19 November 2007 – World Bank Group funding for renewable energy – comprising wind, solar, biomass, geothermal, and hydropower – and energy efficiency projects, rose by two-thirds in the past year to US$1.43 billion, according to figures released recently.
The World Bank Group’s commitments to finance renewable energy and energy efficiency projects were up 67 percent in the 2007 financial year, which ended June 30, from US$860 million the previous year.
“The World Bank has strengthened its investment support and technical assistance for low carbon energy projects,” said Jamal Saghir, director, energy, transport and water department, World Bank. “This is reflected in the progress we made these last few years in expanding support for renewable energy and energy efficiency. Recognising the economic and environmental values of clean energy, the World Bank Group’s Clean Energy Investment Framework established in 2006 sets the stage for even greater support for low carbon economy development in the coming years.”
The World Bank Group has outperformed its 2004 pledge under the Bonn Commitment* to increase funding of new renewable energy projects (wind, solar, biomass and geothermal, as well as hydropower up to 10 MW per facility) and energy efficiency projects by 20 percent a year. From July 2004 through June 2007, the World Bank Group has committed US$1.8 billion for new projects, almost doubling its Bonn goal of US$913 million for the same period.
According to Rachel Kyte, Director, Environment and Social Development Department, International Finance Corporation, “IFC has learned a great deal in the process of identifying energy efficiency and renewable energy investment opportunities in recent years. Our investment of over US$450 million in 27 projects in the 2007 financial year is already substantial and reflects strong market demand for clean energy, but we expect this part of our business to grow much more rapidly in coming years with benefits for our clients and the environment – especially considering the need to respond to climate change.”
In financial year 2007, Bank Group financing, from the World Bank, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), as well as Carbon Finance operations and co-financed projects by the Global Environment Facility (GEF) included:
- US$421 million for new-renewable energy – wind, solar, biomass, geothermal, and hydropower up to 10 MW;
- US$262 million for energy efficiency; and
- US$751 million for hydropower projects with capacities larger than 10MW.
There has been a steady rise in the share of financing the World Bank Group committed for renewable energy and energy efficiency projects since 1990, with total financing topping US$11 billion. Financing for these projects amounts to one-fourth of the Bank Group’s commitments in the energy sector in the past three financial years since the Bonn commitment, up from about 12 percent from the 1990-94 period. It was 40 percent of the Bank Group’s commitments in the energy sector in the 2007 financial year.
The World Bank Group supported 63 renewable energy and energy efficiency projects in 32 countries with funding coming from various parts of the organisation.
- International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), US$549 million plus US$128 million in co-financing from the GEF and US$144 million from carbon funds;
- International Finance Corporation (IFC), including trust funds, US$457 million; and
- Multilateral Investment Guarantee Agency (MIGA), US$155 million.
* The World Bank Group’s Bonn Commitment
At the Bonn International Conference on Renewable Energies in 2004, the World Bank Group made a commitment to accelerate its support for new renewable energy and energy efficiency. WBG committed to increase its financial commitments for new renewable energy and energy efficiency at a growth rate of 20 percent per annum between fiscal years 2005 to 2009, compared to a baseline commitment of $209 million (equal to the average of the previous three years). The World Bank Group has outperformed its Bonn Commitment. From FY05 to FY07, WBG committed $1.8 billion for new renewable energy and energy efficiency compared to the Bonn commitment goal of $913 million for the same.
World Bank Group Commitments for Renewable Energy and Energy Efficiency in Fiscal Year 2007 (millions of dollars)
|Source of Funds
||New Renewable Energy
|World Bank (IBRD/IDA)||70||430||49||549|
|GEF (World Bank)||121||0||7||128|
|World Bank (Carbon Finance)||68||66||10||144|
|IFC (Own Funds)||154||140||156||450|
|IFC (Carbon Finance)||7||0||0||7|
|Source: World Bank Group
Note: Some columns may not add up exactly due to rounding
New Renewable Energy
Projects that had at least one of the following were considered projects with a new renewable energy component: solar energy or heat and power, wind energy for mechanical and electrical power generation, geothermal and biomass energy for power generation and heat, and hydropower of 10 MW or less per installation.
Energy efficiency comprises end use thermal and electricity efficiency activities (for example, industry, transport, buildings, appliances, and so on), power sector rehabilitation, loss reduction in transmission and distribution, and improvements in the efficiency of district heating systems. Hydropower rehabilitation projects which do not result in increased capacity (MW) are also classified as energy efficiency. However, this report does not include loss reduction due to rehabilitation of transmission or distribution networks toward meeting the 20 percent growth commitment if the share of transmission and distribution investments cannot be clearly disaggregated from other objectives, such as network expansion and load increase. It also does not include Development Policy Loan commitments unless the share attributable to efficiency can be clearly determined.
Hydropower > 10 MW
The World Bank considers hydropower, regardless of scale, as renewable energy. However, for reporting purposes, hydropower projects in which the installed capacity at a single facility exceeds 10 MW are reported separately. Pumped storage, run of- river hydropower, and hydropower projects with dams are included here if the capacity exceeds 10 MW.
The WBG supports projects that may be cross-sectoral in nature. For example, renewable energy and energy efficiency components may be embedded within an agricultural, health, or power project. In such blended projects, sometimes it is not easy to specify precisely what the size of each sectoral component is. In this report, as far as possible, great care has been taken to show only the commitment amount associated with new renewables, energy efficiency, or hydropower >10 MW. For example, the total commitment made by IBRD and IDA in a particular project may be $100 million. This project may have three different sectoral components: agro industry, 50 percent; health, 30 percent; and new renewables, 20 percent. In such a case, in this report, only US$20 million has been included as the project’s contribution to renewable energy.
Press release provided by the World Bank Group