The WBG should place greater emphasis on large-scale energy efficiency scale-up, as measured by energy saved and generating capacity avoided. This includes support for efficient lighting and exploring the scope for accelerating the global phase-out of incandescent light bulbs. It includes continued and expanded support for reductions in transmission and distribution losses. And it includes proactive search by IFC for large-scale, catalytic investments in energy efficiency. There is scope to coordinate World Bank support for demand-side energy efficiency policies with IFC support for more efficient manufacturing and more efficient products.
Original Response: IFC intends to increase its climate-related lending from 10 percent of annual commitments in fiscal 2009 to 2025 percent in fiscal 2015, and will undertake a proactive search for suitable investments. Energy efficiency is expected to be a significant contributor to meeting this target. IFC is piloting a set of approaches for estimating avoided emissions associated with real sector investments. IFC agrees with the potential for investments in manufacturing of more efficient products and is actively seeking such opportunities, having made several such investments in fiscal 2010.
More than $3 billion in annual climate business, with at least 20% of its annual long-term finance (LTF) and at least 10% of its annual Trade and Supply Chain (TSC) commitments to be climate friendly by FY15. The target is a percentage of volume and thus the $3 billion figure is dependent on actual growth in total lending.
The IEG report directs attention to energy efficiency, which offers low-cost or negative-cost opportunities to reduce carbon emissions. The report emphasized both with the importance of the scale-up of energy efficiency programs at a transformative scale and with the practice of measuring and evaluating results by energy saved and generating capacity avoided rather than funds dispersed by facility-by-facility, which can easily lead to inefficient effort. As noted in the management update, the EDGE Green Building Market Transformation Program that was launched in 2013 is now available for use by building designers for free when designing resource-efficient commercial and residential buildings in nearly 100 emerging market countries, and boasts a few thousand users. IFC has scaled-up its energy investments IFC's climate-related investment and advisory projects accounted for over 9.6 million metric tons of GHG emissions annually or the equivalent to taking more than 2 million passenger vehicles off the road. 31% of own account climate-related financing ($725 million) was for energy efficiency. IEG will continue to monitor the outcome of the IFC's initiative to grow IFC's industrial and commercial EE business in key sectors, including HVAC, refrigeration, and industrial EE.
FY15 was a record year for climate-smart investments with IFC climate business reaching 22% penetration in FY15, exceeding its publically stated target of 20%. Both own account and climate-related core mobilization were record-breaking, for a total of $4.5 billion. IFCs climate-related investment and advisory projects accounted for over 9.6 million metric tons of GHG emissions annually or the equivalent to taking more than 2 million passenger vehicles off the road. 31% of own account climate-related financing ($725 million) was for energy efficiency. IFC is in the process of hiring an Energy Efficient Specialist to help grow IFCs industrial and commercial EE business in key sectors, including HVAC, refrigeration, and industrial EE. In collaboration across WBG, IFC is also piloting an approach with municipalities on street lighting, and has advised countries in power crises with demand-side management improvements. Green buildings program continues to grow, with IFC's green buildings portfolio now exceeding $1 billion, with an additional $400 million in mobilized funds. The EDGE green buildings software is now live for building designers to use for free when creating their resource-efficient commercial and residential buildings in nearly 100 emerging market countries, and boasts a few thousand users. In FY15 IFC also supported four countries in the development and launch of their national green building codes, including Colombia, Indonesia, the Philippines, and Vietnam, and created global partnerships with major DFIs, including the CDC, FMO, and Proparco.
The emphasis of this recommendation was on catalyzing large-scale energy efficiency scale up. That is, going beyond (for instance) facility-by-facility retrofits to find ways to reorient the private sector towards energy efficiency at a transformative scale.
IFC's work on green buildings exemplifies this approach, as it seeks to shape building codes and certification in order to boost demand for efficient buildings and support developers and manufacturers to boost supply. Nascent engagement with lighting manufacturers moves in the direction of supporting incandescent bulb phase out. Other proposed actions also sound promising, but are not yet implemented.
A second aspect of the recommendation was to focus on actual impacts, rather than volume of funds committed. The ongoing implementation of GHG gas accounting at IFC and its integration into the IDGs is a positive development.
IFC is creating an energy efficiency (EE)strategy to focus and increase our engagements. Programs in EE are supported by 75 professionals across IFC and coordinated by 4 industry specialists in the Climate Business Department. For FY13, energy efficiencycommitments were $1.2 billion or 48% of investment volume.
IFC Development Goal 6 (IDG6), which measures GHG emissions reductions of IFC's climate-related projects, isin testing. In FY13, IFC investment and advisoryengagements reduced emissions by 6.12 million tonnes CO2 equivalent. As part of the testing process, IFC is developing a reporting and target-setting methodology. Targets are scheduled to go live in FY15.
On the advisory side, Resource Efficiency (REF) and Sustainable Energy Finance efforts include reducing losses in distribution and transmission of electricity and water, as well as in district heating utilities. REF cumulative results include enabling $439.5 million in investments (of which IFC was $137.1 million).
IFC is planning to expand its funding to utility-driven energy efficiency, including plant retrofit and end-use efficiency, and is now in discussion with utility-owned ESCos.
IFC has been expanding market intelligence on smart systems. The investment program has included companies on the leading edge of the smart grid and demand side management space.
In green buildings, IFC is proposing the EDGE Green Building Market Transformation Program, which has the potential for 5.27 million tCO2 e GHG reduction p.a. (1 million cars off the road per year), as well as 8,000 GWh electricity saved p.a. (equivalent to consumption of Costa Rica) and 235 million M3 water saved p.a. (equivalent to consumption of Trinidad and Tobago). The concept note is available at https://ifcicollaborate.ifc.org/docs/DOC-54870.
In energy efficient lighting, the Cleantech Investments Unit carried out an extensive review of technologies and business models. On street lighting, IFC's PPP department is engaged in several transactions at the municipal level through the ESCO approach.
IFC has long supported industrial EE retrofits, but is now reviewing its climate definitions to include greenfield industrial projects which are considered best in class. Methodologies are now being refined for cement and petrochemicals with other sectors to follow.
In energy efficient equipment, IFC is focusing on Heating, Ventilating, Air Conditioning (HVAC) through mapping and creating financial products for manufacturers, distributors, and vendors. In transportation, we invest in manufacturing of components that significantly improve fuel efficiency or enable the use of alternative fuels.
To implement EE strategy, IFC is exploring innovative business models for ESCos, and also working with banking partners to provide performance risk measures for financing ESCos. IFC is organizing an International ESCo Conference in Johannesburg, South Africa to bring both international ESCo and ESCo financing experience to help revitalize the ESCo market in South Africa.
IFC has been working on a Guidance Note on Coal, to provide clear guidance to managers and investment officers on investments that are "climate smart, encompassing industries such as manufacturing, district heating, and energy improvements in brownfield projects.
In resource-efficient agribusiness, IFC is proposing a $250 million Global Irrigation Facility which will provide investments and training for farmers to adopt efficient irrigation technologies. We are also investigating opportunities for deployment of smart systems and resource efficiency components to minimize energy and food waste through the supply chain.
In FY13, IFC surpassed its investment and advisory volume targets. Investment volumes were 18% over target (50% increase from FY12), while advisory spend volumes were 45% over target (almost double the increase from FY12).
The methodology for calculating the climate component of projects was harmonized across multinational development banks, while IFC's process for reporting and auditing the data was found to be in compliance with the end of year audit by Ernst Young.
Implementation Status: Active
The IEG report directs attention to energy efficiency, which offers low-cost or negative-cost opportunities to reduce carbon emissions. The report emphasized both with the importance of the scale-up of energy efficiency programs at a transformative scale and with the practice of measuring and evaluating results by energy saved and generating capacity avoided rather than funds dispersed by facility-by-facility, which can easily lead to inefficient effort. As noted in the management update, IFC globally and regionally launched EDGE Green Building Market Transformation Program in 2013 with the aim of 20% of new construction in target markets to be certified as green within 7 years. This is one of the examples of IFC's proactive search for suitable investments to scale-up of energy efficiency programs at a transformative scale. IEG also noted that IFC's commitment of $2.5 billion in climate business, with 19% of LTF and 8% of TSC in FY14. IFC indicated that work is in progress with selected FIs clients to assess market potential for developing a bankable pipeline of energy efficiency finance projects, including medium to long term credit lines and guarantees. This also includes sustainable energy finance for street lighting projects (example street lighting project in Turkey and Hungary). A second aspect of the recommendation was to focus on actual impacts, rather than volume of funds committed. In July 2014, IFC introduced its Development Goal 6 (IDG6) which measures GHG emissions reductions including an approach to quantify emissions reductions from EE projects. IFC indicated that targets for GHG reductions are now part of IFC Department Scorecard.
Energy efficiency is one of IFC's strategic focus areas for FY15-17, including: Sustainable cities, Agriculture and Food Security, and Industrial Efficiency. While EE is explicitly included in the third category, it is also implicitly included in the first two categories through sector focus on green buildings, district heating, efficient lighting and transport, and agriculture supply chain efficiency.
In Industrial EE, IFC is focusing on creating scalable, replicable financing solutions that increase market penetration of existing EE technologies. Climate Business Department is coordinating a team of IOs from MAS and FIG which is developing and testing models. Initial focus is on HVAC equipment.
IFC's EDGE Green Building Market Transformation Program was approved by IFC's Operations Group in 2013 and has since launched globally and regionally in Latin America, South and East Asia, and in South Africa. The program has raised $8 million in donor funds toward a $30 million, 7-year program. Through working with governments, developers, and banks, the program aims for 20% of new construction in target markets to be certified as green within 7 years.
Investments in smart systems have been streamlined through the Early Stage Investment Program (ESIP), now part of CTVVC department. The program invests in early stage companies with high impact, scalable potential, and has closed 7 climate-related deals in FY14.
In efficient lighting, IFC is working with IBRD to approach city clients as one WBG team and help them investigate public or private financing for efficient street lighting. The team is already working in several countries in LAC and in India.
IFC is also coordinating with IBRD to help countries respond to power crisis through energy efficiency in both supply and demand side of the power sector. In addition, IFC has steadily invested in efficiency for thermal power generation and in district heating improvements in cities.
Cool Cows, an inter-department initiative led by CBD on dairy sector efficiency won the IFC SPACE innovation competition. The team is now piloting financing and distribution solutions with technology providers for renewable energy chillers that will replace diesel generation and minimize spoilage in the dairy chain.
IFC Development Goal 6 (IDG6) which measures GHG emissions reductions has been live as of July 1, 2014, and includes methods to quantify emissions reductions from EE projects. As with other IDGs that are live, targets for GHG reductions are now part of IFC Department Scorecard. Training materials for staff includes online module and tip sheets.
In FY14, IFC committed $2.5 billion in climate business, with 19% of LTF and 8% of TSC.