significant barriers, such as entering new markets andapplying new technologies and new business models.<strong>The</strong> facility provided technical assistance grants andinvestment funding to projects with significant environmentalbenefits or projects that led to cleaner production.As <strong>of</strong> 2009, only 4 projects have been committed, and 25received technical assistance grants. High cost, low buyinfrom bilateral donors, unfocused strategy, and resourcelimitations led to under achievements in placing funds.As a pilot facility, the program aimed to demonstrate theviability <strong>of</strong> early-stage cleaner production projects. However,case studies and dissemination workshops appearto have had little impact on technology diffusion.• Sustainable Energy Facility with E&Co. In 2005, IFCestablished the Sustainable Energy Facility Project. <strong>The</strong>project consists <strong>of</strong> $14 million <strong>of</strong> investment capitaland up to an additional $ 2.6 million for technicalassistance and capacity building. Based on a mid-termself- evaluation, this facility appears to have learned thelessons <strong>of</strong> its predecessors, incorporating greater flexibilityin technology and attention to making sure productsare demanded by markets. Like some <strong>of</strong> its predecessorsit combines technical assistance and investment,taking a quasi-venture capital approach.One <strong>of</strong> IFC’s furthest ventures into upstream technologiesis its GEF-supported Fuel Cell Initiative, initiatedin 2001. <strong>The</strong> pilot phase was expected to supportthree companies with different fuel cell technologiesand help increase their supply <strong>of</strong> fuel cells, reduce theirmanufacturing and installation costs, and demonstratethe viability <strong>of</strong> the technology. <strong>The</strong> target market wasbackup and remote-location power for telecom companies.<strong>The</strong> program was supposed to close in December2008, but to date only about 85 systems have been installed,against a target <strong>of</strong> 400. <strong>The</strong>re was no demand forthe remote-location fuel cell.In sum, IFC’s GEF-funded projects seem to have sufferedfrom a persistent set <strong>of</strong> design flaws. <strong>The</strong>y have <strong>of</strong>ten supportedcompanies with the double handicap <strong>of</strong> inexperiencedmanagement and technology that is not locallyfamiliar. <strong>The</strong>y have supported products that are too advancedor expensive for the target market. And they havesometimes presumed overoptimistically that providingtechnology to specific firms would lead to spontaneousdiffusion <strong>of</strong> that technology.IFC’s GEF projects have suffered frompersistent design flaws.<strong>The</strong>re are, however, indications <strong>of</strong> a fresh approach thatrecognizes these past shortcomings. A new initiative onearly-stage clean-tech venture capital is led by staff whowere involved in IFC’s high-risk but ultimately high-returninvestments in African telecom. <strong>The</strong> new approach seeks tosupport experienced management in adopting technologiesthat are proven elsewhere in the world; it is prepared to takesome risks for prospectively high returns. At the same time,an investment in one <strong>of</strong> the developing world’s first largegrid-connected solar photovoltaic power plants also stressesworking with a well-qualified company, and the projectprovides for the construction <strong>of</strong> a “knowledge platform” toshare project results.A fresh approach emphasizes transfer<strong>of</strong> well-proven technologies and creation <strong>of</strong>knowledge platforms to share results.Demonstration and piloting in recent low-carbonenergy projectsTechnology transfer can occur through piloting and demonstration.Existing technologies face new challenges whenput in a new context. For instance, biomass technologiesmay require technical, logistical, contractual, and regulatoryadjustments to adapt to a novel location with untriedfeedstock. An effective pilot project will have a coherentlogical framework for demonstration. So, for instance, ifthe goal was to demonstrate the technical and financial viability<strong>of</strong> a biomass technology so as to induce spontaneousreplication, the project should specify the technical andfinancial indicators that will be collected at the plant level,the target audience, how the results will be communicated,and how uptake <strong>of</strong> the technology will be tracked.Recently initiated pilot projects had goodplans for monitoring internal projectoutcomes.To gauge the extent and practice <strong>of</strong> such projects, IEG dida desk survey <strong>of</strong> low-carbon energy projects over 2007–09for this evaluation. It found 21 projects that contained eitherpilot or demonstration in their project objectives, withtotal commitments <strong>of</strong> roughly $1.4 billion (see table H.1).Eleven <strong>of</strong> these projects were GEF supported; eight hadsolely GEF support. Nearly all project designs containedgood plans for monitoring internal project outcomes, butonly eight projects displayed a strong logical frameworkfor demonstration; few project designs contained any measurement<strong>of</strong> external demonstration effects. Although thethree carbon finance project designs included excellent internaloutcome measures (through the CDM), they lackeda coherent mechanism for demonstration and contained nomeasurement <strong>of</strong> demonstration impacts.Only 8 <strong>of</strong> 21 projects had strong logicalframeworks for demonstration, andfew contained any measurement <strong>of</strong> externaldemonstration effects.70 | Climate Change and the <strong>World</strong> <strong>Bank</strong> Group
Conclusions<strong>The</strong> WBG’s efforts to promote technologies have <strong>of</strong>ten foundered.<strong>The</strong>re is a recurrent set <strong>of</strong> factors in these failures:• <strong>The</strong> projects <strong>of</strong>ten did not set out a clear logical frameworklinking interventions to technological progress.Efforts to support upstream technologies have been fartoo small by themselves to advance those technologiesalong a global learning curve.• New technologies inherently have few suppliers andpoorly known costs. <strong>The</strong> <strong>World</strong> <strong>Bank</strong>’s procurementsystem is not well adapted for these situations.• A combination <strong>of</strong> inexperienced entrepreneurs and unfamiliartechnology constitutes a double set <strong>of</strong> hurdles.REDP, however, shows that it is possible to address bothchallenges.• “Demonstration” projects fail if private companies, understandably,want to keep technologies proprietary.Successful projects, in contrast, planned well for demonstration,learning, and diffusion. REDP supported technologicalprogress in many competing firms, stimulating theindustry’s growth. <strong>The</strong> Energy Conservation Project introducedthe institutional technology <strong>of</strong> energy performancecontracting and arranged for beneficiary firms to participatein demonstration, while they adapted the practice tolocal conditions. It also disseminated 75 specific techniquesfor industrial energy conservation.<strong>The</strong> Regional Silvopastoral Project rigorously documentedand publicized its achievements in boosting farm productivityand sustainability, which facilitated scale-up. <strong>The</strong>reare signs that some <strong>of</strong> these lessons are being incorporatedin new efforts. <strong>The</strong> GEF Evaluation Office cites a UnitedNations <strong>Development</strong> Programme energy efficiency projectthat was carefully designed for replication and successfullydid that (NCSTE 2009).Successful projects planned well fordemonstration, learning, and diffusion.Technology transfer projects face a number <strong>of</strong> barriers anddisincentives. Smaller (more pilot-like) projects may havedisproportionately high costs <strong>of</strong> preparing and supervising,including effective design and monitoring <strong>of</strong> diffusionimpacts. Borrowers—and country directors—mayperceive (correctly or not) that these projects are risky.Projects that involve less-commercial technologies mayrun into procurement issues beyond the expertise <strong>of</strong> moststaff. Projects may also involve complex issues <strong>of</strong> intellectualproperty rights.Should the WBG support the development <strong>of</strong> technologiesproprietary to individual companies? Under what circumstancesshould publicly supported technologies be providedopen source, as a public good, to an entire industry?Technology transfer projects face a number<strong>of</strong> barriers and disincentives.Addressing these barriers requires a host <strong>of</strong> instruments.<strong>The</strong> prominence <strong>of</strong> GEF and donor funding points to concessionalfunds as one way to overcome borrower riskaversion and to support higher preparation and supervisioncosts. Staff and management incentives need to beaddressed—at the very least, by ensuring that pilot anddemonstration projects are assessed as pilots, with recognition<strong>of</strong> the benefit <strong>of</strong> informative “failures.” <strong>The</strong> WBGshould consider setting up a physical or virtual technologyunit as a resource for project teams. <strong>The</strong> unit could provideadvice on procurement, IPRs, diffusion mechanisms, andmonitoring. It could also advise on the advantages and risks<strong>of</strong> engaging with less-mature technologies.<strong>The</strong> WBG should be cautious about trying to advance technologiesat the global level. It has little direct experiencewith upstream technology development. <strong>The</strong>re is, however,an a priori argument for research and developmentsupport for technologies that reduce poverty and are easyto replicate—meaning that there is little private sector interestin them. <strong>The</strong>se might include, for instance, farmingtechniques such as biochar (which increase soil fertility andsequester carbon), improved cookstoves, and techniquesfor reducing urban heat island effects.To make a global difference at the scale-up stage—push atechnology down the cost curve at the global level—thescale <strong>of</strong> intervention needs to be large relative to cumulativeglobal production. For instance, WBG and Clean TechnologyFund resources are large enough, if leveraged, to significantlyincrease the global capacity <strong>of</strong> CSP but are small comparedto the global investment needed to advance carboncapture and storage. And such efforts require weighing therelative merits <strong>of</strong> a purely country-based approach with onebased on global procurement. For example, there are potentialadvantages and disadvantages <strong>of</strong> a single global tenderfor CSP plants (resulting in a standardized design, witheconomies <strong>of</strong> scale and competition) versus a series <strong>of</strong> separatesmaller tenders in different countries (developing moretechnology paths, but not moving far along each one).<strong>The</strong>se choices involve some degree <strong>of</strong> “picking winners,”which requires balancing risks against rewards. If the WBGgets involved in these activities, it needs to develop (or coordinatewith others) a clear technology map with goalsand exit criteria.<strong>Carbon</strong> Finance at the WBG<strong>The</strong> UNFCCC, to which virtually all countries subscribe,has the goal <strong>of</strong> stabilizing atmospheric GHGs to head <strong>of</strong>fdangerous climate impacts. <strong>The</strong> carbon market, a creationSpecial Topics | 71
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Phase II: The Challenge of Low-Carb
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CLIMATE CHANGE AND THE WORLD BANK G
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Executive SummaryUnabated, climate
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IEG PublicationsAnalyzing the Effec