The Challenge of Low-Carbon Development - World Bank Internet ...

highest potential for savings. Currently, IFC has devotedstaff attention to small loans offering only a few thousandtons per year of CO 2savings, and in at least one case (theabove-noted distribution utility) failing to follow up on aproject offering energy and CO 2savings a hundred timesgreater. IFC has just hired an expert in building energyefficiency—how should this expert’s scarce time be allocatedfor maximum impact? Third, IFC could encourage benchmarkingof performance among its smaller direct clientsand among clients of financial intermediaries, preparingstandardized audit services and loan products for them.Systems issuesEnergy efficiency can offer a cost-effective alternative tonew generation, but this may be overlooked in the absenceof a view of the entire power system. Similarly, thecongestion impacts of new generation on transmission canbe overlooked. A systems view is important to address thedegree to which energy efficiency provokes “snap-back”—increased consumption of electricity as its effective pricedrops.Learning and feedbackMost of the financial intermediation projects had a rationaleof promoting diffusion of financial technologies—thatis, the techniques of appraising and structuring energy efficiencyloans. However, this was most effective in China,where the Bank’s Energy Conservation Project (especially)and IFC’s CHUEE Program (to a lesser extent) sought tobuild networks and disseminate information throughoutthe financial and end-user industries. In contrast, mostother projects did not create explicit channels for diffusion,and banks had little motivation for sharing their learningwith competitors.There remains a tremendous need tounderstand what works and what does notin the evolving field of energy efficiency.There remains a tremendous need to understand whatworks and what does not in this still-evolving field. Financialreturns to energy efficiency are poorly and inconsistentlymeasured. A lack of monitoring information on thestate of T&D losses weakens power planning and makes itmore difficult to locate high-return investments. And thereis a desperate need for applied operations research in efficientlighting programs to understand which consumer andproducer barriers are most salient and which interventionsare most effective.The first phase of this evaluation stressed the importanceof developing indicators for energy efficiency to set targetsand assess progress. Learning is critical, because energyefficiency promotion is less well understood than renewableenergy promotion. However, current project-levelmethodologies are haphazardly applied, often lack ex postmeasurement, and are inconsistent in their treatment ofprojects that combine retrofits with capacity expansion.The United Nations Industrial Development Organization,however, has documented that it is possible to set up informationnetworks that facilitate benchmarking and sharingof infromation on efficiency performance. At the nationallevel, several countries are beginning to assemble sectoralinformation on energy efficiency, as a recent ESMAPsponsoredworkshop showed. “Bottom-up” indicators, forexample, for particular industry sectors or for power distributionlosses, would be more useful for the purposes discussedhere than national level indicators.Energy Efficiency | 45