WASHINGTON, DC, US, May 16, 2007.
The World Bank has increased its investments in renewable energy projects due to increased demand for renewables as the technologies have become more cost-effective and as emerging market governments adopt policies and regulatory frameworks that support renewables.
The institution has released its report, ‘Clean Energy for Development Investment Framework: The World Bank Group Action Plan,’ that was prepared for its Development Committee (a joint committee of the Boards of Governors of the World Bank and the Fund On the Transfer of Real Resources to Developing Countries). The Action Plan includes development of sectoral knowledge and approaches in the areas of renewables, energy efficiency and transportation, as well as strategic partnership with the GEF to support continued growth in the low carbon portfolio and leveraging of private finance.
“The increase in low carbon investments is notable, both in absolute terms (millions of dollars) and in relative terms (share of energy sector lending),” the report explains. “The share of financing devoted to projects that support low carbon investments was 37% in FY06; this is partly due to increased demand for support for renewable energy and energy efficiency as these technologies have advanced and have become more cost-effective (given price rise and greater volatility in oil and gas prices) and as emerging market governments adopt policies and regulatory frameworks that support renewable energy.”
“The commitment that the Bank Group made in June 2004 at the Bonn International Renewable Energies Conference to scale up support for new renewable energy and energy efficiency by 20% per annum also provided focus on this portfolio,” it notes. “To date, the Bank Group has exceeded this target: in FY06 lending for new renewable energy and energy efficiency at US$668 million was more than double the Bonn target.”
For all low-carbon projects (renewables including all size hydropower, energy efficiency, power plant rehabilitation, district heating, biomass waste energy, gas flaring reduction, high efficiency coal fired plants), the Bank lent $3,092 million in FY06, up from $1,410 million in FY05 and $296 million in FY03. “In addition to the support for small hydropower plants in the Bonn commitment, the Bank has increased lending for larger hydropower plants as well” as a result of its 2003 strategy that set the stage for a renewal of lending for all size hydropower projects.
Its Alternative Energy Program (ASTAE) is designed to reduce poverty in the Asia region and stimulate pro-poor growth particularly using clean energy options by supporting initiatives that increase energy access for poor people and increase the use of renewables and energy efficiency to reduce GHG emissions. ASTAE support “substantially contributed to the US$230 million or 53% of total World Bank support for renewable energy and energy efficiency in East Asia and Pacific region in FY06,” and supported projects provide 747,500 homes with access to energy, including support to China for promulgating the China Renewables Sources Law that supports increasing the share of green power to 15% of total generation from 7% in 2005.
With additional resources, GEF and the World Bank could “mobilize a larger-scale renewable energy and energy efficiency markets in smaller and less developed countries,” the report concludes. “Although a broad range of proven renewable energy technologies are now commercially available, few have managed to grow their markets to the point that they are truly contributing to the energy access and development agendas.”
“The menu of policy and enabling conditions under which distributed and even household renewable energy technologies make sense must be developed and approaches to upscaling their markets identified,” it notes. “Many GEF projects have focused on supporting renewable energy in off-grid rural areas; these projects and technologies should be part of mainstream Bank operations now and will constitute a portion of the Bank’s response to Pillar 1 of the CEIF.”
