Report

An Assessement of the
World Bank’s Clean
Energy for Development
Investment Framework
Nannan Lundin and Linus Hagberg
Table of Contents

Preface from the Swedish Society for Nature Conservation 1

Executive Summary 3
1. Background and introduction 5
2. Project description 9
3. A developing country/An African context 10
4. A micro-level assessment – from a technical perspective 13
5. Macro-level assessment – from a socioeconomic perspective 18
6. Conclusions and policy implications 27
7. Selected references 30
Acronyms and Abbreviations 32

Author: Nannan Lundin and Linus Hagberg

Coordinator: Göran Ek, Naturskyddsföreningen
Layout: Eleonor Pedersen, Elli Production
Photo: Shutterstock
Print: PÅ Media
Order No: 9078
ISBN: 91 558 0717 8
Produced with economic support from Sida. Sida has not participated
in the production of the publication and has not evaluated the facts or
opinions that are expressed.
 an assessement of the world bank’s clean energy for development investment framework
Preface from the Swedish Society
for Nature Conservation
2.4 billion of the world’s poorest people still lack access to
efficient, clean cooking and heating fuels and 1.6 billion are
still without electricity. Lack of access to basic energy serv-
ices has serious social, economic and environmental conse-
quences. In many developing countries, most women spend
several hours collecting firewood every day. Indoor air pol-
lution caused by open fires and inefficient stoves claims an
estimated 2 million lives each year. Without electricity, chil-
dren cannot learn after dark, medicine cannot be refriger-
ated, job development in rural areas is hindered, and safe
drinking water cannot be supplied to many places.
Renewable energy technologies such as wind, solar, mod-
ern biomass and geothermal could generate a double divi-
dend for the environment and poverty reduction, and as
such present logical responses to the problems of climate
change and energy poverty. Renewable energy sources pro-
duce insignificant greenhouse gas emissions that lead to
climate change, and they do not produce the other air pol-
lutants that the burning of fossil fuels creates to the same
amount, if at all. Renewable energy sources are available
locally, create local jobs and do not usually have significant
negative social and environmental impacts.
As a key player in international development the World
Bank could play a leading role in providing a framework for
“fast-tracking” renewable energy investments in the South.
Regretfully, however, it is the perception of the Swedish
Society for Nature Conservation that the Bank has not ful-
filled these expectations. For many decades, the World
Bank’s energy lending has focused on centralized, large-
scale, grid-based fossil fuels based thermal power and hydro­
power projects. In spite of many promises to “green” its
energy lending over the past 15 years, the World Bank’s
energy sector portfolio still fails to reap the double dividend
of renewable energy technologies that would fight both pov-
erty and climate change. The Bank continues to invest 2 to 3
billion US$ a year in greenhouse gas-producing energy
projects, which fuel climate change and often fail to help the
world’s poor. Financing for renewable energy projects made
up less than 5 percent of the Bank’s overall energy financing
in fiscal year 2006. Whereas the World Bank (IBRD/IDA)
increased its lending to the energy sector from 1.8 billion
US$ in FY 2005 to about 3 billion US$ in FY 2006, the lend-
ing for new renewable energy (without GEF) decreased from
139 million in FY 2005 to 136 million US$ in FY 2006.
As this report shows, we are now afraid that also the
Bank’s “Clean Energy for Development Investment
Framework” will not deliver the desired benefits. It is based
on scenarios for global greenhouse gas emissions at levels
that would allow “dangerous climate change” as defined by
the Intergovernmental Panel on Climate Change. The
framework also promotes additional funding for energy
technologies that have negative social and environmental
impacts – such as large scale dams (and speaks favourably
on nuclear power) – and that will in many cases further
contribute to climate change – i.e. coal based technologies.
The framework does not catalyze the necessary massive
shift to renewable energy technologies that could create the
double dividend of environmental benefits and poverty
reduction.
The Swedish Society for Nature Conservation (SSNC) ad-
vises the Swedish government and its colleagues in like-mind-
ed countries to ask the World Bank to do the following:
• End subsidies for fossil fuels and redirect energy financing
to renewable energy: More than 95% of WB energy financ-
ing is a subsidy to fossil fuels, and about 82% of this goes
to projects that export energy resources to the north and
do not improve access of poor people to electricity and
other energy sources. These resources should instead be
directed to renewable energy technologies in developing
countries.
1
 an assessement of the world bank’s clean energy for development investment framework
• Significantly step up efforts to meet the basic energy needs
of the poor: The rural poor are in greatest need of access to
electricity and efficient, clean and affordable cooking and
heating fuels. Renewable energy technologies based on
local availability are particularly appropriate options to
support rural off-grid electrification. The World Bank
should massively step up its efforts to support rural elec-
trification and renewable energy programs that are owned
and controlled by local people and based on their needs.
•A  dopt guiding targets for greenhouse gas emission reduc-
tions: A commitment to reduce emissions in line with the
UN Framework Convention on Climate Change should
guide the selection of investments by the World Bank.
Until these recommendations are fully implemented, we rec-
ommend that any additional resources, and such are urgently
needed, that Sweden and like-minded progressive countries
make available for energy investment in the developing world
should not be channelled through the World Bank.
In the case of, Sweden, it should draw on its rich experi-
ence in development co-operation with LDCs, and on its
strong commitment to the international community, and
target resources more specifically and efficiently at climate
and poverty issues via bilateral programs. The Swedish
2
International Development Co-operation Agency (SIDA)
has long-standing experience in providing financial aid and
technical assistance to low-income counties with the pri-
mary objective of combating poverty, and has great compe-
tence in the fields of climate and environment. We therefore
recommend that Sweden provide additional funding for
Sida’s climate change programme as an efficient and sustain-
able way to provide energy and development to the South.
SSNC has commissioned this report from IVL – The
Swedish Environmental Research Institute – in order to
provide a scientific analysis on the development impacts of
the World Bank’s “Clean Energy for Development Investment
Framework”, as well as provide a basis for our positions on
how Sweden can support sustainable climate change poli-
cies. The facts and conclusions in this report should be
attributed to the authors and not be seen as the official view-
points of SSNC.
Mikael Karlsson
President
Swedish Society for Nature Conservation
 an assessement of the world bank’s clean energy for development investment framework
Executive Summary
In the face of the pressing global climate change and the
contemporaneous need for safeguarding the development
prospect, the G-8 Gleneagles Summit 2005 and the recent
Bali Roadmap from the UN Climate Change Conference
2007 have put great emphasis on substantial, innovative and
proactive financial support to developing counties, who are
most vulnerable, but suffer most from the adverse impact
of climate changes. Taking account of the complexity in
energy-poverty linkage and the energy-climate nexus, the
World Bank (WB), as one of the most important multilat-
eral financial institutions, has put forward and implemented
the “Clean Energy for Development Investment Framework”
(CEIF) since 2006. The overall objective of the CEIF is to
improve the access to clean and modern energy for the poor
and to scale-up public and private investments for low-
carbon technologies as well as for capacity building in mit-
igation and adaptation actions. In this report, from a tech-
nical perspective and based on a socioeconomic analysis,
we perform a critical assessment of the CEIF in the light of
sustainable development and poverty alleviation, with a
particular focus on Least Developed Countries (LDCs) in
the Sub-Saharan Africa (SSA) Region.
As a highly diverse continent in terms of uneven distribu-
tion of natural resources and different stages of economic
development, the energy issues related to sustainable devel-
opment in Africa involve many technological, institutional
and regional dimensions. While the SSA region, in general
suffers from energy poverty and heavily depends on fossil
fuels such as coal and oil, institutional barriers, e.g. low
capacity and lack of both public and private investments in
national power utilities, have further deteriorated the po-
tential for development and improvement.
Against this background, the CEIF proposes the combi-
nation of large-scale grid extensions, mini-grid and various
renewable energy sources (solar, wind, hydro, biomass,
geothermal) as technical solutions to increase the energy
access for the poor as well as to support the transformation
to low-carbon economies in the SSA region. Furthermore,
support for energy efficiency and advanced clean coal tech-
nologies is also proposed for South Africa, which is equipped
with a certain degree of indigenous technical capacity and
heavily depends on coal for its energy supply. From a tech-
nical perspective we agree, to a large extent, with the pro-
posed technological options. The use of local resources in
the energy mix should be enhanced and small-scale and
sustainable energy solutions can more efficiently improve
energy access for the poor at low cost and with minimal
environmental impact. Nevertheless, despite the increased
financial commitment to renewable energy sources and
successful management and utilisation of carbon finance,
there are serious shortfalls in the WB’s investment frame-
work and a substantial risk if missing the window of oppor-
tunity of paving a genuine pathway for low-carbon and
climate resilient development.
Firstly, the investment portfolio still favours large-scale
hydropower projects and/or uncertain and expensive tech-
nological options in access and low-carbon projects. Even
more unfortunately, considerable resources are still allo-
cated to fossil-fuel based installations and projects.
Secondly, the dominance of large-scale projects and large
3
 an assessement of the world bank’s clean energy for development investment framework
project developers is still pervasive in the Clean Development
Mechanism (CDM). The CDM does not necessarily guaran-
tee the accessibility of the carbon market to Small and
Medium-sized Enterprises (SMEs) who are more active and
innovative in renewable technology markets.
Thirdly, while the role of sectoral reforms and private
participation are important for mobilising private invest-
ment, both historical experience and current observations
have illustrated that the “private cash-flow-driven strategy”
does not work well in low-income and basic-need domi-
nated markets, such as in the SSA-region. Instead, the con-
straints imposed by region- and local-specific institutional
4
and market conditions should be taken into account. Energy
policy reforms supported by the WB should integrate with
market liberalisation and sustainable initiatives in Africa
and link the power access targets with potential targets for
both renewable energy and sustainable development.
Finally, from a Swedish perspective, different channels of
financial and technical assistance should be explored. Based
on the long-standing experience of development co-opera-
tion in Africa the Swedish government and agencies could
contribute to poverty alleviation, integrated with mitigation
of and adaptation to the adverse impact of climate change.
 an assessement of the world bank’s clean energy for development investment framework
1. Background and introduction
As a significant outcome from the G-8 Gleneagles Summit on
“Climate Change, Clean Energy and Sustainable Development”
in 2005, the World Bank (WB), together with other regional
Development Banks were requested to develop a new invest-
ment framework. The overall objective of this initiative is to
improve the access to clean and modern energy for the poor
and to scale-up both public and private investments for
low-carbon technologies as well as for adaptation capacity
building and actions in developing countries. The agenda
emerge to be even more important in the context of the Bali
roadmap from the UN Climate Change Conference 2007.
It emphasised the enhanced actions of both mitigation of
and adaptation to climate change as well as the support to
developing countries, in terms of technology transfer and
financial resources, based on the principle of common but
differentiated responsibilities.1
In such a context, the new investment framework is of great
importance for addressing the manifold challenges faced by
national- and international policy-making bodies, such as:
• The development/poverty challenge: More than 2 billion
people are without clean cooking fuels and more than 1.6
billion without electricity in the developing countries.
These numbers unfortunately will not decrease signifi-
cantly in the coming decades (IEA, 2004).
•  The climate and energy challenges: More than 300 mil-
lion people per year in developing countries are affected
by climate-related disasters. Coal, as the largest GHG emit-
ter source, will nevertheless continue to be the key energy
sources in many years to come (IEA, 2006).
• The (emerging) climate- and energy regime challenges:
National governments and international communities
(such as the EU) in developed countries are to an increas-
ing extent giving priority to climate- and energy policies
at home. It is, however unclear how to bring developing
1 See, e. g. http://unfccc.int/meetings/cop_13/items/4049.php for more details.
counties on board in the post-Kyoto agreement and how
to establish an efficient but fair North-South burden-shar-
ing framework.
The complexities in energy-poverty linkage as well as in
the energy-climate change nexus are becoming more criti-
cal in the near term. The environment space is becoming
increasingly limited, especially when taking the need for
preserving a reasonable likelihood of keeping the 2°C
threshold into account. More importantly, both ongoing
and future delays of efficient and timely actions risk making
the battle against climate change more costly and time-
consuming. Delays can be due to narrowly defined national/
political interests in developed and developing countries as
well as because of unsettled issues with technology transfer
and provision of financial support that developing countries
require when taking common but differentiated responsi-
bilities.
The WB as a multilateral financial institution plays an
important role in international climate change actions. It
has the capacity of and long-standing experiences in provid-
ing financial assistance, facilitating technology transfer as
well as mobilising knowledge-intensive and network-based
human and institutional capacity building in developing
countries. In the face of persistent poverty and increasing
energy need in developing countries on one hand, and press-
ing climate change challenges at the global scale on the other,
the WB is anticipated not only to undertake swift actions to
combat climate-induced poverty, but also to demonstrate a
proactive stance and innovative approach when promoting
low-carbon and climate-resilient development in develop-
ing countries.
1.1  Key elements of the new investment framework
Since the G-8 Summit in 2005, the WB has presented the
outline of “Clean Energy for Development Investment
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 an assessement of the world bank’s clean energy for development investment framework
Framework (CEIF)” (World Bank, 2006a and 2006b) and
the subsequent proposal of and progress report on “The
World Bank Groups’ Action Plan on CEIF” (World Bank,
2007a and 2007b). The key elements in both the CEIF and
followed action plans are briefly presented in Table 1, for an
overview of the basic facts, on which the assessment and
analysis are based.
With the objectives to make and mobilise environmen-
tally responsible and socially and economically sustainable
investments, the CEIF and its action plans focus on:
•  A
����������������������������������������������������
development dimension, with emphases on energy ac-
cess and affordability for the poor.
•  Scaling-up
����������������������������
and climate-proofing��������������������������
investments in and ac-
tions of mitigation and adaptation.
•  Private sector participation to fill financing gaps and spur
low-carbon technology innovation and diffusion.
6
•  Private-public partnership for accelerating policy and
regulatory reforms and removing barriers faced by private
investors.
In addition to conventional financing sources, such as con-
cessional funds and public donations, new financial instru-
ments and approaches have been or are being created:
•  Carbon Partnership Facility (CPF) and Forestry Carbon
Partnership Facility (FCPF) as new carbon facilities to
scale up the use of carbon finance.
•  Global facility for Disaster Reduction and Recovery (GFDRR)
as an important new instrument for adaptation actions.
•  Assessment and Design for Adaptation to Climate Change
– A prototype Tool (ADAPT) as a new technical support
for climate risk-screening and integrating adaptation into
project design.
 an assessement of the world bank’s clean energy for development investment framework
Table 1 Key elements and action plan matrix of the CEIF
Pillar 1
Access to clean, safe and affordable
basic energy services for 250 million
people in Africa by 2030
Key elements Policy reform & regulatory framework
Energy access for the poor
Action matrix Increase energy coverage for
enterprises, households.
Enhance generation capacity for clean
energy.
Provision of energy services for public
facilities, such as schools and clinics.
Provide unconnected households with
affordable lighting.
Push for clean, sustainable cooking
and heating technology.
Funding needs & $165 billion p.a. needed for electricity
existing funding gaps supply (incl. $35 billion for electricity
access for the poor).
Current private & public resources
$80 billion p.a. available.
Concessional support needs to be
doubled to $4 billion p.a.
Pillar 2
Transition to low-carbon economy/
mitigation ( in G+5 countries)
Energy efficiency & Renewable
energy
Low-carbon technology & Carbon
finance
Scaling-up carbon finance.
New instruments:
Green Investment Schemes
Carbon Partnership Facility (CPF)
Forest Carbon Partnership Facility
(FCPF)
Adoption of multi-gas/multi-
sector strategy
De-carbonising power production
needs incremental investments of up
to $30 billion p.a. in non-OECD coun-
tries, on top of basic costs for power
generation.
Resources from GEF are limited
Carbon finance with great potentials,
but with
post-2012 uncertainty.
Pillar 3
Adaptation to & Reduction of
vulnerability
Supporting necessary adaptation
efforts
Climate proofing new
development projects
Integrating adaptation into
national planning
Development of risk sharing
mechanism
Technical assistance
Country/ regional case studies
on technology and other strategic
options
At least $1 billion p.a. needed for
project planning and additional
investments to climate-proof
development project portfolio.
7
 an assessement of the world bank’s clean energy for development investment framework
1.2  Reactions from stakeholders and the civil society
Because of its high-profile and profound future impact, the
CEIF has received great attention from interested parties.
While acknowledging the important actions taken by the
WB to contribute to the battle against climate change as well
as to safeguard the development prospect of developing
countries, the reactions from stakeholders and the civil
society, is nevertheless mixed in particular concerning the
following technical and structural issues:
• W hile the role of decentralised renewable sources of en-
ergy is emphasised in the CEIF and related action plans,
the role and the proportion of investments in fossil fuel-
based and large hydropower projects are questioned and
criticized.
“Financing for the energy sector in SSA increased signifi-
cantly in 2007 in line with the Africa Action Plan”, – This
increase is mostly due to the approval of funding for two mega
dams in Uganda ($360 million) and the Democratic Republic
of Congo ($297 million).
Global Policy Forum, 2007
• Despite the importance of technical innovations in the
transition to a low-carbon economy in developing coun-
tries, the investments in Integrated Gasification Combine
Cycle (IGCC) and Carbon Capture and Storage (CCS) are
still controversial because of the uncertainty in perform-
ance improvement and huge expenses on project imple-
mentation and technical equipments.
Promotion of IGCC and CCS, which are two untested tech-
nologies for use on coal fired power plants, with low antici-
pated efficiency gains (7–13% for gasification), but add be-
tween 30–60% to the price tag of an ordinary coal burner,
which means more debt for the poorest…
Wysham D., 2006
8
• W hile the urgent need for large-scale “buy-down” of in-
cremental costs and scaling-up of financial resources are
well perceived, the role played by carbon finance in devel-
oping countries is considered far from satisfactory.
The two new financial instruments: Carbon Partnership
Facility and Forest Carbon Partnership Facility raised caution
by many forestry experts who fear the FCPF may benefit indus-
trial scale logging, in particular in light of previous IFI-induced
forestry disasters such as in Congo.
Bretton Woods Project, 2007
• W hile the fact that the vulnerability of developing coun-
tries towards climate changes is well-recognised, both the
actions as well as financial resources devoted to address
this vulnerability are considered highly insufficient.
For the World Bank entire project portfolio (sampling projects
from FY2003 to FY2006), it was estimated that 55% of the
project are sensitive to climate risks and about 25% are at sig-
nificant risk. Furthermore, Bank’s country Assistance Strategy
papers do not address climate change and variability at all and
often overlook the risks of natural hazards under current cli-
mate conditions.
OECD, 2006
• W hile the role of private sector participation as well as the
importance of policy and sector reforms are emphasised,
the suitability and feasibility of these “Washington con-
sensus” – inspired approaches in energy sectors in develop-
ing counties remain questioned.
Full-cost recovery models are unlikely to deliver quality, afford-
able service to a large number of poor users in Nicaragua and
Nigeria. The process of energy sector privatisation has reduced
poor people’s access to energy because of increased tariffs and
locked the countries into high oil imports and high carbon
emission in its power generation.
Christian Aid, 2006
 an assessement of the world bank’s clean energy for development investment framework
2. Project description
Against the above background, the objective of this assess-
ment report is, from a technical perspective, and based on
a socioeconomic analysis, to examine the CEIF in the light
of sustainable development and poverty alleviation, with a
particular focus on Least Developed Countries (LDCs) in the
Sub-Saharan African (SSA) region, as well as in the context
of the recent development of middle-income developing
counties in Africa, such as South Africa.
Prior to the detailed assessment, we first provide a brief
overview of a developing country/an African context in
terms of the structure of the power sector, access- and ef-
ficiency lag as well as the climate vulnerability that the poor-
est regions are facing (Chapter 3). The assessment of the
CEIF is based on the combination of a micro-level analysis
of different technical options included in the investment
portfolio (Chapter 4) with a macro-level analysis of the in-
vestment performance and strategy from the standpoint of
poverty alleviation and sustainable socioeconomic develop-
ment (Chapter 5). More specifically, the following key ques-
tions are addressed:
•T o identify the technical issues involved in the CEIF, e.g.
the distribution of the technology investment portfolio
and its implied strategic priorities.
•T o outline the feasibility of implementation in terms of
cost-effectiveness, accessibility and environmental im-
pacts associated with identified technical issues.
•T  o address the short-run socioeconomic impact of the
CEIF, in terms of market and institutional conditions on
the least developed countries in the SSA-region.
• To assess the long-term socioeconomic impact of the CEIF,
in terms of sustainable human and technological develop-
ment on developing countries.
By integrating micro- and macro-level analyses, and from
a policy-making perspective, policy implications in the fol-
lowing fields will be taken into consideration (Chapter 6).
•T  o what extent and how quickly the WB has managed, or
will manage to make a meaningful shift and scale-up of its
energy portfolio towards clean, renewable energy options.
• To what extent the carbon trading and carbon finance will
not only generate sufficient emission reductions and cash
flow, but also contribute to sustainable development in
developing countries, in particular in the least developed
ones.
• To what extent the WB investment in clean energy will
meet the need for narrowing the energy demand-supply
gap in developing countries, in particular when taking
country-, region- and local-specific economic, social and
institutional conditions into account.
•F  rom a Swedish perspective, which strategies/options can
be relevant for the Swedish government and agencies to
assist with poverty alleviation and to promote low-carbon
economic development when providing foreign aid and
investment in Africa?
9
 an assessement of the world bank’s clean energy for development investment framework

3. A developing country/An African context

African countries are highly diverse and include a number
of OPEC oil producers, such as Nigeria, Algeria and Libya,
as well as coal-rich South Africa. In the contrast to these
energy-rich countries, the energy-poor countries in the
sub-Saharan region face great challenges and suffer from
grave poverty because of the lack of access to modern
fuel and electricity. In addition, desertification and defor-
estation caused by the use of fuel wood mutually reinforce
each other. In recent years, climate change in the form of
higher temperature and more frequent extreme weather
events has made the situation even more severe. Therefore,
the energy issues in the sustainable development involve
various institutional, technological and regional economic
dimensions.
3.1 The structure of power sector in Africa:
technical, financial and institutional
performance2
The Africa power sector is characterised by small systems,
with over 75% of the continent’s installed capacity coming
from South Africa and North Africa. The installed capac-
ity of most SSA countries ranges from 10 MW to 2000 MW.
In addition, only 14 out of the 53 African countries have an
installed capacity of 1000 MW and above, which implies
that over 80% of SSA countries have small systems with less
than 1000 MW of installed capacity.
It is also important to note that, in these SSA countries,
the effective power capacities are only a fraction of installed
capacities. The system loss, due to poor maintenance on the
transmission and distribution systems as well as faulty de-
sign factors, can be as high as 41%, which is very high com-
tricity delivered, but also affects the financial performance
of the power utilities, of which most are public-owned.
The African power sector is also overwhelmingly domi-
nated by conventional thermal power generation, in forms
of large coal-fired power plants in South Africa and large
oil- and gas-fired power plants in North Africa and Nigeria.
Thermal power generation thus accounts for 80% of Africa’s
total electricity production in 2004, while hydropower gen-
eration contributed 16.5%, nuclear power 2.5% and renew-
able energy sources 0.6%.
Both production and consumption of electricity were
dominated by South Africa and five Northern African coun-
tries, which account for above 80% of Africa’s total produc-
tion (539 TWh) and consumption (477 TWh) in 2004. The
remaining 46 SSA countries (excluding South Africa and
Nigeria) accounted for less than 20% of production and
consumption.
In terms of carbon emission, the SSA-region has the least
per-capita emission level worldwide. However, because of
absence of efficient introduction of clean technology and
low energy efficiency, the carbon intensity, which is meas-
ured as national carbon emission per unit of GNP has re-
mained constant in the past decades, instead of decreasing
as in many industrialised countries.
Table 2 Carbon dioxide intensity comparison (IEA, 2004)
Co2 intensity 1990 Co2 intensity 2003
tonne per million US$ tonne per million US$
Region (value, year 2000) (value, year 2000)
Africa 444 441

pared with the international standard of between 10–12%. Europe 510 396
The poor technical performance in form of high level of
USA 701 562
system loss not only further constrains the quantity of elec-

2 The facts on the power sector in Africa presented in this session are based on the information from the annual World Energy Outlook, which is conducted by International Energy Agency (IEA, 2004 and IEA,
2006) and the information from the UN Economic Commission for Africa website: http://www.uneca.org.

10
 an assessement of the world bank’s clean energy for development investment framework
Most African electricity supply utilities have been govern-
ment-owned and operated. The urban areas have been the
priorities for grid supplies and the location for generating
capacity. As providing grid electricity to dispersed rural
population is expensive, technically difficult (often ineffi-
cient) and with limited return on investment, to date, no
SSA countries has managed to provide a grid to reach a ma-
jority of the rural population. The limited energy supplies
to rural areas in Africa made energy very expensive for the
poor, in relation to their income level and is getting more
expensive because of the oil price shock since 2006. For in-
stance, the energy poor Africa spend about $17 billion a year
on fuel-based lighting (such as fuel-based kerosene lamps)
and/or battery lighting.
3.2  Access- and efficiency lag and poverty
In year 2000 the United Nation (UN) adopted eight
“Millennium Development Goals” (MDGs), which aimed
Figure 1 Power poverty and the Millennium Development Goals (IEA. 2004)
Million people
2,500
2,000
1,500
People to gain
access to electricity
to reach MDG
1,000
500
0 2015 MDG target
People without electricity People relying on traditional biomass
to eradicate extreme poverty worldwide. Because of the
strong link between income-level and access to modern
energy services, to reduce the proportion of people living
on less than $1 a day by 50% by 2015 is closely associated with
increases in electrification rate and reduction in inefficient
use of biomass for cooking and heating. Therefore, to bridge
the access- and efficiency gap in power utilisation, together
with the above structural problems in the power sector are
the key sustainability issues in the poorest countries in
Africa. If the MDGs were to be reached, 500 million people
more would need to be electrified and 700 million people
would need to switch away from unsustainable biomass in
2015. Furthermore, the females (and children) in the labour
force suffer most from the health problem and unproductive
labour utilisation, associated with traditional biomass.
Thus, “energy has an explicit gender dimension when con-
sidered from the poverty point of view” (EAC, 2006, East
African Development Strategy).
People to switch
away from traditional
biomass to reach MDG
2002
2015 Reference Scenario
11
 an assessement of the world bank’s clean energy for development investment framework

3.3 Climate vulnerability versus aid
and adaptation deficit
The developing countries, in particular in the poor SSA-
region (also South Asia) are more vulnerable to climate
change in form of extreme weather events and larger vari-
ability of weather. These countries are highly dependent on
the agricultural sector, which accounts for around 20% of
their GDP and more than 50% of their total labour force,
but at the same time, face constraints of limited arable land
as well as poor soil quality (UN, 2008).3 The economic re-
sources available as well as the institutional capacity for
dealing with climate change are highly constrained in the
poorest African countries. Furthermore, at the household
level, with limited access to insurance, social safety nets and
savings, the adaptation to the climate change of the poor
population is to a large extent, on a “self-help” basis and they
could easily be locked into a downward cycle of poverty.
In the face of urgent and increased need for financial re-
sources as well as enhanced effectiveness in international
climate change actions, the multilateral financial aid to
Africa, excluding debt relief and humanitarian aid, has
hardly increased since 2004.
In terms of multilateral financial aid to deal with climate
change in developing countries, the “adaptation deficit” is
even more apparent. The amount of adaptation related
funds reached only $26 million by the end of 2006. Some
estimates show that the support to a new global investment
in adaptation of at least $86 billion annually, or 0.2% of
OECD counties’ combined GDP, is needed to climate-proof
infrastructure and build the resilience of the poor to the
adverse impact of climate change (UN, 2008).

Figure 2 Core development aid to Sub-Saharan Africa 2000–2006 (UN, 2008)

Total net ODA to SSA in
constant 2005 US$ billions
45

40

35

30

25

20

15

10 Net Debt Relief Grants

5 Humanitarian Aid
Development Projects, Programmes
0 and Technical Co-operation
2000 2001 2002 2003 2004 2005 2006
estimates

3 The exact numbers for the SSA is 16% of GDP and 58% of total labour force, and 17% of GDP and 55% of total labour force in South Asia in 2004.

12
 an assessement of the world bank’s clean energy for development investment framework
4. A micro-level assessment
— from a technical perspective1
A majority of developing countries heavily depend on fossil
fuels as coal and oil for their energy needs. Of the 47 poor-
est countries, 38 are net importers of oil, and 25 import all
of their oil (Worldwatch Institute). Access to energy for the
poor in developing countries has, to a large extent, been
enabled through government subsidies for grid extensions
or supply of fossil fuels. In the CEIF, the combination of
large-scale grid extensions, mini-grid and various renewable
energy sources (solar, wind, hydro, biomass, geothermal) is
proposed as technical solutions to increase the energy access
for the poor as well as to support the transformation to low-
carbon economies in developing countries. Furthermore,
support for energy efficiency and advanced clean coal tech-
nologies is also proposed, for middle-income developing
countries, which are equipped with a certain degree of
indigenous technological capacity and heavily depend on
coal for their energy supply.
4.1 Technological options for energy access
for the poor4
4.1.1 Grid, mini-grid or off grid applications
In low-income developing countries where both the size of
the grid and the load growth are small, it is often more eco-
nomical to add several small power units than a large central
power plant. Taking advantage of local renewable resources
such as wind, hydro, biomass or geothermal and construct-
ing smaller power stations may provide energy security and
avoid some of the uncertainty associated with international
fuel prices as well as the risk associated with financing and
constructing large-scale power plants. The cost of small grid
connected geothermal and wind power are estimated at US¢
4–6/kWh and several biomass technologies (biomass gasi-
fier, biomass steam and waste-to-power via anaerobic diges-
tion) are all estimated to cost around US¢ 5–7/kWh. While
large hydropower is associated with high environmental and
4 The technical descriptions of various energy technologies provided in this session are mainly based on information from the Energy Sector Management Assistance Program (ESMAP, 2007).
social risks that have to be cautiously addressed and has
shown difficulties to attract private participation, many
small and medium run-of-river projects have low environ-
mental consequences, no resettlement complications and
limited financial risk, which make them bankable by the
private sector. Small run-off-river hydropower is an option
both for grid, mini-grid and off-grid applications.
Mini-grid applications are village- and district-level iso-
lated networks with loads between 5 kW and 500 kW. As the
WB recognises, mini-grid or off-grid solutions based on
renewable resources such as hydro, solar, geothermal or
biomass are often most cost-effective for rural and peri-
urban areas in the least developed countries, at a cost level
of US¢ 6–15/kWh. For improving the energy access of the
poor with minimal climate impact, these renewable tech-
nologies are many times the best option.
For small isolated loads, off grid solutions of renewable
technologies (including solar PV, small wind, pico-hydro
and geothermal) are estimated to be the most cost-effective,
although they are still relatively expensive (US¢ 30–50/
kWh), with pico-hydro as a notable exception at only US¢
12/kWh. The cost for a small, stand-alone gasoline or diesel
engine generator is estimated at US¢ 45–60/kWh.
Furthermore, the cost for several of these renewable tech-
nologies with high initial cost will decline considerably
when both the leaning- and scale- effects are in place, as in
the case of conventional technologies. From the standpoint
of technological feasibility and cost-effectiveness, as the WB
(2007) states, it is not a question of “if,” but ”when,” the goal
of a self-sustaining solar PV or wind power market in devel-
oping countries will be reached.
4.1.2 Mini, micro and pico hydropower system
Mini and micro-hydro power projects are usually run-of-the-
river schemes that divert some of the water flow through civil
13
 an assessement of the world bank’s clean energy for development investment framework
works, for example, an intake weir, fore bay, and, for micro-
hydro options, a penstock. Since no water catchments or
storage is needed, the environmental impacts are very small.
A drawback of these applications is seasonal variation in flow,
making it difficult in some cases to balance load with power
output. A pico-hydroelectric power plant is much smaller
than a micro-hydro (a few hundred Watts), and incorporates
all of the electro-mechanical elements into one portable de-
vice. They are typically installed on the river or stream em-
bankment and can be removed during floods or low flow
periods. The power output is sufficient for a single household
or small business. Because micro- and pico-hydro systems
are simple, scalable, reasonably reliable and at low cost, they
provide a source of cheap, independent and continuous power
without the need for environmental safeguards.
A hybrid solar photovoltaic-wind power configuration
is a potentially attractive arrangement for small loads (100
kW or less) in an off-grid or mini-grid configuration. It al-
lows each renewable resource to supplement the other, in-
creasing overall reliability without having to resort to other
backup sources such as diesel generators.
4.1.3 Large hydropower
A large part of the investments on renewable energy of the
WB has been large hydropower projects (>10 MW), as this
is considered the most cost-effective grid connected renew-
able energy application, but nevertheless controversial.
On the one hand, large hydropower increases energy
security and adds reserve capacity to back up intermittent
sources, such as wind and solar (and thermal). Since it relies
on local renewable resources, the dependency on increas-
ingly expensive fossil fuels is reduced. Hydropower storage
projects- when designed and operated in a sustainable way
can help manage the drought and flood stresses of natu-
rally volatile hydrology and contribute to water security.
On the other hand, there are potential environmental
and social impacts, which include sediment transport and
erosion, relocation of populations, impact on rare and en-
14
dangered species, loss of livelihood and passage of migra-
tory fish species in hydro power plants. According to The
World Commission on Dams (2000), large dams generally
have a range of extensive impacts on rivers, watersheds and
aquatic ecosystems and can lead to irreversible loss of fresh-
water species and ecosystems. Large dams have so far dis-
placed 40 to 80 million people. In tropical areas the risk for
great emissions of methane from shallow dams, where veg-
etation is not removed prior to inundation, is also signifi-
cant. Therefore, the climate impact of large hydropower
plants in tropical regions can be quite high if it is not man-
aged properly. A case study from the Tucurui Dam in Brazil
shows that the GHG emissions per kWh are similar or up to
double as high as for conventional thermal plants based on
fossil fuels (World Commission on Dams, 2000).
Taking account of all the risk factors associated with
social and environmental sustainability, the large hydro-
power project might not end up so cost-effective. For pov-
erty alleviation, it is also questionable with large hydro-
power projects. The poorest are, in principle excluded from
the grid-connection, while smaller off-grid or mini-grid
solutions are often the only cost-effective solution to achieve
power access to the poor in rural areas. Furthermore, the
potential negative impacts from large dams will also pre-
dominantly affect the poor.
4.1.4 Biomass technologies
In many developing countries there are vast biomass resourc-
es that are used very inefficiently. Biomass is predominantly
used for cooking, lightning and heating in very inefficient
stoves. Such traditional use of biomass has significantly neg-
ative impacts on various dimensions of sustainable develop-
ment, which involves deforestation, local (indoor- and out-
door) pollution because of incomplete and inefficient
combustion as well as health problems in forms of respira-
tory diseases and unproductive labour use (in particular
female labour force).
By assuring sustainable forestry and energy crop cultiva-
 an assessement of the world bank’s clean energy for development investment framework
tion, biomass steam power plants is a low-carbon alternative
for grid applications that will lead to regional development,
employment and more efficient use of biomass for energy
supply. The use of local biomass resources such as wood or
agricultural residuals will provide energy security and avoid
some of the uncertainty associated with international fossil
fuel prices. In urban areas waste-to-energy projects can
mitigate the methane emissions from landfills and provide
energy from a cheap resource. Waste combustion heat and
power plants or anaerobic digestion of municipal waste are
two low carbon energy technologies that also address in-
creasing waste problems in developing countries.
For mini-grid applications there are two particularly
promising technologies according to ESMAP (2007) – biogas
digesters and biomass gasifiers – that may be the most cost-
efficient. The digestion residual can be used as fertilizer in
local agriculture.
4.2  Technological options for low-carbon economy
The technological options proposed in the CEIF for tran­
sition to a low-carbon economy focus on the following
approaches:
1. Low-cost and high-impact solutions based on existing
financially viable technologies. This includes efficiency
improvement of existing coal thermal plants and hydro-
power plants, insulation of buildings, and loss reductions
in power transmission and distribution.
2. New technologies such as supercritical and ultra-super-
critical coal technologies and later integrated gasification
combined cycle (IGCC) with carbon capture and storage
(CCS) should be promoted to substitute conventional, less
efficient, sub-critical coal plants. Natural gas is important
as a bridging fuel in the transition period until renewable
energy technologies become commercially viable.
4.2.1 New efficient coal plants
Coal-steam electric power plants typically have a pulverized
coal (PC) boiler where coal is combusted, creating steam
which passes through a turbine to generate electricity.
Design steam temperatures of sub-critical plants have nor-
mally been set at 540°C. The adoption of new high strength
ferritic steels has recently enabled the steam conditions to
be raised above 25 MPa, 566°C, with the current maximum
boiler outlet steam temperature being about 593°C to 600°C
(so-called “Ultra-Super Critical (USC)” conditions). With
higher steam conditions, the thermal performance increas-
es. According to the WB (2006a), a conventional small sub-
critical coal plant in Asia has an efficiency of just 25%
whereas a large supercritical and ultra-supercritical coal
plant have an efficiency of 36% and 42% respectively (Table
3). The emissions of CO2 for the sub-critical coal plant is
estimated to about 1360g CO2/kWh compared to about 940
and 810g CO2/kWh for a supercritical and ultra-supercrit-
ical coal plant, respectively. The CO2 emissions from these
new coal plants are lower, but are still very high compared
to renewable energy or natural gas.
According to ESMAP (2007), conventional power gen-
eration technologies (open cycle and combined cycle gas
turbines [CCGTs], coal- and oil-fired steam turbines) re-
main more economical for most large grid-connected ap-
plications, even with increases in oil price forecasts. Using
Super-critical or USC for very large (over 500 MW) power
plants is estimated most cost-effective when fuel prices are
high and CO2 reductions are sought.
In the CEIF, new efficient coal technologies are consid-
ered important near-term initiatives for the transition to a
low-carbon economy in developing countries. From a near-
term financial point of view, these clean coal plants may
sound wise, as they are estimated to be most cost-effective.
However, a continued reliance on coal for power production
will not tackle the climate change sufficiently. Substituting
old and inefficient coal plants with more efficient plants will
lead to less CO2 emissions per generated kWh. But the total
emissions will still increase rapidly with every new installed
unit as long as the power production is based on fossil fuels.
To really achieve emission reduction, these technologies rely
15
 an assessement of the world bank’s clean energy for development investment framework

Table 3 Coal plant technologies and estimated efficiency, cost and CO2 emissions
(World Bank, 2006a and ESMAP, 2007)
Supercritical
Sub-critical Super critical USC IGCC Fluidized bed
Plant (Asia) (Asia) (OECD) (OECD) (OECD)

Plant size MW 50 600 500 300 500

Efficiency 25% 36% 42% 42% 40%

Total
US¢/kWh > 4.47 4.29 4.29 5.39 –
generating cost1)

CO2 g/kWh 1362 938 811 811 851

1) Economic assessment of total generating cost for a plant size of: Subcritical: 300 MW, Supercritical: 500 MW, Ultrasupercritical: 500 MW, IGCC: 300 MW. ESMAP (2007).

on CCS and the WB has considered coal power technologies
with CCS as the most important pathway for the transition
to low-carbon economy in developing countries in the me-
dium term.
Nevertheless, the WB concludes also that, most current
planning methods are inadequate for comparing fuel-inten-
sive thermal generation technologies with fuel-free capital
intensive renewables, such as hydro, wind, and geothermal
because of difficulties in handling fuel price risk systemati-
cally (World Bank, 2007d). However, in the longer run, it
will be increasingly beneficial with renewables, which does
not use fuel and has much less environmental impacts.
4.2.2 ”Clean coal” technology and Carbon capture
and storage
To mitigate the high emission levels of SO2, but also NOx,
and toxic compounds from coal combustion, new “clean
coal” technologies are being developed, and promoted by
the WB in the CEIF for pollution mitigation in energy pro-
duction in developing countries. Depending on how the
“washed” compounds are deposited, these technologies can
reduce the regional health and pollution problems associ-
ated with coal plants. The emissions of CO2, however, re-
main high and pollution and health problems from coal
mining are still major environmental and social issues.
Clean coal is also referred to as CCS, where carbon dioxide
is separated and sequestered from the flue gas from conven-
tional coal plants and then transported and permanently
stored in geological formations, deep ocean masses or in the
form of mineral carbonates. IGCC is an emerging coal tech-
nology with much better environmental performance than
conventional coal plants and is suited for carbon capture
from the syngas prior to combustion.
The WB (2006a) has estimated the cost for conventional
and new power plant technologies with CCS. The untested
Integrated Gasification Combined Cycle (IGCC) is consid-
ered the most suitable coal technology for CCS. With CCS,
the estimated generating cost will increase with 20–55% for
IGCC, and 40–70% for a supercritical coal plant or NGCC
(Natural Gas Combined Cycle). However, these figures do
not include cost of CO2 transport and storage, which is es-
timated to increase the energy cost by an additional 30–60%
(IPCC, 2005). For new supercritical pulverized coal (PC)
plants using current technology, the extra energy require-
ments for CCS range from 24–40%, while for natural gas
combined cycle (NGCC) plants, the range is 11–22% and for
coal-based IGCC systems it is 14–25%, resulting in increased
fuel consumption (IPCC, 2005).

16
 an assessement of the world bank’s clean energy for development investment framework
In addition, there are still many uncertainties with the CCS
technology. CCS is still untested and critics point out that
there are still no proven CO2 storage facilities. Ocean stor-
age is poorly understood and the storage will not be perma-
nent. 30–85% of CO2 would be retained after 500 years for
depths 1000–3000 m, according to IPCC (2005). In well-
selected geological formations, CO2 can be trapped for mil-
lions of years and 99% of CO2 are likely to be retained over
1000 years. Even with CCS, the power production will not
be emission-free. Capture, compression, transportation and
injection of CO2 are energy intensive processes, which will
cause additional emissions of both CO2 and other substanc-
es along the CCS chain. According to a life cycle analysis,
CCS reduced the CO2 emissions by approximately 80% dur-
ing the life cycle for an IGCC plant. However, the emissions
of SO2 and NOx increased with 20% and 60% respectively
(Mayer-Spohn, 2007). Another life cycle analysis of CCS
applied to conventional pulverized coal plants shows simi-
lar results; the CO2 emissions can be reduced by about 75%
whereas the emissions of human toxical, eutrophicating and
acidifying compounds increased considerably (Zapp et al,
2007).
Finally, these coal technologies with CCS are suitable for
very large plants (>500 MW) due to high capital costs and
at the same time, dependent on efficient distribution sys-
tems to a storage reservoir for the captured carbon. This is
an option for large grid applications in middle-income de-
veloping countries with vast resources of coal, if the CCS
technology proves to be reliable and cost-effective. However,
environmental, social and health problems often associated
with the coal mining industry in developing countries (such
as China) still remain.
To summarize, for many developing countries, which are
already highly dependent on imports of fossil fuels for their
energy needs and/or with inefficient use of large-scale power
generation, it is important to enhance the use of local re-
sources in their energy mix. In particular, the small-scale
and sustainable renewable energy solutions will more effi-
ciently improve energy access for the poor, but with low cost
and minimal environmental impact.
17
 an assessement of the world bank’s clean energy for development investment framework

5. Macro-level assessment
– from a socioeconomic perspective

From a socioeconomic perspective, the WB’s investments
and strategy for clean energy involve two important issues
that need to be taken into serious consideration, namely:
• How to build an energy infrastructure and institutional
capacity to meet the large incremental energy demand in
developing countries?
• How these energy projects and technical assistances should
be/are being implemented, and how this will affect local
and global sustainable development?
5.1 An overview of the investment portfolio
– a quantitative analysis
The World Bank Group (WBG), i.e. the World Bank, its in-
house facilities and its private affiliates IFC and MIGA has,
in its Action Plan made a clear statement of its ambition to
“address poverty reduction, mitigation and adaptation to-
gether”.

Table 4 Sector breakdown of WBG Energy Lending FY03-07 (in US$ millions)
% in total
Energy sector FY03 FY04 FY05 FY06 FY07 FY 2007

Low-carbon 237 299 781 1461 677 19

Access 684 475 627 727 482 13

Blended low-carbon & access 128 52 440 281 757 21

Transmission & distribution 90 103 200 645 469 13

Oil, gas and coal 325 496 529 1037 628 17

Thermal generation 461 191 76 510 360 10

Other energy 462 100 196 130 231 6

Grand total 2388 1716 2848 4794 3604 100

Total low-carbon 365 351 1221 1794 1434 40

Total access 813 527 1067 1008 1239 34

In terms of investment in energy access for the poor, the invest-
ment amounted to $1.2 billion. However, this figure was to a
large degree, inflated by the amount of “blended low-carbon
and access”, which was up to $757 millions because of two large
hydropower projects in Congo and Uganda. Otherwise, the
access investment has decreased since FY 2005.
In addition to the need for increased investments in en-
ergy access for the SSA-region, a multi-functional strategy/
approach is required to more efficiently address the local
need of energy services for households and communities.
The current energy access projects are often based on a
single-functional approach with a traditional view of elec-
trification. For instance, cases of rural electrification only
meeting lighting needs are many, while good lighting will
only improve comfort in the vicinity (ADB Finesse Africa
Newsletter, 2006). The electrification program design needs
to be an integrated and holistic approach, which addresses
the need for the overall human development in terms of
lightening, heating, educational and business activities.
One of the strongest arguments, raised by NGOs and the
civil society against the WBG’s energy lending has been the
large share of fossil-based investments in oil, gas and coal
projects. According to the calculation by the Bank Informa­
tion Centre, the IFC provided more than $645 million to oil

18
 an assessement of the world bank’s clean energy for development investment framework

and gas companies in FY 2007, which resulted in a statement
by 200 organisations from 56 countries to call on the WBG to
“tackle the issues of energy poverty and build clean energy
pathways rather than subsidising big oil”. From the WBG’s
own statistics, it shows that $628 millions were allocated to
“Oil, gas and coal” lending, which accounted for more than
17% of the total ($3.6 billion) in FY07.
While the local production of oil and gas by large compa-
nies in Africa is, to a large extent for export, the benefit brought
to the local population is highly limited. Furthermore, the
adverse social and environmental impacts associated with the
oil and gas production have been substantial. For instance,
according to an earlier IEA study (2000) and the WB’s own
estimates, the oil and gas extraction plants in Africa, to a large
extent, still flare gas as waste. This wasted energy is equivalent
to 12 times the energy that the continent uses and the flaring
releases carbon directly into the atmosphere.
In terms of renewable energy and energy efficiency, there
has indeed been steadily increasing support for renewable en-
ergy and energy efficiency, which can be motivated by several
factors. First of all, the climate change has increased the aware-
ness of the importance of other energy options than coal and
oil. Furthermore, the oil price shock and the (expected) com-
mercial maturation of clean technologies provide further op-
tions for clean energy development. According to figures from
the WB (2007d), the cumulative WBG financial commitments
to new renewable energy and energy efficiency during FY
1990–2007 exceeded $11 billion.

Figure 3 World Bank Group Commitment for Renewable Energy and Energy Efficiency (World Bank, 2007d)
Annual US$ millions Cumulative US$ millions
1,600 14,000

1,400 12,000

1,200
10,000
1,000
8,000
800
6,000
600

4,000
400 Hydro > 10 MW
2,000 New renewable energy
200
Energy efficiency
Cumulative commitment
1990

1992
1993
1994
1995
1996
1997
1998
1999
2000

2003
2004
2005
2006
2002
1991

2001

2007

In FY 2007 commitments for new renewable energy and en- financing reached 25% of total energy commitments in
ergy efficiency were $683 million and $751 million was com- FY2005–2007, and 40% in FY 2007. (However, this measure
mitted for hydropower projects greater than 10MW per facil- has been questioned and criticized as an overstatement of the
ity. The share of new renewable energy and energy efficiency WBG’s commitment to clean energy).

19
 an assessement of the world bank’s clean energy for development investment framework

Figure 4 World Bank Group Annual Hydropower Financial Commitments, 1995-2008 (World Bank, 2007d)
US$ millions
1,000

800

600

400

200

0
1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 Note: Data on FY08 is Q1.

In the past years, the WBG has been re-engaging in hydro-
power, for the purpose of both energy and water security. 35
hydropower projects have been approved since 2005, amount-
ing to $1.6 billion in commitments. In Africa, four projects
were approved in Congo, Senegal, Sierra Leone and Uganda
as efforts to utilise the vast “underexploited hydropower re-
sources and the potential for further expansion as a low-
carbon solution to increasing energy access”. The projects in
Africa are motivated by the need for regional water manage-
ment, which aim to develop a river basin and power pool, to
enhance regional co-ordination, development and sustain-
ability of water resources. However, these mega-projects have
been criticized, because of the environmental risks and social
and human consequences. Furthermore, in the current cir-
cumstance of increased climate variation, the reliance on
large hydropower in Africa may impose additional risk to the
sustainability of the energy supply because of its dependence
on rainfall, which makes it vulnerable to drought. Many
countries in the SSA regions have experienced serious drought
in the past, which has affected hydropower generation.
Being aware of the critics, the WBG attempts to attract
private investments in small- and medium run-of-river
projects, which have limited financial risks, low environ-
mental consequences and without resettlement complica-
tions. But the scope of such projects is limited, with a few
projects in South Asia and Latin America.

20
 an assessement of the world bank’s clean energy for development investment framework
Figure 5 World Bank Group Renewable Energy and Energy Efficiency Commitments by region, FY 2007
(World Bank 2007d)
Annual US$ millions
800
700
600
500
400
300
200
100
0
AFR EAP ECA LCR MNA
In terms of investments in energy efficiency, the WBG has
invested $3.1 billion in energy efficiency in around 120
projects in 40 countries since 1990 (World Bank, 2007c).
However, there is a significant concentration in Europe,
Central Asia, East Asia and the Pacific, in a few sectors, such
as industries, district heating and electric power. The number
of projects to provide modern and efficient lighting tech-
nologies for grid-connected and off-grid consumers in
Africa is still very limited. It is to a large extent, due to weak
interests from private banks in energy efficiency projects. It
is also reflects the absence of Small- and Medium Sized
Enterprises (SMEs) in the market. Furthermore, from both
supply- and demand sides, the efficiency issue is of particu-
lar importance, in supply-limited but demand-increasing
regions such as Africa. It is a largely neglected issue so far,
both in the sector reforms and in multilateral aid to Africa.
5.2 The role of the private sector and carbon
finance- A qualitative overview
In addition to expansion of concessional finance and mo-
New RE
Hydro > 10MW
EE
SAR
bilisation of financial resources from public donors, the
great emphasis has been put on the private sector engage-
ment and the acceleration of the access of developing coun-
tries to carbon finance in the scaling-up scheme of the CEIF.
The question is, if these two approaches can really help to
fill in the financial gap between demand and supply of en-
ergy, while maintaining affordable prices and in a sustain-
able way in the poorest regions of Africa?
5.2.1 Regulations and sector reform:
economical conditionality
Rural electrification programmes are very costly, due to low
population density, combined with low electricity prices.
Together with low-level of demand per capita, it imposes
great difficulty of achieving profitability and economies of
scale through capacity expansion for public electricity sup-
pliers. Furthermore, the institutional capacity and efficiency
of public utilities are often low in these least developed coun-
tries and there has been serious price distortion that deprived
the public-owned utilities of opportunities for expansion.
21
 an assessement of the world bank’s clean energy for development investment framework
Against the above background, the WB, together with many
national governments and multinational funding agencies
promotes privatisation of national power utilities as alter-
native solutions and sector reform is often referred as a pre-
condition to attract capital investment in energy infrastruc-
ture. For example, In the case of Bujagali hydropower, to
make the project bankable, the Uganda government under-
took power sector reform, to allow the electricity price to
“remain at or near cost-reflective level”, or, in other words
to increase prices as well as to carry out the privatisation of
its national utilities. In most cases, the removal of subsidies,
associated with privatisation and liberalisation led to a high-
er tariff, which was less affordable to the poor. In a medium
run, due to the limited per-capita consumption, the econo-
mies of scale in electricity supply are still difficult to reach
and the unit price is therefore unlikely to fall. Moreover, the
technology required, is often a form of stand-alone with
renewable energy generation, such as small- and mini and
pico-hydro installation for basic human services, such as
energy need in daily life, health, education and water supply.
Such common and public goods will not be able to generate
immediate returns for private investment. It implies that
the very poor population most in need of basic energy serv-
ices will not benefit much from private investments.
Consequently, such narrow-defined “market-orientation”
and cash-flow driven privatisation process lead to outcomes
that are not in line with sustainable development:
• From the supply side, the production of electric power is still
skewed towards fossil-based and large-scale solutions, while
the support for increasing the supply of renewable energy is
still limited.
•  Many African countries have introduced private manage-
ment and ownership in the electric power sector, e.g.
Independent Power Producers (IPP), but most of them are
fossil-fuel plants instead of renewable energy producers.
• Market reform often leads to an increase in the energy
prices as a result of subsidy removal and the reform of state
monopolies also frequently leads to layoffs and further
22
social problems, while the access to the poor was not nec-
essarily improved because the supply network does not
expand, hand in hand with privatisation.
5.2.2 The role of carbon finance:
CDM & new carbon finance instrument
Through public-private partnership and the Clean
Development Mechanism (CDM), the WB has managed to
bring 10 national governments and 654 private sector firms
from industrialised countries to developing countries. They
have entrusted the WB to manage more than $2 billion of
funds for the purchases of carbon emission reductions in
non Annex-1 countries (World Bank, 2007c). However, the
financial leverage potentials offered to African countries so
far, has been very limited, which can been seen clearly in the
regional and sectoral distribution of CDM projects.
The CDM and the role played by the WB, as the largest
public carbon finance broker have been criticized, because of
incentive distortions involved as well as structural shortfalls,
such as:
•  Low hanging fruits: the CDM structure favours large
projects, large enterprise groups and industrial end-of–
pipe projects in sectors with significant environmental and
social impact, such as iron/steel industry, chemical indus-
try, coal industry and large hydro.
•  Narrow definition of sustainability requirements in CDM
and the failure of the CDM to deliver on its sustainable de-
velopment objective are considered a structural failure. The
CDM only attaches a market value to emission reduction,
but not necessarily to sustainable development aspects.
•  In a long-run perspective, CDM can indeed generate ad-
ditional financial resources, but may also cause a delay of
the transformation to low-carbon economies in both the
North and South.
 an assessement of the world bank’s clean energy for development investment framework

Figure 6 Location of CDM projects (World Bank 2007c)

Primary CDM annual
India 12%
volumes transacted (MtCO2e)
500
R. of Asia 7%
400
Africa 3%
Other & Unsp.
China
61% 300 Africa
Other & Unsp. 7%
R. of Latin America
200
Brazil 4% Brazil
R. of Asia
100
R. of Latin America 6% India
0 China
2002 2003 2004 2005 2006

2006 2002–2006

Figure 7 Assets classes of CDM projects (World Bank 2007c)

Primary CDM annual

volumes transacted (MtCO2e)
N2O Other 500
13% 13%
Hydro
6% 400
HFC Wind 5% Other
34% Biomass 3% 300 CMM
Other Renewables 2% LFG + waste
200
EE+Fuel s.
EE+Fuel c. 9%
N2O
100
Agro-forestry 1% Renewables
CMM 7% 0 HFC
Animal Waste 2% LFG 5% 2002 2003 2004 2005 2006

As a share of volumes contracted in 2006 2002–2006

23
 an assessement of the world bank’s clean energy for development investment framework
On the other hand, there are indeed adjustments that have
been implemented or are in the process of being introduced,
which can bring significant improvements to and have a
positive impact on the carbon market:
o Introduction of the Bio Carbon Fund and Community
Development Carbon fund will make financing more ac-
cessible and feasible for small-scale CDM projects.
• A programmatic instead of project-based approach, which
shifts from stand-alone projects to multiple projects on a
programmatic basis, can generate significant “scale-up”
effects of the CDM.
Nevertheless, the current carbon market is not yet large
enough to generate significant funding for international
climate change actions. The proposed new instrument FCPC
aims to scale-up the forest carbon market, through “avoided
deforestation” (AD). The AD approach is so far excluded
from the CDM, but is considered a potential positive incen-
tive for the post-2012 climate change regime. Taking account
of the fact that 20% of global emission is the result of defor-
estation, the AD projects have great potential to contribute
to the preservation of biodiversity as well as to bring addi-
tional income to resource-rich developing countries.
The WB has already planned, with the support of the G8,
for an investment fund with $250 millions to support AD
projects in Indonesia, Brazil and Congo (Griffiths, 2007).
However, on top of criticism related to pure technical and
methodological issues, the WB’s plan of implementing
FCPC in the view of sustainable development has already
been questioned. According to many NGOs the social, rights
and accountability issues involved in the plan have not been
sufficiently addressed in the following aspects:
• The finance plan for FCPF assumes that the fund will op-
erate almost entirely on market-based funds by 2014. But
there is an emerging consensus among proponents of AD
that a mixed approach, involved both public funding and
participation is required.
• The successful implementation of FCPF requires good
24
governance and meaningful participation of stakeholders
in developing countries, as well as fair treatment of forest-
dependent communities and indigenous forest people.
However, the track record of the WB in terms of sustain-
able forest governance and management has been poor.
Examples include industrial logging in Congo as well as
IFC-projects for soya expansion in the Brazilian Amazon
and palm oil production in Indonesia.
5.3 Climate adaptation and technology
development – a long-run perspective
5.3.1 Need for scale-up for climate change adaptation
While the facts of the additional climate vulnerability and
acute situation faced by the poor population in the SSA-
region are well-known in both political debates and to the
public, the international co-operation on adaptation has
been characterized by “chronic under-financing, weak coor-
dination and a failure to look beyond project-based response”,
according to an assessment by the UN (UN, 2008).
The WB has enhanced its ambition of “mainstreaming”
adaptation lending and increased its adaptation-related ac-
tivities from around 10 to 40 projects, during 2005–2007.
In terms of investment/aid portfolio and technical as-
sistance, the WB has also made attempts to enlarge the scope
of its portfolio, to cover the integral parts of the foundation
for successful adaptation planning. For example:
• Information for effective planning (e.g. CAS/CAP )
• Infrastructure for climate-proofing
• Insurance for social risk management and poverty reduc-
tion (e.g. CCRIF )
• Institutions for disaster risk management (e.g. GFDRR)
However, the assessment of GEF by the UN reveals that, there
is still an apparent “financial inadequacy”. Furthermore, the
supported projects are often a limited response to adaptation
challenges because of its focus on “climate-proofing small-
scale projects or infrastructure projects against short-term
and incremental risk”. Furthermore, the project designs are
 an assessement of the world bank’s clean energy for development investment framework

often outside the institutional framework of national plan- and technical assistance is to promote energy technology,
ning for poverty reduction and long-tem strategy for climate which in turn will contribute to sustainable development
change adaptation. in developing countries in a long-run perspective. The role
of such a long-run strategy was also stressed in the CEIF.
Table 5 The Multilateral adaptation financing account, However, there is a great diversity in both income-level and
(UN, 2008) technological as well institutional capacities among African
Total countries. Each African country faces different challenges
disbursed in the process of creating indigenous standards and low-cost
Total pledge Total received (less fees)
Adaptation fund (US$ million) (US$ million) (US$ million) technology as well as when establishing fruitful South-
Least Developed South knowledge sharing and renewable policy learning.
156.7 52.1 9.8
Countries Fund Consequently, the requirement for action by the WB varies
Special Climate
considerably across countries.
67.3 53.3 1.4
Change Fund In the case of grid applications, many African countries
Adaptation Fund 5 5 –
have inherited European standards for their distribution
networks, standards that were adopted to high density, high
Sub-total 229 110.4 11.2
demand centres in Europe. As a consequence, it often re-
Strategic Priority
50 50 14.8
sulted in oversized networks with unnecessarily high costs
on Adaptation
for connecting rural load. African counties need to decrease
Total 279 160.4 26 the per-connection cost and develop their own locally adapt-
ed low-cost standards. For instance, Tunisia and South
In addition to “financial inadequacy”, the “technical inad- Africa are making efforts to address this technical issue.
equacy” of the WBG’s funding to adaptation has also been For off-grid and mini-grid applications, there are sev-
examined from a governance perspective, in terms of effi- eral technical challenges, such as the access to appropriate
ciency, fairness and responsiveness (See, e.g. Möhner and solutions, especially on the mini, micro and pico hydro
Klein, 2007). The need of developing countries is defined categories as well as building up infrastructure for manu-
both in terms of the need to be able to access to adaptation facturing, installation and operation.
funds as well as the need to be able to use the funds in line In the case of South Africa, as a coal-rich country, it has
with their country-specific adaptation circumstances and rather different circumstances and has much higher carbon
requirements. The GEF is criticized, in particular, on the intensity than other African countries. This is also the moti-
ground of the inadequacy in responding to the need of de- vation for the resources that South Africa has devoted to
veloping countries. On the one hand, the amount of funds “clean coal technology” and it has managed to become world
provided by ODA is much larger than what is available under leader in certain technologies, such as coal-to-liquids, under-
the GEF, due to the inefficient GEF activity cycle. On the ground gasification and pulverised coal combustion, etc.
other hand, adaptation has to compete with other more im- However, it is still important to bear in mind that the low
mediate development priorities. consumer price of coal-based electricity is due to heavy sub-
sidies and does not reflect the true investment- and produc-
5.3.2 Indigenous technology development tion costs. Furthermore, including the externality associated
One of most important tasks of the WBG’s financial support with coal-based electricity production, in forms of resource

25
 an assessement of the world bank’s clean energy for development investment framework

depletion, air pollution and climate change, such production

imposes a huge cost for the South African society.
On the other hand, the estimates of the potential contri-
bution of renewable energy in South Africa shows that sev-
eral renewable energy technologies could be cheaper than
new fossil fuel options within a relative short time span (10
years) and renewable electricity generating technologies
(such as biomass, land fill gas, solar PV, wind and hydro)
can generate up to 90% of the electricity needs by 2050
(Banks, D. and Schäffler, J. 2005). Nevertheless, this opti-
mistic outcome is conditional on a proactive and concerted
development, which starts now!
In such a context, the WBG should make a constructive
contribution in its technical assistance to promote and fa-
cilitate a proactive low-carbon strategy in developing coun-
tries, such as South Africa, which aims to depart from the
fossil fuel dependence and pave the pathway towards renew-
able energy, taking advantage of its rich natural resources.

26
 an assessement of the world bank’s clean energy for development investment framework
6. Conclusions and policy implications
6.1  General concluding remarks on CEIF
Based on an integrated micro- and macro-analysis we see
both strengths and weaknesses of the CEIF. The new frame-
work has made certain improvements and created innova-
tive approaches in the fields of carbon finance and project
design for adaptation actions. It also raised the awareness
of the urgent funding needs for international adaptation
action and the potential for a low-carbon transition pathway
in developing countries. Furthermore, the CEIF has also
highlighted the importance of the combination of financial
and technical assistance and the synergies between techni-
cal and institutional capacity building as well as the private-
public partnership.
However, the weaknesses of the CEIF are also evident and
in some cases so serious that they risk missing the window
of opportunity of paving a genuine pathway for low-carbon
and climate resilient development.
Even though the technical options for clean-technologies
are clearly outlined and the advantages of small-scale solu-
tions using local and renewable resources are convincingly
demonstrated, the WBG’s investment portfolio still favours
large-scale hydropower projects and/or uncertain and ex-
pensive technological options in access and low-carbon
projects. Even more unfortunately, considerable resources
are still allocated to fossil-fuel based installations and
projects. In other words, the WBG’s energy investment port-
folio is far away from a meaningful and creditable shift to a
clean and sustainable energy mix for developing countries.
At the current stage, the dominance of large-scale
projects and large project developers is still pervasive in the
CDM, even though carbon finance and carbon trading can
be relatively easily scaled up by applying a multi-sectoral
approach and including AD project. The CDM does not
necessarily guarantee the accessibility of the carbon market
to SMEs who are more active and innovative in renewable
technology markets. From the standpoint of developing
counties, how the carbon market can contribute to local
sustainable development and technology development
needs to be addressed with higher priority and strategic
importance. In the current situation, while the large devel-
oping counties, such as China and India are flooded by
“low-hanging fruit” CDM projects, the poor and small de-
veloping counties in Africa have hardly any access to carbon
finance. The skewed regional and sectoral distribution of
CDM may impose unnecessary and destructive “competi-
tion” for CDM market share among developing countries.
It is also a potential strategic barrier for developing counties
to commit to emission targets in the future climate nego-
tiation when a large portion of low-cost and simple reduc-
tion opportunities have been take away by those “low-hang-
ing fruit” CDM projects.
While the role of sectoral reforms and private participa-
tion are important for mobilising private investment, both
historical experience and current observations illustrate
that the “private cash-flow-driven” strategy does not work
well in low-income and basic-need dominated markets, such
as in the SSA-region, where there is insufficient business and
investment infrastructure. Instead, it requires new and in-
novative financing schemes such as private-public partner-
ship (from both the investor side and the recipient side) and/
or micro-credit schemes. In other words, the reforms need
to be integrated with the objectives of poverty reduction and
environment mainstreaming, instead of narrowly defined
in terms of sector efficiency and cash-flow generation.
Finally, the problems faced by developing counties are
often due to constraints imposed by region- and local-spe-
cific institutional and market conditions. For example, the
experiences from the WB’s Solar PV initiative shows that, a
large-scale, fully commercial solar PV off-grid market in
developing countries turns out to be overly optimistic. The
need to increase manufacturing capacity and supply of new
material were substantial when supporting solar PV in rural
electrification programmes. More importantly, at the cur-
rent stage, there are few African countries with comprehen-
sive legislation linking liberalisation and privatisation of
national utilities with an increase of renewable energy from
27
 an assessement of the world bank’s clean energy for development investment framework
local and national resources. Furthermore, while the sub-
sidies for fossil-fuel based power generation are still sub-
stantial, the incentive legislation and structure for renew-
able energies are either non-existing or insignificant. As one
example, in many African countries there are no national
targets specifically to increase renewable energy. The WB
should therefore support energy policy reforms which in-
tegrate liberalisation and sustainable initiatives in Africa
and link the electrification targets with potential renewable
targets.5
6.2 The policy implication for Sweden’s international
energy and development co-operation
For the period of 2007–2010, Sweden will contribute 850
million SEK to the GEF for multilateral climate co-opera-
tion.6 There are instantly recognizable reasons to argue that
the CEIF, at least in the current form, is not the most optimal
multilateral channel, through which the financial as well
human resources from Sweden can contribute to the clean
and sustainable development in the LDCs. Firstly, the heav-
ily skewed investment portfolio towards fossil-based energy
sources and large-scale hydropower projects of the CEIF is
not consistent with the clean and renewable energy profile
that Sweden stands for. From a technical viewpoint, it does
not represent the innovative and small-scale environmental
technological solutions that the Swedish business sector has
comparative advantages in. Secondly, the lack of clearly
defined renewable priorities and targets in the CEIF makes
it difficult to reach measurable and sector-specific results
that facilitate low-carbon transition and development.
Finally, the overrepresentation of large enterprises and ac-
tors with substantial market power, in both carbon finance
and investment projects could also jeopardise the principle
of transparency and grass-rooted equality.
5 There are already some good models in Africa. For example in Kenya, the government has set a target of 25% of electricity generated to come from geothermal by 2020.
6 See http://www.regeringen.se/sb/d/1471 for more details.
7 See, e.g. http://www.regeringen.se/sb/d/1471 and http://www.naturvardsverket.se/en/In-English/Menu/for more details.
28
Therefore, Sweden should draw on its rich experience in
development co-operation with LDCs and strong commit-
ment to the international community to explore other chan-
nels that target resources more specifically and efficiently
at climate and poverty issues.
The Swedish government and its agencies have, over the
last few years, taken several positive initiatives to address
the importance of climate change and the environmental
dimensions in international development co-operation:7
• Sweden is supporting the United Nations Environment
Programme (UNEP) through participation in the Poverty
and Environment Initiative, whose objective is to help poor
countries integrate environmental concerns into their na-
tional investment plans and anti-poverty strategies, and
the Environment and Security Initiative (ENVSEC), which
aims to prevent environmental problems from leading to
conflicts between and within countries.
• Sweden will contribute 50 million SEK to the EU:s initia-
tive of Global Climate Change Alliance as a part of the EU
co-operation to reduce poverty.
In addition to the multilateral initiatives, many bilateral
agreements are also in place to support developing coun-
tries. Some of them are with a particular focus on Africa:
• The Swedish International Development Co-operation
Agency (SIDA) has long-standing experience in providing
financial aid and technical assistance to African counties
with the primary objective of combating poverty.
• The Swedish Energy Agency (Energimydigheten) is pro-
moting its energy development co-operation with African
countries in the form of the Swedish-East African
Programme. As a concrete example, capacity building for
CDM in Uganda has already been initiated.
 an assessement of the world bank’s clean energy for development investment framework
The link between climate change and poverty, as well as the
need for support and assistance for the poorest is to an in-
creasing extent becoming the focus of Swedish foreign aid
and development policy. However, there are still substantial
gaps that need to be bridged in the near future:
• In terms of development co-operation, the support to the
SSA-region has traditionally focused on humanitarian aid
in the fields of public health and regional conflicts. Only
recently has the aspect of climate change received more at-
tention. To integrate international development co-oper-
ation with national climate change actions is a complex task
and requires extensive institutional and implementation
capacity. The knowledge and experiences of the Swedish
governmental agencies need to be enhanced rapidly.
• W hile there is increased interest in cooperating with de-
veloping countries in the fields of renewable energy and
clean environmental technologies, the “hotspots” have
been China and India where there is market potential for
the Swedish environmental technology sector. In contrast,
Africa has not been a prioritised geographic area. The cre-
ation of public-private partnerships to support sustainable
development in Africa and at the same time introduce
cost-efficient and local-adapted technological solutions
from the Swedish environmental technology sector re-
mains a challenge.
• Finally, an integrated and holistic approach, which include
dimensions such as policy dialogue, foreign aid, energy and
environment technology and political influence require
long-term strategic planning and highly structured and
efficient co-ordination and implementation both at home
and in recipient countries. So far, based on the experience
from other developing countries such as China, the progress
achieved by the Swedish actors has been limited.
In the recently released “Klimatberedningen”, both market-
based instruments such as CDM and foreign aid are consid-
ered viable instruments for promoting climate-related and
environment- friendly international development co-oper-
ation. However, uncertainty remains regarding how much
resources Sweden should devote in the Swedish home mar-
ket and how much should be invested in developing coun-
tries/transition economies outside Sweden. This uncer-
tainty reflects a narrowly defined view on the legitimacy of
“the good example” in the battle against climate change.
Instead, the “power of the good example” should be fully
exploited both at home and in a global context. This can be
achieved, through financial support and technical assist-
ance from both public and private sectors, as well as by the
regulatory framework, through which private-sector par-
ticipation in form of carbon trading and other voluntary
climate compensation will be encouraged. Sweden has in-
deed the possibility and potential to integrate the develop-
mental dimension into its proactive image in global climate
and environmental issues. The efforts made to mitigate and
adapt to the adverse impact of climate change outside
Sweden, in particular in the poorest developing countries,
are not only motivated by the cost-effectiveness in emission
reduction and the competitiveness of Swedish industry.
They are also a demonstration of Sweden’s genuine com-
mitment to take the common, but differentiated, responsi-
bility with its strong political willingness and technological
capability.
29
 an assessement of the world bank’s clean energy for development investment framework

7. Selected references

ADB Finesse Africa Newsletter, 2006: http://finesse-africa.org/newsletter/200604/if.php.

Banks, D. and Schäffler, J. 2006: The potential Contribution of Renewable Energy in South Africa. RAPS Consulting,
Johannesburg. http://www.earthlife.org.za/Files/potential%20of%20RE%20in%20SA%20Feb06.pdf.
EAC, 2006: East African Development Strategy.
http://www.eac.int/documents/EAC_development_strategy_2006_2010.pdf
ESMAP, 2007: Technical and Economic Assessment of Off-grid, Mini-grid and Grid Electrification Technologies,
ESMAP Technical Paper 121/07 December 2007
Griffiths, T., 2007: See “red”? –“Avoided deforestation“ and the rights of indigenous peoples and local communities.
http://www.forestpeoples.org/documents/ifi_igo/avoided_deforestation_red_jun07_eng.pdf
IEA, 2000: World Energy Outlook 2000. IEA, Paris.
IEA 2004: World Energy Outlook 2004. IEA, Paris.
IEA 2006: World Energy Outlook 2006. IEA, Paris.
IPCC, 2005: IPCC special report on Carbon Dioxide Capture and Storage. Prepared by working group III of the
Intergovernmental Panel on Climate Change. Metz, B., O.Davidson, H. C. de Coninck, M. Loos, and L.A. Meyer (eds.).
Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA
Mayer-Spohn O., 2007: Parametrised LCA of Electricity Generation in an Integrated Gasification Combined Cycle
(IGCC) with Carbon Capture and Storage (CCS). SETAC Europe 14th LCA Case Study Symposium in Gothenburg ‚
4th of December 2007.
Möhner, A. and Klein Richard J. T., 2007: The Global Environment Facility: Funding for Adaptation or Adapting to
Funds. SEI http://www.sei.se/editable/pages/sections/climate/publications/climate_energy_working_moehner_klein.pf

30
 an assessement of the world bank’s clean energy for development investment framework

UN, 2008: Human Development Report 2007/2008. Fighting climate change: Human solidarity in a divided world. UN,
New York.
World Bank, 2006a: Clean Energy and Development: towards an investment framework. DC2006-0002, World Bank,
Washington, DC.
World Bank, 2006b: An investment framework for Clean Energy and Development: A progress Report. DC2006-0012,
World Bank, Washington, DC.
World Bank, 2007a: Clean Energy for Development Investment Framework : The World Bank Group Action Plan.
DC2007-0002, World Bank, Washington, DC.
World Bank, 2007b: Clean Energy for Development Investment Framework: Progress Report on the World Bank Group
Action Plan. August, 2007. World Bank, Washington, DC.
World Bank, 2007c: State and Trends of the Carbon Market 2007. Washington, DC
World Bank, 2007d: Catalyzing Private investment for a low-Carbon Economy – World Bank Group Progress on
Renewable Energy and Energy Efficiency in Fiscal 2007. Washington, DC.
World Commission on Dams, 2000: Dams and development – A new framework. Earthscan Publications Ltd, London
and Sterling
Worldwatch Institute: Energy for development The Potential Role of Renewable Energy in Meeting the Millennium
Development Goals. Paper prepared for the REN21 Network by The Worldwatch Institute.
Zapp P, Schreiber A, Kuckshinrichs W, 2007: Screening LCA of Fossil Power Plants with Carbon Capture and Storage
(CCS) via Membrane Technology and Case Study of Fossil Power Production with Amine-based Carbon Capture
Technology. SETAC Europe 14th LCA Case Study Symposium in Gothenburg ‚ 4th of December 2007.

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 an assessement of the world bank’s clean energy for development investment framework

Acronyms and Abbreviations

ADAPT Assessment and Design for Adaptation to Climate Change – A prototype Tool
AD Avoided Deforestation
CCS Carbon Capture and Storage
CDM Clean Development Mechanism
CEIF Clean Energy for Development Investment Framework
CPF Carbon Partnership Facility
ESMAP Energy Sector Management Assistance Program
FCPF Forestry Carbon Partnership Facility
FY Fiscal Year
GEF Global Environment Facility
GFDRR Global facility for Disaster Reduction and Recovery
GHG Greenhouse gases
GNP Gross National Product
IEA International Energy Agency
IFC International Finance Corporation
IFI International Financial Institution
IGCC Integrated Gasification Combined Cycle
IPP Independent Power Producers
LDC Least Developed Countries
MDGs Millennium Development Goals
MIGA Multilateral Investment Guarantee Agency
NGCC Natural Gas Combined Cycle
NGO Non-Governmental Organization
ODA Official Development Assistance
OECD Organization for Economic Cooperation and Development
PC Pulverized Coal
PV Photovoltaic
SSA Sub-Saharan Africa
SMEs Small and Medium-sized Enterprises
USC Ultra-Super Critical
WB World Bank
WBG World Bank Group

32
As a key player in international development the World Bank could play a leading role in provid-
ing a framework for “fast-tracking” renewable energy investments in the South. Regretfully,
however, it is the perception of the Swedish Society for Nature Conservation that the Bank has
not fulfilled these expectations. For many decades, the World Bank’s energy lending has focused
on centralized, large-scale, grid-based fossil fuels based thermal power and hydropower projects.
In spite of many promises to “green” its energy lending over the past 15 years, the World Bank’s
energy sector portfolio still fails to reap the double dividend of renewable energy technologies
that would fight both poverty and climate change.

SSNC has commissioned this report from IVL – The Swedish Environmental Research Institute –
in order to provide a scientific analysis on the development impacts of the World Bank’s climate
strategy document “Clean Energy for Development Investment Framework”, as well as provide
a basis for our positions on how Sweden can support sustainable climate change policies.

Naturskyddsföreningen. Box 4625, SE-116 91 Stockholm.

Phone + 46 8 702 65 00. info@naturskyddsforeningen.se
www.naturskyddsforeningen.se

The Swedish Society for Nature Conservation is an environ­

mental organisation with power to bring about change. We
spread knowledge, map environmental threats, create solu-
tions, and influence politicians and public authorities, at both
national and international levels. Moreover, we are behind one
of the world’s most challenging ecolabellings,
“Bra Miljöval”(Good Environmental Choice). Climate, the
oceans, forests, environmental toxins, and agriculture
are our main areas of involvement.
www.naturskyddsforeningen.se