Table I.1<strong>Carbon</strong> and Economic Returns on Projects (continued)Hydro run-<strong>of</strong>-river 8.7 76.9 AppraisalHydro run-<strong>of</strong> river 4.7 71.1 AppraisalMini-hydro 24 61.2 EvaluationWind 11.9 15.0 AppraisalWind 11.3 13.2 AppraisalWind 5.5 14.1 AppraisalWind 7.1 10.0 AppraisalWind 12.5 34.7 AppraisalWind 7.0 16.8 AppraisalWind 14.7 41.0 AppraisalWind 3.9 14.9 EvaluationBRT 81 9.6 AppraisalSource: <strong>World</strong> <strong>Bank</strong> data.Note: BRT = bus rapid transit; CFL = compact fluorescent light; T&D = transmission and distribution.Caveats:• <strong>The</strong>se estimates have many limitations and are presented to indicate rough orders <strong>of</strong> magnitude and to illustrate the need for more thorough andrigorous analysis.• Estimates—all adapted from WBG project documents—are mostly based on ex ante appraisals and could be overly optimistic. <strong>The</strong>y are not producedwith consistent methodologies or rigor.• <strong>Carbon</strong> reductions per dollar consider only investment costs; operations and maintenance are excluded.• Economic rates <strong>of</strong> return (ERRs) typically do not include nonmonetized benefits such as reduction in local air pollution or the value <strong>of</strong> increased energysecurity.• ERRs take the electricity tariff (and any associated capacity payments) to represent the economic value <strong>of</strong> electricity (except in the case <strong>of</strong> solar homephotovoltaics). In many cases tariffs are artificially low, so this will be an underestimate.• In this sample, wind projects receive tariffs that are 2.2 times higher, on average, than the tariffs received by hydropower plants. Hence these estimatesshould not be used for a head-to-head comparison <strong>of</strong> wind and hydro.• Lifetime emission reductions are based on approximations <strong>of</strong> project lifetime. Grid power plants are assumed to provide emission reductions for20 years; solar home photovoltaic systems 15 years; bus rapid transit 14 years; energy efficiency projects, transmission and distribution projects and<strong>of</strong>f-grid power have an assumed lifetime <strong>of</strong> 10 years; compact fluorescent light bulb life is 6 years. To the extent that projects provide emission reductionsbeyond this, emission reductions are understated.• ERR values for compact fluorescent light bulb projects generally include only fuel savings; they do not also include the value <strong>of</strong> deferring the need forconstruction <strong>of</strong> peak load plants, or reductions in load shedding.• Much <strong>of</strong> the variation in emission reductions (particularly for hydro) comes from variation in the carbon intensity <strong>of</strong> the baseline power generationbeing displaced by the project.• Energy efficiency financial intermediary project ERR counts all benefits from subproject investments, regardless <strong>of</strong> whether they were triggered byWBG involvement.• For direct investments in energy efficiency, the (relatively small) costs <strong>of</strong> energy audits are excluded.• Most <strong>of</strong> the economic benefits from <strong>of</strong>fgrid solar come from studies that find high household willingness to pay for electrical power.114 | Climate Change and the <strong>World</strong> <strong>Bank</strong> Group
Appendix JRecent WBG <strong>Development</strong>s in Emission Mitigation Activities<strong>The</strong> main body <strong>of</strong> this paper and portfolio analysis has focusedon the 2003–08 period. As noted, there has been anincrease in climate-related activity since the 2008 adoption<strong>of</strong> the Strategic Framework on <strong>Development</strong> and ClimateChange. This appendix provides a descriptive review <strong>of</strong>key developments since 2008, including the 2009 energyportfolio, the Climate Investment Funds, the <strong>Carbon</strong> PartnershipFacility, the Forest <strong>Carbon</strong> Partnership Facility,and the <strong>Low</strong> <strong>Carbon</strong> Growth Studies program <strong>of</strong> the EnergySector Management Assistance Program. <strong>The</strong>se areashave not been evaluated in detail or fully validated by IEGanalysis.2008–09 Energy Portfolio <strong>Development</strong>s<strong>The</strong> growth in support for low carbon energy activitiescontinued in fiscal 2009, reaching annual commitments <strong>of</strong>more than $3.3 billion. <strong>Low</strong> carbon financing constitutesroughly 40 percent <strong>of</strong> the energy portfolio. Although IEGhas not formally validated the CEIF 2009 low carbon portfolioclassification, the CEIF definitions have been verysimilar to IEG’s reckoning <strong>of</strong> low carbon support in the past(see figure J.1).Most financing continues to come from traditional (IDA,IBRD, and International Finance Corporation) fundingsources, with the proportion coming from traditional financingincreasing in 2009.For the first time, more than half <strong>of</strong> the low carbon portfoliois for energy efficiency, though support for new renewableshas also increased markedly.<strong>The</strong> increase in financing for low carbon projects in fiscal2008 and 2009 comes primarily from a few large investments.In fiscal 2008, most financing for energy efficiencyand large hydropower was provided by stand-alone projects;26 percent came from just three IBRD projects: IndiaRampur Hydropower Project ($395 million), ChinaEnergy Efficiency Financing ($200 million), and ChinaLiaoning Med. Cities III (an energy efficiency project,$185 million).<strong>The</strong> following year, the portfolio was dominated by largeenergy efficiency investments; 40 percent <strong>of</strong> financing camefrom 5 <strong>World</strong> <strong>Bank</strong> projects: Turkey Private Sector RenewableEnergy and Energy Efficiency Project ( $500 millionFigure J.1Commitment ($ millions)6,0005,0004,0003,0002,0001,0000Financing for <strong>Low</strong> and Non-<strong>Low</strong><strong>Carbon</strong> Energy, 2003–092003 2004 2005 2006Year2007 2008 2009Non-low-carbon energy, CEIF<strong>Low</strong>-carbon energy, CEIF<strong>Low</strong>-carbon energy, IEGSource: IEG and CEIF.Note: CEIF = Clean energy Investment Framework.IBRD), India Coal-Fired Generation Rehabilitation($225 million), Turkey Programmatic Electricity Sector<strong>Development</strong> Policy Loan ($200 million), Vietnam RenewableEnergy <strong>Development</strong> Project ($199 million), andNigeria Electricity and Gas Improvement ($182 million).Recent Activities: Climate Investment FundsIn 2008 the WBG and other multilateral developmentbanks jointly established the $6.2 billion Climate InvestmentFunds. <strong>The</strong> core <strong>of</strong> the Climate Investment Fund isthe $5.1 billion Clean Technology Fund (CTF), aimed atfinancing demonstration, large-scale deployment andtransfer <strong>of</strong> low-carbon technologies in large or middle-incomecountries.CTF financing eligibility requires the creation <strong>of</strong> countryor sector investment plans, and then selects projectsfor financing on the basis <strong>of</strong> potential for greenhouse gassavings, cost-effectiveness, demonstration potential atscale, development impact, implementation potential, andadditional costs and risk premium. Eligible technologiesinclude the power sector, transportation, and energy efficiencyin buildings, industry, or agriculture.Appendix J: Recent WBG <strong>Development</strong>s in Emission Mitigation Activities | 115
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CLIMATE CHANGE AND THE WORLD BANK G
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