Conclusions and RecommendationsEconomic life and GHG emissions have been closely intertwined. This evaluation hastraced some <strong>of</strong> the most important parts <strong>of</strong> that large and complex knot, assessing theimpacts <strong>of</strong> WBG attempts to disentangle the threads. Table 6.1 summarizes the sectoralfindings. This chapter draws conclusions that cross-cut those diverse sectors andpresents recommendations.<strong>The</strong> Congruence <strong>of</strong> Mitigation and<strong>Development</strong>GHG mitigation directly contributes to development andpoverty reduction. But it does so by managing long-termrisks at the global level. Thus, countries are rightly concernedabout potential trade-<strong>of</strong>fs between long-term, globallyshared benefits and short-term, local benefits.IEG finds that there are many important areas <strong>of</strong> action thatcombine significant global benefits with high local ones.Figure 6.1 plots indicative estimates <strong>of</strong> the local economicreturns and global mitigation returns <strong>of</strong> some <strong>of</strong> the interventionsdiscussed in this evaluation. <strong>The</strong>se estimates mustbe taken with extreme caution, as they are based on possiblyoveroptimistic appraisals or on sometimes inconsistentor poorly documented monitoring reports.But this evaluation suggests that energy efficiency and BRT<strong>of</strong>fer local ERRs that exceed most development projects,with GHG as a significant side benefit. At current valuations<strong>of</strong> carbon reduction, the domestic benefits are muchlarger than the carbon benefits. <strong>The</strong>re was insufficient informationto compute returns to forest interventions, butthere are large deforestation reductions (and therefore largeemissions reductions) from forest protection projects, especiallywhere local sustainable use is allowed, and evengreater reductions from the establishment or maintenance<strong>of</strong> indigenous forest areas. This suggests a combination <strong>of</strong>social, biodiversity, and carbon gains from these projects.A Systems View Is EssentialAs emphasized in Phase I <strong>of</strong> this evaluation (IEG 2009), asystems view is <strong>of</strong>ten necessary to assess interventions’ impactsand to appraise alternatives. A narrow project-levelfocus can fail to account for positive or negative indirecteffects, fail to identify important complementary efforts,and become mired in controversy uninformed by a consideration<strong>of</strong> alternatives.For instance, the WBG’s involvement in coal projects hasbeen a lightning rod for debate. If there were an internationalagreement that clearly set out how to achieve theUNFCCC goal <strong>of</strong> climate stabilization, with assigned rolesand responsibilities, such a debate would not be necessary.In the existing vacuum, the SFDCC set out criteria thatwould restrict support to cases that are least cost, that optimizeenergy efficiency options, and for which no financeablelow-carbon alternative exists.A study for Kosovo illustrates a way to apply these criteria.It employs a systemwide model to show that even in thepresence <strong>of</strong> €10/ton <strong>of</strong> CO 2charges or credits, and takingaccount <strong>of</strong> the damages from air pollution, it would still beadvantageous for Kosovo to build a large coal plant, whileclosing smaller, older ones. However, it is essential that suchmodels incorporate the scope for efficiency improvementsas an alternative to new power generation and considerhigher levels <strong>of</strong> carbon payment.Similarly, assessment <strong>of</strong> the costs and benefits <strong>of</strong> largehydropower plants should be made in the context <strong>of</strong> asystems model that identifies the advantages and disadvantages<strong>of</strong> different sites (as in the Nile Equatorial Lake StrategicEnvironmental Assessment). <strong>The</strong> model should alsoconsider the social and environmental impacts <strong>of</strong> alternativemodes <strong>of</strong> power provision.In the area <strong>of</strong> forests and land use, forest conservationneeds to be accompanied by sustainable agricultural intensification.Increased agricultural pr<strong>of</strong>itability by itselfcould motivate added deforestation; increased forest protectionin one area could deflect pressures to another inthe absence <strong>of</strong> a compensating supply <strong>of</strong> food, timber, andjobs. Likewise, the benefits <strong>of</strong> improved urban transit canbe quickly eroded as cars expand into freed-up roadways;80 | Climate Change and the <strong>World</strong> <strong>Bank</strong> Group
Figure 6.1800Economic and <strong>Carbon</strong> Returns to InvestmentsPanel AProject ERR700600500400300200100CFLsEnergy efficiencyPanel B00 20 40 60 80 100 120 140 160Lifetime CO 2 emissions / investment cost (kgCO 2 per $)T&D Off-grid solar Energy efficiency HydropowerWind CFL BRT160Panel B140120CFLsProject ERR100806040SHSBRTT&DEnergy efficiency20WindHydropower00 20 40 60 80 100 120 140Lifetime CO 2 emissions / investment cost (kgCO 2 per $)Source: IEG.Note: Estimates—all adapted from WBG project documents—are mostly based on ex ante appraisals, could be overly optimistic, andare selected on the basis <strong>of</strong> availability. <strong>The</strong>y are not produced with consistent methodologies or rigor. See appendix I for a fullerdescription <strong>of</strong> data limitations. BRT = bus rapid transit; CFL = compact fluorescent light; ERR = economic rate <strong>of</strong> return; SHS = solarphotovoltaic home system; T&D = transmission and distribution.a comprehensive system <strong>of</strong> transport demand managementis necessary for sustained gains.Recommendations<strong>The</strong> WBG’s resources are small compared with the capitalcost <strong>of</strong> providing low-carbon energy to developing andtransition economies—to say nothing <strong>of</strong> broader developmentneeds. To make a difference for the planet, the WBGneeds to leverage its resources as far as possible. It can dothis through four interlinked lines <strong>of</strong> action:• Support favorable policies (discussed at length inPhase I <strong>of</strong> this evaluation with respect to energy pricingand efficiency policies, and reiterated here in connectionwith renewable energy policies).• Be a venture capitalist for technical, financial, andinstitutional innovations (in short, for fostering technologytransfer) by identifying innovations that havepotentially high returns, using a cycle <strong>of</strong> piloting anddemonstration to test, adapt, upscale, and diffuse thesetechnologies to wider and wider audiencesConclusions and Recommendations | 81
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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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Table of ContentsAbbreviations . .
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Figures1.1 GHG Emissions by Sector
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AcknowledgmentsThe report was prepa
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Executive SummaryUnabated, climate
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esettlement plans has been ineffect
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of some technologies, such as landf
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Scale up high-impact investmentsEne
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Major monitorable IEGrecommendation
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Major monitorable IEGrecommendation
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Chairman’s Summary: Committee onD
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most places. Before we get there, w
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non-Annex I countries. The World Ba
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attention. In a couple of decades,
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GlossaryAdditionalityBankabilityBas
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Joint ImplementationA mechanism und
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Chapter 1evALuAtiOn HiGHLiGHts• T
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of interventions, from technical as
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would allow industrialized countrie
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growth, poverty reduction (includin
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Chapter 2eValuaTION HIGHlIGHTS• W
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Table 2.2Evaluated World Bank Renew
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Figure 2.2Breakdown of 2003-08 Low-
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Table 2.4 Commitments to Grid-Conne
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Box 2.1The Economics of Grid-Connec
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on average (Iyadomi 2010). (Reducti
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and industrial policy. An increasin
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Table 2.6Hydropower Investments by
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costs for remaining unelectrified a
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