🎧 Boosting Energy Efficiency to Power a Green Future
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Boosting energy efficiency is critical for addressing climate change. The energy sector is estimated to account for more than two-thirds of total greenhouse gas emissions globally and improving energy efficiency could contribute up to 40% towards reducing greenhouse gas emissions by 2030. Are the World Bank and its partners fully realizing the immense potential of energy efficiency advancements Show More
Boosting energy efficiency is critical for addressing climate change. The energy sector is estimated to account for more than two-thirds of total greenhouse gas emissions globally and improving energy efficiency could contribute up to 40% towards reducing greenhouse gas emissions by 2030. Are the World Bank and its partners fully realizing the immense potential of energy efficiency advancements? What factors are slowing down the scaling up of impactful energy efficiency interventions?
In this episode, Marialisa Motta and Ramachandra Jammi join host Jeff Chelsky to unpack lessons from IEG’s evaluation on World Bank Group Support to Demand-Side Energy Efficiency. Marialisa is manager of IEG’s Finance Private Sector Infrastructure and Sustainable Development Evaluation Unit and Rama is Senior Evaluation Officer in IEG and is the lead of IEG’s energy efficiency evaluation.
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Related Resources
Blog: Untapped potential for decarbonization: Scaling up energy efficiency
Evaluation Insight Note: Transport Decarbonization
Evaluation: World Bank Group’s support for electricity supply from renewable energy resources, 2000–2017
Evaluation: World Bank Group Support to Electricity Access, FY2000-2014
Untapped potential for decarbonization: Scaling up energy efficiency
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Using less energy to do the same work is the single action with the biggest potential gain on decreasing the amount of carbon dioxide we put into the atmosphere. A new report assesses World Bank Group support for energy efficiency and the potential for scale up to meet key climate goals. Using less energy to do the same work is the single action with the biggest potential gain on decreasing the amount of carbon dioxide we put into the atmosphere. A new report assesses World Bank Group support for energy efficiency and the potential for scale up to meet key climate goals.
World Bank Group Support to Demand-Side Energy Efficiency
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This report assesses the effectiveness and coherence of the World Bank Group’s support to clients on Demand Side Energy Efficiency (DSEE) and the opportunities to scale them up.
This report assesses the effectiveness and coherence of the World Bank Group’s support to clients on Demand Side Energy Efficiency (DSEE) and the opportunities to scale them up.
Evaluation of World Bank Group Support to Creating an Enabling Environment for Private Sector Participation in Climate Action, Fiscal Years 2013–22 (Approach Paper)
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The objective of the evaluation is to derive lessons from Bank Group experience in improving the enabling environment for private sector participation in climate action. The evaluation will assess the relevance and effectiveness of Bank Group support to enabling private sector participation in climate action, including the drivers that led to positive results. It aims to identify lessons Show MoreThe objective of the evaluation is to derive lessons from Bank Group experience in improving the enabling environment for private sector participation in climate action. The evaluation will assess the relevance and effectiveness of Bank Group support to enabling private sector participation in climate action, including the drivers that led to positive results. It aims to identify lessons applicable to the World Bank, IFC, and the Multilateral Investment Guarantee Agency (MIGA) by obtaining evidence-based findings on what works, why, and for whom. Such lessons can inform the implementation of the Climate Change Action Plan (CCAP) 2021 and subsequent Bank Group activities. The focus on the enabling environment has been chosen because researchers, policy makers, and climate action practitioners realized that creating an enabling environment is a key priority for the private sector to engage in climate action. The need to enhance the enabling environment for private sector participation in climate action is critical to meet the trillions in investments needed to address climate change and achieve Paris Agreement goals.
Ecuador Country Program Evaluation (Approach Paper)
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The Country Program Evaluation (CPE) for Ecuador seeks to assess the performance of the World Bank Group in helping Ecuador address its main development challenges. The objective of this CPE is to assess how the Bank Group supported Ecuador in addressing key challenges that constrained its development and how that support adapted over time to respond to changing circumstances, an evolving Show MoreThe Country Program Evaluation (CPE) for Ecuador seeks to assess the performance of the World Bank Group in helping Ecuador address its main development challenges. The objective of this CPE is to assess how the Bank Group supported Ecuador in addressing key challenges that constrained its development and how that support adapted over time to respond to changing circumstances, an evolving relationship, and lessons from experience. The evaluation will cover the period FY07–22. The time period is selected to include the earliest efforts at normalizing relations after the break in July 2007. Because this was such a pivotal aspect of the World Bank’s support to Ecuador over the past decade, the CPE considers a somewhat expanded time period.
🎧 Lessons Unwrapped from Tackling Plastic Waste
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Every year, the world generates 2 billion tons of trash, including 400 million tons of plastic. Most of this waste is mismanaged, piling up and flowing into our oceans, adding to greenhouse gas emissions and land and water pollution. A long-term solution requires the world to shift to a circular economy. What does circularity entail? What can we learn from global efforts to tackle solid waste, Show More
Every year, the world generates 2 billion tons of trash, including 400 million tons of plastic. Most of this waste is mismanaged, piling up and flowing into our oceans, adding to greenhouse gas emissions and land and water pollution. A long-term solution requires the world to shift to a circular economy. What does circularity entail? What can we learn from global efforts to tackle solid waste, and in particular plastics?
Host Jeff Chelsky talks trash with Steve Fletcher, Professor of Ocean Policy and Economy at the University of Portsmouth, to take stock of lessons from a waste crisis that is disproportionately affecting people in poverty.
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Related Resources
IEG Evaluation: Transitioning to a Circular Economy: An Evaluation of the World Bank Group's Support for Municipal Solid Waste Management (2010-20)
Blog: Towards a circular economy: Addressing the waste management threat
The case for energy efficiency in low-income countries: Evidence from Malawi
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More than half of sub-Saharan Africa struggles with energy access. An ongoing IEG evaluation of a World Bank project in Malawi indicates that energy-efficiency projects could potentially help meet the high demand for energy access in low-income countries.More than half of sub-Saharan Africa struggles with energy access. An ongoing IEG evaluation of a World Bank project in Malawi indicates that energy-efficiency projects could potentially help meet the high demand for energy access in low-income countries.
World Bank Group Support to Energy Efficiency: An Independent Evaluation of Demand-side Approaches (Approach Paper)
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Energy efficiency contributes, first and foremost, to addressing climate change, but it also to addressing three other critical development challenges: firm productivity, energy security, and household energy affordability and access. The purpose of the evaluation is to assess how well the World Bank Group is supporting client countries to scale up demand-side energy efficiency to achieve Show MoreEnergy efficiency contributes, first and foremost, to addressing climate change, but it also to addressing three other critical development challenges: firm productivity, energy security, and household energy affordability and access. The purpose of the evaluation is to assess how well the World Bank Group is supporting client countries to scale up demand-side energy efficiency to achieve development outcomes. This evaluation will cover IBRD, IDA and IFC, including lending, advisory, analytics and knowledge products for the period FY2011–20 and build on the findings of the previous IEG evaluations on related energy topics.
Building a path for the clean energy transition: Lessons from World Bank support for renewable energy
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The ongoing dominance of fossil fuels in global energy production accounts for more than 60% of overall greenhouse gas emissions. The Clean Energy Transition —the pathway for decarbonizing global energy— is essential for addressing climate change and will also provide a key means for the poor to access affordable, reliable, clean electricity. The transition will be central to achieving both the Show MoreThe ongoing dominance of fossil fuels in global energy production accounts for more than 60% of overall greenhouse gas emissions. The Clean Energy Transition —the pathway for decarbonizing global energy— is essential for addressing climate change and will also provide a key means for the poor to access affordable, reliable, clean electricity. The transition will be central to achieving both the goals of the Paris Climate Accords and key elements of the Sustainable Development Goals, and experts agree that Renewable Energy (RE) has a vital role to play in the Clean Energy transition.
The Independent Evaluation Group (IEG) recently released its first systematic assessment of World Bank Group support for the supply of electricity from renewable energy. The evaluation looked at the evolution and the outcomes of the Bank Group’s approach from 2000 to 2017, and how well it helped developing countries address the myriad obstacles in the way of adopting renewable energy and seizing the opportunities presented by advances in RE technology, ranging from battery storage to solar and wind technology to system planning and integration of renewables.
In short, the World Bank Group has an important role to play. It is the single largest global contributor to RE in developing countries, where it is forecast that 70% of the required scale up in RE to meet the Clean Energy Transition goals will take place.
The Bank Group’s role in the development of RE extends beyond its financing, with support such as policy advice to create the right environment for RE scale up and the convening of partners to mobilize financing and technical support also having an important impact. Based on lessons drawn from almost two decades of Bank Group interventions, IEG has identified three key recommendations for leveraging the Bank Group’s comparative advantages to maximize the impact of its support for RE.
Recommendation 1: Focus on integration of renewable energy into the grid
The technical advances and the falling costs of wind power and solar photovoltaic present significant opportunities, but to seize them will require overcoming a common challenge presented by these RE technologies. They are variable because wind power only generates electricity when the wind is blowing, and solar photovoltaic only works when the sun is shining.
Countries will need to adapt their power systems to cope with these variable sources of electricity. Variable sources of power are projected to have the largest role in the RE scale-up, and the share of wind and solar photovoltaic in Bank Group RE projects has surged in line with global trends.
Integrating these variable sources of power into the grid to expand the power supply and replace higher carbon alternatives requires robust power system planning, adequate grid codes and standards for grid-friendly equipment, stronger and expanded transmission infrastructure to reach the often remote locations of RE installations, and the deployment of batteries or other storage technologies to convert variable sources of power into a continuous supply to the grid, known as base-load power.
Hydropower, which represented US$1 billion of the Bank Group’s US$4.5 billion RE portfolio from financial years 2018 to 2020, has the advantage of being able to store ‘fuel’. By building a reservoir along with the hydropower dam, water can be stored and released to generate more electricity when the grid calls for it. This flexibility can be used to balance the load on the grid and compensate for the intermittency of solar photovoltaic and wind power.
However, the scale of hydropower projects with storage are typically more complex to develop and can have greater environmental and social challenges. The Bank Group is supporting a decreasing number of large-scale hydropower projects with storage, with a shift to smaller-scale projects that rely solely on the flow of river water. In view of its track record as a dependable replacement for fossil fuels and its role in meeting the integration challenge, attention to developing hydropower with storage that meets high environmental and social standards should be a priority.
IEG found that less than 7% of the Bank Group RE portfolio in the evaluation period focused on integrating RE into power systems. With notable exceptions, such as the power system planning support to Egypt to develop its wind power, the majority of Bank Group projects focused primarily on addressing policy and regulatory barriers. While the latter is critical, developing countries will need support to meet the integration challenge to take advantage of the rapid expansion of wind power and solar photovoltaic.
Both China and Nicaragua had ambitious plans to expand wind power, and both faltered over lack of power systems planning to ensure the grid could handle the expanded source of intermittent power. The Bank Group is helping both countries address this issue, and lessons from experience should help guide similar integration challenges in other countries.
Recommendation 2: Take comprehensive approaches to addressing the barriers to RE
IEG found that RE development proved more successful when the Bank Group engaged systematically over time, strengthening its relationships, and progressively and comprehensively helping countries implement the necessary reforms to remove barriers to RE development.
These barriers include the right policies and regulatory environment to encourage the development of RE, power systems capable of integrating variable sources of power, the capacities to undertake new investments in RE and operate ongoing projects, and the ability to create the right environment to attract investors and mobilize the high up-front investments needed for RE.
The Bank Group can build on the comparative advantages its constituent institutions to provide the kind of comprehensive support that addresses multiple barriers. While the World Bank can utilize its lending and technical advisory capacity to focus on RE policies and integration, the Bank Group’s private sector arm, the International Finance Corporation (IFC) can work on mobilizing private capital and promoting the adoption of environmental and social performance standards and mechanisms for scaling-up, and the Bank Group’s risk guarantee agency, the Multilateral Investment Guarantee Agency can further extend its risk mitigation portfolio to cover a wider range of RE technologies.
This coordinated and comprehensive support can have a significant impact. In 2002, the World Bank and IFC coordinated to rehabilitate the Pamir hydropower plant in the very poor Badakhshan region of eastern Tajikistan, mobilizing private finance and development partners for the first private investment in the country’s energy sector.
Following the collapse of the region’s diesel plant, the local population in Badakshan had been forced to resort to wood as fuel, schools and other public institutions closed during the winter, and indoor pollution rose as economic activity stalled. The Pamir hydropower plant now ensures 96% of households in Badakhshan enjoy 24 hours of electricity per day, all year-round.
Recommendation 3: Keep Bank Group knowledge and skills up to date
While there have been notable successes, keeping up with the dynamic nature of RE requires cutting-edge knowledge. It is important for the Bank Group to keep its knowledge up to date of technological changes and the evolving nature of policy and regulatory requirements on RE overall and specifically on integration, including storage and distributed generation, as well as financial structuring skills to mobilize private capital investment in RE. This will require constantly updating knowledge on issues ranging from power systems planning to pricing policy and procurement.
Conclusion
There are a range of studies that propose different pathways to the Clean Energy Transition, but they are unanimous in calling for a momentous expansion of RE. The Bank Group has an important role to play in working with developing countries to achieve this goal. To maximize the impact of Bank Group support, IEG recommends prioritizing interventions that focus on integrating RE sources into power systems, as part of comprehensive, long-term country engagements, with coordinated Bank Group solutions, backed by specialized skills that are continually updated to help developing countries address their pressing and rapidly evolving challenges to scale-up RE.
Read IEG’s Evaluation of the World Bank Group’s support for electricity supply from renewable energy resources, 2000–2017
Pictured above: Manik, a solar pump operator for Nusra works near the solar panels in Rohertek, Bangladesh on October 12, 2016. Nusra is an NGO working to bring solar irrigation to farmers and solar home systems to families in Rohertek. Photo: © Dominic Chavez/World Bank
What works in public utility reform: Lessons from evaluations in the energy and water sectors
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Utility reform has never been more important. The COVID-19 pandemic has badly impacted utilities across the world. Many utilities are now under intensified financial stress due to budget reductions and a loss of revenue, resulting from a sudden drop in collection rates, suspension of billing, and tariff adjustment in some countries. This, in turn, has made it more challenging to ensure continued Show MoreUtility reform has never been more important. The COVID-19 pandemic has badly impacted utilities across the world. Many utilities are now under intensified financial stress due to budget reductions and a loss of revenue, resulting from a sudden drop in collection rates, suspension of billing, and tariff adjustment in some countries. This, in turn, has made it more challenging to ensure continued service delivery.
IEG recently published the synthesis Public Utility Reform: What lessons can we learn from IEG evaluations in the energy and water sectors?, a compilation of evidence of what worked and what did not work, and why, in World Bank support of public utility reforms in the energy and water sectors in its client countries. Its findings are even more relevant in the context of uncertainty about medium-to long-term outlook for recovery from the challenges imposed by COVID-19.
Well before COVID-19, financial viability and institutional accountability were the two main challenges faced by public utilities in improving service outcomes in the energy and water sectors. Now, the effectiveness of utilities in these two fundamental areas remain critical for ensuring the quality and sustainability of these vital basic services during a post-pandemic recovery.
Financial Viability
IEG analysis reveals a range of World Bank interventions geared to support financial viability in both the energy and water sectors.
Recovering the cost of service is at the core of sector reform. Across both water and energy sectors, inadequate cost recovery is a key driver of financial underperformance. Poor bill collection and operational inefficiencies (including excessive network losses) also have a significant role. IEG finds that, while tariff reform is fundamental, improving operational efficiency of service providers is crucial for financial sustainability. The cumulative evidence indicates that when inefficiencies result in high-cost service provision, improving utilities’ operational efficiency should precede or go hand-in-hand with tariff increases. Additionally, the gains from reductions in technical and commercial losses, improvements in payment collection, financial management, and demand side management proved easier to sustain once implemented.
Evidence points to the importance of strengthening utilities’ commercial orientation, which is vital for the provision of adequate and reliable services, regardless of whether the service delivery agents are under public or private ownership. Utilities that emphasize cost control, customer orientation, and responsiveness to incentives are more likely to make meaningful progress. For example, World Bank operations in Vietnam and Turkey helped improve financial sustainability of electric power utilities through technical support and policy reforms, incrementally implementing tariff and market regulations in the electricity sector.
Utilities may need more financial support as they weather the economic crisis triggered by the pandemic. However, as the recently published IEG evaluation State your Business! An evaluation of World Bank Group support to the Reform of State-Owned Enterprises cautions, temporary subsidies introduced at the time of COVID-19 can pose “policy traps” supported by powerful vested interests, which can be hard to reverse once the crisis is over.
Institutional Accountability
Creating the right accountability and incentives is essential for effective service delivery. In both energy and water sectors, institutional accountability is critically tied to performance. Sustaining reforms requires competent institutions and strong administrative capacity. Improved performance can be a first step towards attracting private sector investment.
Strengthening sector planning, utility management, capacity and skills, can improve sector outcomes. A solid sectoral fiscal, financial, and regulatory framework also defines and sets the context for leveraging markets and the private sector to support service delivery.
There are multiple institutional pathways that could lay the foundation for improved and sustained service delivery. There is no single model but there are certain principles that work.
In energy, improved accountability and regulatory performance drive sector outcomes. Good practices on corporate governance and regulation enable the sector environment to leverage markets and the private sector. In Rwanda, for example, the World Bank (through budget support operations), the International Finance Corporation (through advisory services), and Public-Private Infrastructure Advisory Facility (PPIAF) helped the government develop sector regulatory structures and separate water and electricity utilities to improve governance, accountability and transparency. Institutional and policy reforms transformed the Rwanda Energy Group into a commercially operated state-owned enterprise and helped attract private finance.
In water, improved capacity, incentives, and transparent rules on accessing funds can ensure good sector outcomes. Good financial and operational data systems are also important. In Peru, the utility Sedapal radically changed its corporate management approach and work culture, including adopting a new performance-based compensation and incentive system driven by reaching results targets. IEG’s field-based assessment confirmed a steady improvement in access coverage, basic service parameters, and operational and financial performance.
Political and social challenges
In both sectors, utilities' operations and management are closely linked to the political economy in which they operate. Political economy considerations can inform specific design elements, including choices of programmatic instruments vs. standalone operations, or front-loading vs. back-loading of important reform actions in a programmatic series. Experience shows that support to operations needs to match the time frame in which effective government action can reasonably take place. The World Bank’s experience shows that complementary interventions and sustained support contribute positively to favorable and enduring results.
Regarding tariff reform, the institutional, political, and social challenges are considerable. Public opposition to tariff reforms reflects a lack of confidence in public service improvements and that vulnerable groups will be protected. At the same time, it is important to address potentially negative distributional consequences of reforms through such measures as differentiated tariffs and targeted assistance programs. Their success depends on the government’s ability to reach vulnerable households through fiscally sustainable programs.
Read the report | Public Utility Reform: What lessons can we learn from IEG evaluations in the energy and water sectors?
Pictured at top, clockwise from left:
The main drinking water pipeline for 750 households in Alapars and Karenis communities (Kotayk region) being fully rehabilitated. Armenia. Photo credit: Armine Grigoryan / World Bank
The control room at the thermal power station at Takoradi, Ghana, June 21, 2006. Photo credit: Jonathan Ernst/World Bank
Electrical Substation in Kenya. Photo credit: Andrew Stone
Windmill, Nicaragua photo credit: Ihsan Kaler Hurcan
Wegala Community Water Supply and Sanitation Project. Sri Lanka. Photo credit: Simone D. McCourtie / World Bank
Girl gathers drinking water from a community water pipe. Photo credit: Dominic Sansoni / World Bank