energy access WB recognises. biomass steam and waste-to-power via anaerobic diges. The cost for a small. stand-alone gasoline or diesel the grid and the load growth are small. Of the 47 poor. for middle-income developing of US¢ 6–15/kWh. large-scale grid extensions. hydro. engine generator is estimated at US¢ 45–60/kWh.1. with pico-hydro as a notable exception at only US¢ In low-income developing countries where both the size of 12/kWh. geothermal or carbon economies in developing countries. it is often more eco. For small isolated loads. these renewable tech- indigenous technological capacity and heavily depend on nologies are many times the best option. The cost of small grid of a self-sustaining solar PV or wind power market in devel- connected geothermal and wind power are estimated at US¢ oping countries will be reached. geothermal) is lated networks with loads between 5 kW and 500 kW. wind. renewable resources such as hydro. solar. 38 are net importers of oil. which make them bankable by the enabled through government subsidies for grid extensions private sector. the cost for several of these renewable tech- power plant. For improving the energy access of the countries. While Mini and micro-hydro power projects are usually run-of-the- large hydropower is associated with high environmental and river schemes that divert some of the water flow through civil 4 The technical descriptions of various energy technologies provided in this session are mainly based on information from the Energy Sector Management Assistance Program (ESMAP. and 25 import all small and medium run-of-river projects have low environ- of their oil (Worldwatch Institute). biomass or geothermal and construct. 13 . many est countries. coal for their energy supply.” but ”when.and scale. pico-hydro 4. Furthermore. 2007).1 Technological options for energy access and geothermal) are estimated to be the most cost-effective. nomical to add several small power units than a large central Furthermore.1 Grid.effects are in place.

the grid-connection.and out- can help manage the drought and flood stresses of natu. fossil fuels (World Commission on Dams.when designed and operated in a sustainable way ment. which involves deforestation. for micro. which include sediment transport and female labour force). combustion as well as health problems in forms of respira- On the other hand.and pico-hydro systems aged properly. In tropical areas the risk for all of the electro-mechanical elements into one portable de. the dependency on increas.1. an assessement of the world bank’s clean energy for development investment framework works. while smaller off-grid or mini-grid solutions are often the only cost-effective solution to achieve 4. Because micro. Hydropower storage ative impacts on various dimensions of sustainable develop- projects. A pico-hydroelectric power plant is much smaller water species and ecosystems. reasonably reliable and at low cost. the A large part of the investments on renewable energy of the potential negative impacts from large dams will also pre- WB has been large hydropower projects (>10 MW). there are potential environmental tory diseases and unproductive labour use (in particular and social impacts. it is also questionable with large hydro- creasing overall reliability without having to resort to other power projects. a penstock. erty alleviation. is considered the most cost-effective grid connected renew- able energy application. large hydropower increases energy In many developing countries there are vast biomass resourc- security and adds reserve capacity to back up intermittent es that are used very inefficiently. and incorporates placed 40 to 80 million people. and. The power output is sufficient for a single household plants in tropical regions can be quite high if it is not man- or small business. watersheds and making it difficult in some cases to balance load with power aquatic ecosystems and can lead to irreversible loss of fresh- output. in. dangered species. in principle excluded from backup sources such as diesel generators. but nevertheless controversial. power project might not end up so cost-effective. the large hydro- kW or less) in an off-grid or mini-grid configuration. 4. as this dominantly affect the poor. 2000). Since no water catchments or tory fish species in hydro power plants. Since it relies used for cooking. lightning and heating in very inefficient on local renewable resources.1. World Commission on Dams (2000). A hybrid solar photovoltaic-wind power configuration Taking account of all the risk factors associated with is a potentially attractive arrangement for small loads (100 social and environmental sustainability. Therefore. Biomass is predominantly sources. fore bay. the environmental impacts are very small. By assuring sustainable forestry and energy crop cultiva- 14 . loss of livelihood and passage of migra- hydro options. great emissions of methane from shallow dams. A case study from the Tucurui Dam in Brazil are simple. independent and continuous power double as high as for conventional thermal plants based on without the need for environmental safeguards. large dams generally A drawback of these applications is seasonal variation in flow.3 Large hydropower power access to the poor in rural areas. They are typically installed on the river or stream em. For pov- lows each renewable resource to supplement the other. stoves. According to The storage is needed. relocation of populations. Furthermore. door) pollution because of incomplete and inefficient rally volatile hydrology and contribute to water security. where veg- vice. the climate impact of large hydropower periods. for example. have a range of extensive impacts on rivers. etation is not removed prior to inundation. Such traditional use of biomass has significantly neg- ingly expensive fossil fuels is reduced. scalable. local (indoor. an intake weir.4 Biomass technologies On the one hand. impact on rare and en. It al. The poorest are. is also signifi- bankment and can be removed during floods or low flow cant. Large dams have so far dis- than a micro-hydro (a few hundred Watts). erosion. they shows that the GHG emissions per kWh are similar or up to provide a source of cheap. such as wind and solar (and thermal).

2. less sound wise. Waste combustion heat and es. conventional power gen- The technological options proposed in the CEIF for tran­ eration technologies (open cycle and combined cycle gas sition to a low-carbon economy focus on the following turbines [CCGTs]. a conventional small sub- power plants or anaerobic digestion of municipal waste are critical coal plant in Asia has an efficiency of just 25% two low carbon energy technologies that also address in. insulation of buildings. The adoption of new high strength supply. New technologies such as supercritical and ultra-super. but are still very high compared to renewable energy or natural gas. The CO2 emissions from these local agriculture. ered important near-term initiatives for the transition to a critical coal technologies and later integrated gasification low-carbon economy in developing countries. efficient. the thermal performance increas- energy from a cheap resource. In the CEIF. respectively. Design steam temperatures of sub-critical plants have nor- employment and more efficient use of biomass for energy mally been set at 540°C. and loss reductions high and CO2 reductions are sought. Natural gas is important However. and 810g CO2/kWh for a supercritical and ultra-supercrit- efficient. with the current maximum some of the uncertainty associated with international fossil boiler outlet steam temperature being about 593°C to 600°C fuel prices. plant have an efficiency of 36% and 42% respectively (Table For mini-grid applications there are two particularly 3). The digestion residual can be used as fertilizer in ical coal plant. even with increases in oil price forecasts. The use of local biomass resources such as wood or ferritic steels has recently enabled the steam conditions to agricultural residuals will provide energy security and avoid be raised above 25 MPa.2  Technological options for low-carbon economy According to ESMAP (2007). plants is estimated most cost-effective when fuel prices are power plants.and oil-fired steam turbines) re- approaches: main more economical for most large grid-connected ap- 1. new efficient coal technologies are consid- 2. old and inefficient coal plants with more efficient plants will lead to less CO2 emissions per generated kWh. Low-cost and high-impact solutions based on existing plications. 566°C. This includes efficiency Super-critical or USC for very large (over 500 MW) power improvement of existing coal thermal plants and hydro. a continued reliance on coal for power production as a bridging fuel in the transition period until renewable will not tackle the climate change sufficiently. coal. From a near- combined cycle (IGCC) with carbon capture and storage term financial point of view. Substituting energy technologies become commercially viable. The emissions of CO2 for the sub-critical coal plant is promising technologies according to ESMAP (2007) – biogas estimated to about 1360g CO2/kWh compared to about 940 digesters and biomass gasifiers – that may be the most cost.1 New efficient coal plants emissions will still increase rapidly with every new installed Coal-steam electric power plants typically have a pulverized unit as long as the power production is based on fossil fuels. as they are estimated to be most cost-effective. an assessement of the world bank’s clean energy for development investment framework tion. for grid applications that will lead to regional development. But the total 4. new coal plants are lower. 4. sub-critical coal plants. in power transmission and distribution. In urban areas waste-to-energy projects can (so-called “Ultra-Super Critical (USC)” conditions). biomass steam power plants is a low-carbon alternative which passes through a turbine to generate electricity. creating steam To really achieve emission reduction. coal (PC) boiler where coal is combusted. Using financially viable technologies. According to the WB (2006a). these technologies rely 15 . these clean coal plants may (CCS) should be promoted to substitute conventional. With mitigate the methane emissions from landfills and provide higher steam conditions. whereas a large supercritical and ultra-supercritical coal creasing waste problems in developing countries.

which does and new power plant technologies with CCS.39 – generating cost1) CO2 g/kWh 1362 938 811 811 851 1) Economic assessment of total generating cost for a plant size of: Subcritical: 300 MW.2. these technologies can ments for CCS range from 24–40%. The emissions of CO2. 2005). wind. the extra energy require- “washed” compounds are deposited. and geothermal conventional coal plants and is suited for carbon capture because of difficulties in handling fuel price risk systemati. IGCC: 300 MW. However. 2007d). and promoted by timated to increase the energy cost by an additional 30–60% the WB in the CEIF for pollution mitigation in energy pro. where carbon dioxide to low-carbon economy in developing countries in the me. while for natural gas reduce the regional health and pollution problems associ. combined cycle (NGCC) plants. new “clean not include cost of CO2 transport and storage. With CCS. these figures do and toxic compounds from coal combustion. The untested not use fuel and has much less environmental impacts. the WB concludes also that. tional coal plants and then transported and permanently Nevertheless. and 40–70% for a supercritical coal plant or NGCC To mitigate the high emission levels of SO2.29 5. 2007) Supercritical Sub-critical Super critical USC IGCC Fluidized bed Plant (Asia) (Asia) (OECD) (OECD) (OECD) Plant size MW 50 600 500 300 500 Efficiency 25% 36% 42% 42% 40% Total US¢/kWh > 4. however. deep ocean masses or in the planning methods are inadequate for comparing fuel-inten. is separated and sequestered from the flue gas from conven- dium term. 4. but also NOx. Ultrasupercritical: 500 MW. an assessement of the world bank’s clean energy for development investment framework Table 3 Coal plant technologies and estimated efficiency. which is es- coal” technologies are being developed. (Natural Gas Combined Cycle). resulting in increased main high and pollution and health problems from coal fuel consumption (IPCC. ESMAP (2007). the range is 11–22% and for ated with coal plants. from the syngas prior to combustion. in the longer run. most current stored in geological formations. (IPCC. For new supercritical pulverized coal (PC) duction in developing countries. Supercritical: 500 MW.47 4. 16 . on CCS and the WB has considered coal power technologies mining are still major environmental and social issues. with CCS as the most important pathway for the transition Clean coal is also referred to as CCS. coal-based IGCC systems it is 14–25%. such as hydro. Integrated Gasification Combined Cycle (IGCC) is consid- ered the most suitable coal technology for CCS. Depending on how the plants using current technology.2 ”Clean coal” technology and Carbon capture the estimated generating cost will increase with 20–55% for and storage IGCC. However.29 4. re. IGCC is an emerging coal tech- sive thermal generation technologies with fuel-free capital nology with much better environmental performance than intensive renewables. 2006a and ESMAP. it The WB (2006a) has estimated the cost for conventional will be increasingly beneficial with renewables. form of mineral carbonates. cally (World Bank. 2005). cost and CO2 emissions (World Bank.

17 . an assessement of the world bank’s clean energy for development investment framework In addition. CO2 can be trapped for mil. energy needs and/or with inefficient use of large-scale power CCS reduced the CO2 emissions by approximately 80% dur. In particular. which are cause additional emissions of both CO2 and other substanc. Ocean stor. However. In well. dependent on efficient distribution sys- age is poorly understood and the storage will not be perma. transportation and as China) still remain. and minimal environmental impact. but with low cost applied to conventional pulverized coal plants shows simi. already highly dependent on imports of fossil fuels for their es along the CCS chain. Another life cycle analysis of CCS ciently improve energy access for the poor. there are still many uncertainties with the CCS Finally. for many developing countries. lions of years and 99% of CO2 are likely to be retained over environmental. lar results. eutrophicating and acidifying compounds increased considerably (Zapp et al. tems to a storage reservoir for the captured carbon. according to IPCC (2005). it is important to enhance the use of local re- ing the life cycle for an IGCC plant. at the same time. the emissions sources in their energy mix. This is nent. However. injection of CO2 are energy intensive processes. if the CCS selected geological formations. compression. According to a life cycle analysis. 2007). the power production will not with the coal mining industry in developing countries (such be emission-free. social and health problems often associated 1000 years. Even with CCS. technology proves to be reliable and cost-effective. these coal technologies with CCS are suitable for technology. 30–85% of CO2 would be retained after 500 years for an option for large grid applications in middle-income de- depths 1000–3000 m. 2007). which will To summarize. CCS is still untested and critics point out that very large plants (>500 MW) due to high capital costs and there are still no proven CO2 storage facilities. Capture. veloping countries with vast resources of coal. generation. the small-scale of SO2 and NOx increased with 20% and 60% respectively and sustainable renewable energy solutions will more effi- (Mayer-Spohn. the CO2 emissions can be reduced by about 75% whereas the emissions of human toxical.

lightening.2 billion. its in- • How to build an energy infrastructure and institutional house facilities and its private affiliates IFC and MIGA has. According to the calculation by the Bank Informa­ single-functional approach with a traditional view of elec. the World Bank. raised by NGOs and the approach is required to more efficiently address the local civil society against the WBG’s energy lending has been the need of energy services for households and communities. be/are being implemented. heating. The electrification program design needs hydropower projects in Congo and Uganda. the WB’s investments 5. trification. inflated by the amount of “blended low-carbon only improve comfort in the vicinity (ADB Finesse Africa and access”. 2006). cases of rural electrification only ment amounted to $1. the invest. the IFC provided more than $645 million to oil 18 . which addresses access investment has decreased since FY 2005. the need for the overall human development in terms of In addition to the need for increased investments in en. educational and business activities. gas and coal The current energy access projects are often based on a projects. namely: The World Bank Group (WBG). a multi-functional strategy/ One of the strongest arguments. large share of fossil-based investments in oil. this figure was to a meeting lighting needs are many.1 An overview of the investment portfolio and strategy for clean energy involve two important issues – a quantitative analysis that need to be taken into serious consideration. while good lighting will large degree. Macro-level assessment – from a socioeconomic perspective From a socioeconomic perspective. and how this will affect local and global sustainable development? Table 4 Sector breakdown of WBG Energy Lending FY03-07 (in US$ millions) % in total Energy sector FY03 FY04 FY05 FY06 FY07 FY 2007 Low-carbon 237 299 781 1461 677 19 Access 684 475 627 727 482 13 Blended low-carbon & access 128 52 440 281 757 21 Transmission & distribution 90 103 200 645 469 13 Oil. which was up to $757 millions because of two large Newsletter.e. mitigation and adaptation to- • How these energy projects and technical assistances should gether”. the to be an integrated and holistic approach. i. Otherwise. ergy access for the SSA-region. However. tion Centre. an assessement of the world bank’s clean energy for development investment framework 5. For instance. capacity to meet the large incremental energy demand in in its Action Plan made a clear statement of its ambition to developing countries? “address poverty reduction. gas and coal 325 496 529 1037 628 17 Thermal generation 461 191 76 510 360 10 Other energy 462 100 196 130 231 6 Grand total 2388 1716 2848 4794 3604 100 Total low-carbon 365 351 1221 1794 1434 40 Total access 813 527 1067 1008 1239 34 In terms of investment in energy access for the poor.

19 .000 1.200 10.600 14.000 New renewable energy 200 Energy efficiency Cumulative commitment 1990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2003 2004 2005 2006 2002 1991 2001 2007 In FY 2007 commitments for new renewable energy and en. ness of the importance of other energy options than coal and nies in Africa is. which accounted for more than ergy and energy efficiency. This wasted energy is equivalent by 200 organisations from 56 countries to call on the WBG to to 12 times the energy that the continent uses and the flaring “tackle the issues of energy poverty and build clean energy releases carbon directly into the atmosphere. it shows that $628 millions were allocated to has indeed been steadily increasing support for renewable en- “Oil. to a large 1990–2007 exceeded $11 billion. For instance. which resulted in a statement extent. still flare gas as waste. Figure 3 World Bank Group Commitment for Renewable Energy and Energy Efficiency (World Bank. Furthermore. According to figures from oil and gas production have been substantial. the WB (2007d).000 8. to a large extent for export.000 1.000 400 Hydro > 10 MW 2. an assessement of the world bank’s clean energy for development investment framework and gas companies in FY 2007. the mercial maturation of clean technologies provide further op- adverse social and environmental impacts associated with the tions for clean energy development. which can be motivated by several 17% of the total ($3. 2007d) Annual US$ millions Cumulative US$ millions 1.000 600 4. the climate change has increased the aware- While the local production of oil and gas by large compa.6 billion) in FY07. there own statistics. financing reached 25% of total energy commitments in ergy efficiency were $683 million and $751 million was com. FY2005–2007.400 12. From the WBG’s In terms of renewable energy and energy efficiency. and 40% in FY 2007. the cumulative WBG financial commitments according to an earlier IEA study (2000) and the WB’s own to new renewable energy and energy efficiency during FY estimates. the oil price shock and the (expected) com- to the local population is highly limited. factors. The share of new renewable energy and energy efficiency WBG’s commitment to clean energy). (However. this measure mitted for hydropower projects greater than 10MW per facil.000 1. the oil and gas extraction plants in Africa. First of all. has been questioned and criticized as an overstatement of the ity. pathways rather than subsidising big oil”. the benefit brought oil. Furthermore.000 800 6. gas and coal” lending.

in the current cir- power. In Africa. private investments in small. amount. which have limited financial risks. 1995-2008 (World Bank. these mega-projects have tions. which aim to develop a river basin and power pool. development and sustain.6 billion in commitments. But the scope of such projects is limited. 35 cumstance of increased climate variation. In the past years. Many as efforts to utilise the vast “underexploited hydropower re. However. in the past. which makes it vulnerable to drought. Senegal. the reliance on hydropower projects have been approved since 2005. Furthermore. low environ- enhance regional co-ordination. 20 . to projects. the WBG attempts to attract Africa are motivated by the need for regional water manage. for the purpose of both energy and water security. carbon solution to increasing energy access”. because of the environmental risks and social projects in South Asia and Latin America. with a few been criticized.000 800 600 400 200 0 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 Note: Data on FY08 is Q1. Sierra Leone and Uganda on rainfall.and medium run-of-river ment. and human consequences. an assessement of the world bank’s clean energy for development investment framework Figure 4 World Bank Group Annual Hydropower Financial Commitments. The projects in Being aware of the critics. large hydropower in Africa may impose additional risk to the ing to $1. mental consequences and without resettlement complica- ability of water resources. countries in the SSA regions have experienced serious drought sources and the potential for further expansion as a low. the WBG has been re-engaging in hydro. which has affected hydropower generation. four projects sustainability of the energy supply because of its dependence were approved in Congo. 2007d) US$ millions 1.

in supply-limited but demand-increasing Together with low-level of demand per capita.2. the WBG has bilisation of financial resources from public donors. from both Rural electrification programmes are very costly. 21 . tries to carbon finance in the scaling-up scheme of the CEIF. an assessement of the world bank’s clean energy for development investment framework Figure 5 World Bank Group Renewable Energy and Energy Efficiency Commitments by region. the efficiency issue is of particu. It is to a large extent. the public-owned utilities of opportunities for expansion. scale through capacity expansion for public electricity sup- pliers. ergy. if these two approaches can really help to as industries.1 Regulations and sector reform: is also reflects the absence of Small. lar importance. It 5. Furthermore. 2007c).A qualitative overview tries and there has been serious price distortion that deprived In addition to expansion of concessional finance and mo. great difficulty of achieving profitability and economies of both in the sector reforms and in multilateral aid to Africa.1 billion in energy efficiency in around 120 great emphasis has been put on the private sector engage- projects in 40 countries since 1990 (World Bank. combined with low electricity prices. the invested $3. Central Asia. FY 2007 (World Bank 2007d) Annual US$ millions 800 700 600 500 400 300 200 New RE 100 Hydro > 10MW EE 0 AFR EAP ECA LCR MNA SAR In terms of investments in energy efficiency. ment and the acceleration of the access of developing coun- However. it imposes regions such as Africa. in a few sectors. while maintaining affordable prices and in a sustain- nologies for grid-connected and off-grid consumers in able way in the poorest regions of Africa? Africa is still very limited.and demand sides.and Medium Sized economical conditionality Enterprises (SMEs) in the market. Furthermore. the institutional capacity and efficiency 5. population density. such The question is. East Asia and the Pacific. due to low supply. The number fill in the financial gap between demand and supply of en- of projects to provide modern and efficient lighting tech.2 The role of the private sector and carbon of public utilities are often low in these least developed coun- finance. due to weak interests from private banks in energy efficiency projects. district heating and electric power. there is a significant concentration in Europe. It is a largely neglected issue so far.

which was less affordable to the poor. in other words bring 10 national governments and 654 private sector firms to increase prices as well as to carry out the privatisation of from industrialised countries to developing countries. the removal of subsidies. large enterprise groups and industrial end-of– the very poor population most in need of basic energy serv. such narrow-defined “market-orientation” try. social impact. such as: Such common and public goods will not be able to generate •  Low hanging fruits: the CDM structure favours large immediate returns for private investment. such as incentive distortions involved as well as structural shortfalls.2 The role of carbon finance: ture. They its national utilities. is often a form of stand-alone with The CDM and the role played by the WB. but may also cause a delay of ment and ownership in the electric power sector. still limited. because of pico-hydro installation for basic human services. while CDM only attaches a market value to emission reduction. However. which can been seen clearly in the and the unit price is therefore unlikely to fall. the econo.g. •  In a long-run perspective. In the case of Bujagali hydropower. The skewed towards fossil-based and large-scale solutions. • Market reform often leads to an increase in the energy prices as a result of subsidy removal and the reform of state monopolies also frequently leads to layoffs and further 22 . fossil-fuel plants instead of renewable energy producers. e. CDM can indeed generate ad- •  Many African countries have introduced private manage. the transformation to low-carbon economies in both the Independent Power Producers (IPP). chemical indus- Consequently. to allow the electricity price to Development Mechanism (CDM). such as small. have entrusted the WB to manage more than $2 billion of associated with privatisation and liberalisation led to a high. the regional and sectoral distribution of CDM projects. has been very limited. together with many social problems. In a medium non Annex-1 countries (World Bank. Moreover. the run. For example. health. In most cases. the Uganda government under. energy need in daily life. Through public-private partnership and the Clean took power sector reform. hand in hand with privatisation. as the largest renewable energy generation. the production of electric power is still velopment objective are considered a structural failure. the support for increasing the supply of renewable energy is but not necessarily to sustainable development aspects. but most of them are North and South. education and water supply. and cash-flow driven privatisation process lead to outcomes •  Narrow definition of sustainability requirements in CDM that are not in line with sustainable development: and the failure of the CDM to deliver on its sustainable de- • From the supply side. due to the limited per-capita consumption. 2007c). while the access to the poor was not nec- national governments and multinational funding agencies essarily improved because the supply network does not promotes privatisation of national power utilities as alter. expand. coal industry and large hydro.2. financial leverage potentials offered to African countries so mies of scale in electricity supply are still difficult to reach far. such as iron/steel industry. the WB has managed to “remain at or near cost-reflective level”. funds for the purchases of carbon emission reductions in er tariff. ditional financial resources. or. pipe projects in sectors with significant environmental and ices will not benefit much from private investments. It implies that projects. native solutions and sector reform is often referred as a pre- condition to attract capital investment in energy infrastruc. an assessement of the world bank’s clean energy for development investment framework Against the above background.and mini and public carbon finance broker have been criticized. to CDM & new carbon finance instrument make the project bankable. technology required. 5. the WB.

of Asia 7% 400 Africa 3% Other & Unsp. 9% N2O 100 Agro-forestry 1% Renewables CMM 7% 0 HFC Animal Waste 2% LFG 5% 2002 2003 2004 2005 2006 As a share of volumes contracted in 2006 2002–2006 23 . China 61% 300 Africa Other & Unsp. of Latin America 6% India 0 China 2002 2003 2004 2005 2006 2006 2002–2006 Figure 7 Assets classes of CDM projects (World Bank 2007c) Primary CDM annual volumes transacted (MtCO2e) N2O Other 500 13% 13% Hydro 6% 400 HFC Wind 5% Other 34% Biomass 3% 300 CMM Other Renewables 2% LFG + waste 200 EE+Fuel s. of Asia 100 R. EE+Fuel c. 7% R. an assessement of the world bank’s clean energy for development investment framework Figure 6 Location of CDM projects (World Bank 2007c) Primary CDM annual India 12% volumes transacted (MtCO2e) 500 R. of Latin America 200 Brazil 4% Brazil R.

the international co-operation on adaptation has deforestation” (AD). In terms of investment/aid portfolio and technical as- The WB has already planned. can generate significant “scale-up” 5. the there is an emerging consensus among proponents of AD supported projects are often a limited response to adaptation that a mixed approach. there are indeed adjustments that have governance and meaningful participation of stakeholders been implemented or are in the process of being introduced. the AD projects have great potential to contribute adaptation lending and increased its adaptation-related ac- to the preservation of biodiversity as well as to bring addi. 2007). rights tion (e. for successful adaptation planning. the assessment of GEF by the UN reveals that. there erate almost entirely on market-based funds by 2014. The AD approach is so far excluded been characterized by “chronic under-financing. which and palm oil production in Indonesia. tive for the post-2012 climate change regime. but is considered a potential positive incen. weak coor- from the CDM. GFDRR) sufficiently addressed in the following aspects: • The finance plan for FCPF assumes that the fund will op. Brazil and Congo (Griffiths. dination and a failure to look beyond project-based response”. For example: However. in developing countries. CCRIF ) and accountability issues involved in the plan have not been • Institutions for disaster risk management (e.g. as well as fair treatment of forest- which can bring significant improvements to and have a dependent communities and indigenous forest people. CAS/CAP ) methodological issues. involved both public funding and challenges because of its focus on “climate-proofing small- participation is required. during 2005–2007. development – a long-run perspective 5. Furthermore. sistance. the WB has also made attempts to enlarge the scope for an investment fund with $250 millions to support AD of its portfolio. of the fact that 20% of global emission is the result of defor. Taking account according to an assessment by the UN (UN. But is still an apparent “financial inadequacy”.g. an assessement of the world bank’s clean energy for development investment framework On the other hand. IFC-projects for soya expansion in the Brazilian Amazon • A programmatic instead of project-based approach.1 Need for scale-up for climate change adaptation Nevertheless. to cover the integral parts of the foundation projects in Indonesia. Development Carbon fund will make financing more ac. According to many NGOs the social. the track record of the WB in terms of sustain- o Introduction of the Bio Carbon Fund and Community able forest governance and management has been poor.3. However. the project designs are 24 . Furthermore. shifts from stand-alone projects to multiple projects on a programmatic basis. scale projects or infrastructure projects against short-term • The successful implementation of FCPF requires good and incremental risk”. the current carbon market is not yet large While the facts of the additional climate vulnerability and enough to generate significant funding for international acute situation faced by the poor population in the SSA- climate change actions. the WB’s plan of implementing • Infrastructure for climate-proofing FCPC in the view of sustainable development has already • Insurance for social risk management and poverty reduc- been questioned. The proposed new instrument FCPC region are well-known in both political debates and to the aims to scale-up the forest carbon market.3 Climate adaptation and technology effects of the CDM. 2008). through “avoided public. positive impact on the carbon market: However. Examples include industrial logging in Congo as well as cessible and feasible for small-scale CDM projects.g. tivities from around 10 to 40 projects. on top of criticism related to pure technical and • Information for effective planning (e. tional income to resource-rich developing countries. The WB has enhanced its ambition of “mainstreaming” estation. with the support of the G8.

ning for poverty reduction and long-tem strategy for climate which in turn will contribute to sustainable development change adaptation. The need of developing countries is defined categories as well as building up infrastructure for manu- both in terms of the need to be able to access to adaptation facturing. Möhner and solutions.1 9. under- the GEF. in terms of effi.3 1. African counties need to decrease Total 279 160. and technical assistance is to promote energy technology. the requirement for action by the WB varies Special Climate considerably across countries. Each African country faces different challenges disbursed in the process of creating indigenous standards and low-cost Total pledge Total received (less fees) Adaptation fund (US$ million) (US$ million) (US$ million) technology as well as when establishing fruitful South- Least Developed South knowledge sharing and renewable policy learning. The role of such a long-run strategy was also stressed in the CEIF. 2008) technological as well institutional capacities among African Total countries.and produc- 5.2 Indigenous technology development tion costs. there are sev- examined from a governance perspective. the amount of funds “clean coal technology” and it has managed to become world provided by ODA is much larger than what is available under leader in certain technologies. On the ground gasification and pulverised coal combustion. For instance. adaptation has to compete with other more im. many African countries Adaptation Fund 5 5 – have inherited European standards for their distribution networks. on the intensity than other African countries.4 26 the per-connection cost and develop their own locally adapt- ed low-cost standards. as a coal-rich country. micro and pico hydro Klein. installation and operation.2 demand centres in Europe. other hand.7 52. 2007). the “technical inad. funds as well as the need to be able to use the funds in line In the case of South Africa.4 11. Tunisia and South In addition to “financial inadequacy”.8 sulted in oversized networks with unnecessarily high costs on Adaptation for connecting rural load. consumer price of coal-based electricity is due to heavy sub- sidies and does not reflect the true investment.8 Countries Fund Consequently. Table 5 The Multilateral adaptation financing account.g. This is also the moti- ground of the inadequacy in responding to the need of de. However. an assessement of the world bank’s clean energy for development investment framework often outside the institutional framework of national plan. such as the access to appropriate ciency. in developing countries in a long-run perspective. due to the inefficient GEF activity cycle. it is still important to bear in mind that the low mediate development priorities. 156. As a consequence.4 Change Fund In the case of grid applications. including the externality associated One of most important tasks of the WBG’s financial support with coal-based electricity production. e. high Sub-total 229 110. Africa are making efforts to address this technical issue. it often re- Strategic Priority 50 50 14. eral technical challenges. there is a great diversity in both income-level and (UN. standards that were adopted to high density. in particular. The GEF is criticized.3 53. fairness and responsiveness (See. However. especially on the mini. in forms of resource 25 . 67. vation for the resources that South Africa has devoted to veloping countries. such as coal-to-liquids. it has with their country-specific adaptation circumstances and rather different circumstances and has much higher carbon requirements. On the one hand. equacy” of the WBG’s funding to adaptation has also been For off-grid and mini-grid applications. etc.3. Furthermore.

air pollution and climate change. solar PV. which starts now! In such a context. such as South Africa. the WBG should make a constructive contribution in its technical assistance to promote and fa- cilitate a proactive low-carbon strategy in developing coun- tries. taking advantage of its rich natural resources. 2005). the estimates of the potential contri- bution of renewable energy in South Africa shows that sev- eral renewable energy technologies could be cheaper than new fossil fuel options within a relative short time span (10 years) and renewable electricity generating technologies (such as biomass. D. wind and hydro) can generate up to 90% of the electricity needs by 2050 (Banks. this opti- mistic outcome is conditional on a proactive and concerted development. and Schäffler. 26 . which aims to depart from the fossil fuel dependence and pave the pathway towards renew- able energy. On the other hand. land fill gas. such production imposes a huge cost for the South African society. Nevertheless. an assessement of the world bank’s clean energy for development investment framework depletion. J.

at the cur- technology markets. while the large devel- both strengths and weaknesses of the CEIF. Conclusions and policy implications 6. folio is far away from a meaningful and creditable shift to a Finally. a CDM. the CEIF has also It is also a potential strategic barrier for developing counties highlighted the importance of the combination of financial to commit to emission targets in the future climate nego- and technical assistance and the synergies between techni. In other words. ship (from both the investor side and the recipient side) and/ pensive technological options in access and low-carbon or micro-credit schemes. the poor and small de- tive approaches in the fields of carbon finance and project veloping counties in Africa have hardly any access to carbon design for adaptation actions. the projects and large project developers is still pervasive in the experiences from the WB’s Solar PV initiative shows that. where there is insufficient business and tions using local and renewable resources are convincingly investment infrastructure.and macro-analysis we see importance. Furthermore. in terms of sector efficiency and cash-flow generation. an assessement of the world bank’s clean energy for development investment framework 6. the WBG’s investment portfolio still favours novative financing schemes such as private-public partner- large-scale hydropower projects and/or uncertain and ex. “low-hanging fruit” CDM projects. the WBG’s energy investment port.1  General concluding remarks on CEIF needs to be addressed with higher priority and strategic Based on an integrated micro. the reforms need projects. the dominance of large-scale cific institutional and market conditions. More importantly. From the standpoint of developing rent stage. the weaknesses of the CEIF are also evident and While the role of sectoral reforms and private participa- in some cases so serious that they risk missing the window tion are important for mobilising private investment. It also raised the awareness finance. such are clearly outlined and the advantages of small-scale solu. both of opportunity of paving a genuine pathway for low-carbon historical experience and current observations illustrate and climate resilient development. tion opportunities have been take away by those “low-hang- public partnership. that the “private cash-flow-driven” strategy does not work Even though the technical options for clean-technologies well in low-income and basic-need dominated markets. considerable resources to be integrated with the objectives of poverty reduction and are still allocated to fossil-fuel based installations and environment mainstreaming. in developing countries. ing fruit” CDM projects. often due to constraints imposed by region. The new frame. In the current situation. fully commercial solar PV off-grid market in be relatively easily scaled up by applying a multi-sectoral developing countries turns out to be overly optimistic. However. how the carbon market can contribute to local sive legislation linking liberalisation and privatisation of sustainable development and technology development national utilities with an increase of renewable energy from 27 . The approach and including AD project. instead of narrowly defined projects. as in the SSA-region. For example. tiation when a large portion of low-cost and simple reduc- cal and institutional capacity building as well as the private. The CDM does not need to increase manufacturing capacity and supply of new necessarily guarantee the accessibility of the carbon market material were substantial when supporting solar PV in rural to SMEs who are more active and innovative in renewable electrification programmes. In other words. The skewed regional and sectoral distribution of of the urgent funding needs for international adaptation CDM may impose unnecessary and destructive “competi- action and the potential for a low-carbon transition pathway tion” for CDM market share among developing countries. it requires new and in- demonstrated. Even more unfortunately.and local-spe- At the current stage. even though carbon finance and carbon trading can large-scale. the problems faced by developing counties are clean and sustainable energy mix for developing countries. there are few African countries with comprehen- counties. such as China and India are flooded by work has made certain improvements and created innova. Instead. oping counties.

targets specifically to increase renewable energy. Therefore. an assessement of the world bank’s clean energy for development investment framework local and national resources.naturvardsverket. it does tries.6 There are instantly recognizable reasons to argue that aims to prevent environmental problems from leading to the CEIF. As one nels that target resources more specifically and efficiently example.5 • Sweden is supporting the United Nations Environment Programme (UNEP) through participation in the Poverty 6. Firstly. the incentive legislation and structure for renew. http://www.regeringen. countries in the form of the Swedish-East African tors with substantial market power. the lack of clearly financial aid and technical assistance to African counties defined renewable priorities and targets in the CEIF makes with the primary objective of combating poverty. development co-operation with LDCs and strong commit- stantial. capacity building for and investment projects could also jeopardise the principle CDM in Uganda has already been for more details. co-operation to reduce poverty. at least in the current form. From a technical viewpoint. which tion. 5 There are already some good models in Africa. taken several positive initiatives to address tegrate liberalisation and sustainable initiatives in Africa the importance of climate change and the environmental and link the electrification targets with potential renewable dimensions in international development co-operation:7 targets. As a concrete example. Sweden will contribute 850 tional investment plans and anti-poverty strategies. and million SEK to the GEF for multilateral climate co-opera. is not the most optimal conflicts between and within countries. it difficult to reach measurable and sector-specific results • The Swedish Energy Agency (Energimydigheten) is pro- that facilitate low-carbon transition and development. 6 See http://www. many bilateral not consistent with the clean and renewable energy profile agreements are also in place to support developing coun- that Sweden stands for. 28 .se/sb/d/1471 and http://www. Some of them are with a particular focus on Africa: not represent the innovative and small-scale environmental • The Swedish International Development Co-operation technological solutions that the Swedish business sector has Agency (SIDA) has long-standing experience in providing comparative advantages in. e. For example in Kenya. in many African countries there are no national at climate and poverty issues.2 The policy implication for Sweden’s international and Environment Initiative. whose objective is to help poor energy and development co-operation countries integrate environmental concerns into their na- For the period of 2007–2010. 7 See. ment to the international community to explore other chan- able energies are either non-existing or more details. Sweden should draw on its rich experience in sidies for fossil-fuel based power generation are still sub. the heav. the overrepresentation of large enterprises and ac.g. moting its energy development co-operation with African Finally. Secondly.regeringen. over the should therefore support energy policy reforms which in. last few years. while the sub. in both carbon finance Programme. the government has set a target of 25% of electricity generated to come from geothermal by 2020. ily skewed investment portfolio towards fossil-based energy sources and large-scale hydropower projects of the CEIF is In addition to the multilateral initiatives. the Environment and Security Initiative (ENVSEC). Furthermore. through which the financial as well • Sweden will contribute 50 million SEK to the EU:s initia- human resources from Sweden can contribute to the clean tive of Global Climate Change Alliance as a part of the EU and sustainable development in the LDCs. The WB The Swedish government and its agencies have. of transparency and grass-rooted equality. multilateral channel.

Sweden has in- been China and India where there is market potential for deed the possibility and potential to integrate the develop- the Swedish environmental technology sector. However. “the good example” in the battle against climate change. as well as by the • W hile there is increased interest in cooperating with de.friendly international development co-oper- gaps that need to be bridged in the near future: ation. cost-efficient and local-adapted technological solutions are not only motivated by the cost-effectiveness in emission from the Swedish environmental technology sector re. and environmental issues. as well as the In the recently released “Klimatberedningen”. mains a challenge. an assessement of the world bank’s clean energy for development investment framework The link between climate change and poverty. Only tries/transition economies outside Sweden. responsi- dimensions such as policy dialogue. tainty reflects a narrowly defined view on the legitimacy of tention. long-term strategic planning and highly structured and efficient co-ordination and implementation both at home and in recipient countries. but differentiated. They are also a demonstration of Sweden’s genuine com- • Finally. based on the experience from other developing countries such as China. energy and bility with its strong political willingness and technological environment technology and political influence require capability. The cre. an integrated and holistic approach. reduction and the competitiveness of Swedish industry. However. uncertainty remains regarding how much • In terms of development co-operation. So far. regulatory framework. the support to the resources Sweden should devote in the Swedish home mar- SSA-region has traditionally focused on humanitarian aid ket and how much should be invested in developing coun- in the fields of public health and regional conflicts. the progress achieved by the Swedish actors has been limited. The knowledge and experiences of the Swedish achieved. based instruments such as CDM and foreign aid are consid- creasing extent becoming the focus of Swedish foreign aid ered viable instruments for promoting climate-related and and development policy. the “power of the good example” should be fully and requires extensive institutional and implementation exploited both at home and in a global context. foreign aid. This uncer- recently has the aspect of climate change received more at. The efforts made to mitigate and ation of public-private partnerships to support sustainable adapt to the adverse impact of climate change outside development in Africa and at the same time introduce Sweden. in particular in the poorest developing countries. ance from both public and private sectors. To integrate international development co-oper. there are still substantial environment. through which private-sector par- veloping countries in the fields of renewable energy and ticipation in form of carbon trading and other voluntary clean environmental technologies. ation with national climate change actions is a complex task Instead. the “hotspots” have climate compensation will be encouraged. both market- need for support and assistance for the poorest is to an in. 29 . mental dimension into its proactive image in global climate Africa has not been a prioritised geographic area. through financial support and technical assist- governmental agencies need to be enhanced rapidly. This can be capacity. In contrast. which include mitment to take the common.

M. IEA. 2006: http://finesse-africa. Paris. IEA 2006: World Energy Outlook 2006. Paris. USA Mayer-Spohn O. de United Kingdom and New York. http://www. Selected references ADB Finesse Africa Prepared by working group III of the Intergovernmental Panel on Climate Change.earthlife.pdf. http://www. IEA. 2007: See “red”? –“Avoided deforestation“ and the rights of indigenous peoples and local communities. 2007: Technical and Economic Assessment of Off-grid.). Möhner.pdf IEA. Mini-grid and Grid Electrification Technologies. NY. D. IEA 2004: World Energy Outlook 2004.forestpeoples.php. IEA. J. C. and L. Meyer (eds.. H. IPCC. 2006: East African Development Strategy. B. ESMAP Technical Paper 121/07 December 2007 Griffiths. T. 2006: The potential Contribution of Renewable Energy in South Africa. EAC. 2000: World Energy Outlook 2000. and Schäffler. and Klein Richard J. O. Cambridge. SEI http://www. 2005: IPCC special report on Carbon Dioxide Capture and Storage.pdf ESMAP.eac. T. RAPS 30 . Johannesburg. 2007: The Global Environment Facility: Funding for Adaptation or Adapting to Funds. Metz. an assessement of the world bank’s clean energy for development investment framework 7. 2007: Parametrised LCA of Electricity Generation in an Integrated Gasification Combined Cycle (IGCC) with Carbon Capture and Storage (CCS). Cambridge University Press.. A. SETAC Europe 14th LCA Case Study Symposium in Gothenburg ‚ 4th of December 2007.

2007. London and Sterling Worldwatch Institute: Energy for development The Potential Role of Renewable Energy in Meeting the Millennium Development Goals. Washington. World Bank. DC. Washington. DC. Washington. DC2006-0002. DC2006-0012. World Bank. Fighting climate change: Human solidarity in a divided world. DC. 2007: Screening LCA of Fossil Power Plants with Carbon Capture and Storage (CCS) via Membrane Technology and Case Study of Fossil Power Production with Amine-based Carbon Capture Technology. 31 . SETAC Europe 14th LCA Case Study Symposium in Gothenburg ‚ 4th of December 2007. an assessement of the world bank’s clean energy for development investment framework UN. World Bank. Washington. Earthscan Publications Ltd. DC. DC. New York. 2007d: Catalyzing Private investment for a low-Carbon Economy – World Bank Group Progress on Renewable Energy and Energy Efficiency in Fiscal 2007. 2008: Human Development Report 2007/2008. August. World Bank. World Commission on Dams. World Bank. Washington. 2006b: An investment framework for Clean Energy and Development: A progress Report. Zapp P. DC World Bank. 2006a: Clean Energy and Development: towards an investment framework. World Bank. DC2007-0002. World Bank. Paper prepared for the REN21 Network by The Worldwatch Institute. Washington. Kuckshinrichs W. Schreiber A. UN. 2007c: State and Trends of the Carbon Market 2007. World Bank. World Bank. 2000: Dams and development – A new framework. 2007a: Clean Energy for Development Investment Framework : The World Bank Group Action Plan. 2007b: Clean Energy for Development Investment Framework: Progress Report on the World Bank Group Action Plan.

an assessement of the world bank’s clean energy for development investment framework Acronyms and Abbreviations ADAPT Assessment and Design for Adaptation to Climate Change – A prototype Tool AD Avoided Deforestation CCS Carbon Capture and Storage CDM Clean Development Mechanism CEIF Clean Energy for Development Investment Framework CPF Carbon Partnership Facility ESMAP Energy Sector Management Assistance Program FCPF Forestry Carbon Partnership Facility FY Fiscal Year GEF Global Environment Facility GFDRR Global facility for Disaster Reduction and Recovery GHG Greenhouse gases GNP Gross National Product IEA International Energy Agency IFC International Finance Corporation IFI International Financial Institution IGCC Integrated Gasification Combined Cycle IPP Independent Power Producers LDC Least Developed Countries MDGs Millennium Development Goals MIGA Multilateral Investment Guarantee Agency NGCC Natural Gas Combined Cycle NGO Non-Governmental Organization ODA Official Development Assistance OECD Organization for Economic Cooperation and Development PC Pulverized Coal PV Photovoltaic SSA Sub-Saharan Africa SMEs Small and Medium-sized Enterprises USC Ultra-Super Critical WB World Bank WBG World Bank Group 32 .


www. as well as provide a basis for our positions on how Sweden can support sustainable climate change policies.As a key player in international development the World Bank could play a leading role in provid- ing a framework for “fast-tracking” renewable energy investments in the South. For many decades. the World Bank’s energy lending has focused on centralized. create solu- tions. info@naturskyddsforeningen. Box 4625. and influence politicians and public authorities.naturskyddsforeningen. grid-based fossil fuels based thermal power and hydropower projects. and agriculture are our main areas of involvement. the oceans.naturskyddsforeningen. however. Naturskyddsföreningen. it is the perception of the Swedish Society for Nature Conservation that the Bank has not fulfilled these expectations. large-scale. . environmental toxins. map environmental threats. SE-116 91 Stockholm. SSNC has commissioned this report from IVL – The Swedish Environmental Research Institute – in order to provide a scientific analysis on the development impacts of the World Bank’s climate strategy document “Clean Energy for Development Investment Framework”. at both national and international levels. the World Bank’s energy sector portfolio still fails to reap the double dividend of renewable energy technologies that would fight both poverty and climate change. Climate. In spite of many promises to “green” its energy lending over the past 15 years. Regretfully. we are behind one of the world’s most challenging ecolabellings. We spread knowledge. The Swedish Society for Nature Conservation is an environ­ mental organisation with power to bring about change. “Bra Miljöval”(Good Environmental Choice). Phone + 46 8 702 65 www.