the bottom line designing credit lines for energy efficiency · 2017. 8. 7. · 3 designing credit...

The boTTom line

Attractive opportunities to invest in energy efficiency are often passed up for lack of commercial financing. Donors and governments can solve this problem by setting up dedicated credit lines that allow financial institutions (often local banks) to on-lend funds to entities wishing to improve their energy efficiency. The success of a credit line depends to a great extent on the selection of competent and committed financial institutions. A technical assistance component built into the credit line helps lower the technical and financial risk of projects.

Designing Credit lines for energy efficiency

Ashok Sarkar is a senior energy specialist in the World Bank’s South Asia region.

Jonathan Sinton is a senior energy specialist in the World Bank’s Energy Practice.

Joeri de Wit is an energy analyst in the same practice.

A k n o w l e d g e n o t e s e r i e s f o r t h e e n e r g y p r A c t i c e

Why is this issue important?

investments in energy efficiency depend on the availability of credit

Many economically attractive opportunities to invest in energy efficiency are forgone because of various market barriers, notably the limited availability of commercial financing for energy efficiency projects. Once a government decides, as a matter of policy, to scale up energy efficiency, it typically must engage commercial banks to provide financing to the private end users who will carry out the energy efficiency projects needed to make the national policy a reality.

Credit lines help banks establish an energy efficiency business line by mitigating the perceived high financial risk of energy efficiency projects and of the energy service companies that carry them out, and sometimes by building into the credit line a technical assistance component to improve understanding of the fundamentals of energy efficiency projects. They also reduce the transaction costs of project finance by standardizing the process of project appraisal and loan processing. For project developers, credit lines expand the pool of commercial debt financing for their projects. The technical assistance component helps lower the perceived technical and financial risks of energy efficiency investments.

Energy efficiency credit lines make funds available to participating financial institutions (including local banks). Typically the credit line is extended to the financial institution as a low interest rate loan by a donor (such as a multilateral development bank or other international financial institutions) or by government. The recipient institution then on-lends the funds to borrowers (industries and other private entities) to invest in energy efficiency projects (figure 1). Targeted support for energy efficiency investments is warranted because current invest-ment levels are suboptimal (Taylor and others 2008).

how do the credit lines work?

Four design features are critical to success

Appropriate financing terms. The donor or government agency usually extends the credit line to a participating financial institution (typically a bank) at its standard rate and tenor. The financial institution then on-lends to project developers at terms specified in legal agreements between the donor or government and insti-tutions. For example, World Bank credit lines typically require that on-lending occur at market rates to avoid creating market distortions and competitive advantages and that the participating institution provide cofinancing on a one-to-one basis or better (table 1). For many projects, cofinancing has equaled or significantly exceeded Bank lending, but in at least one case it was less than 20 percent of the loan amount. Using its standard project-appraisal criteria, the financial institution will typically finance about 70 percent of a project’s total investment costs, requiring the project host or energy service company to finance the remaining 30 percent through equity investments. The participating financial institution will also demand collateral, often 120 percent or more of the loan amount, because it assumes all repayment risks. In this way, a credit line can leverage funds both from the financial institution and the project developer.

When the donor agency providing the credit line is an interna-tional financial institution, funds for the line are either lent to the participating financial institution via the national government or directly to the institution with an accompanying guarantee from the government. The exchange rate risk is typically borne by the par-ticipating financial institution. Repayment occurs through the same channels followed to disburse the credit line (as shown in figure 1).

There is a risk that an energy efficiency credit line may end up subsidizing participating financial institutions, since financing from

A k n o w l e d g e n o t e s e r i e s f o r t h e e n e r g y p r A c t i c e

2014/11

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2 D e s i g n i n g C r e D i T L i n e s f o r e n e r g y e f f i C i e n C y

“There is a risk that an

energy efficiency credit line

may end up subsidizing

participating financial

institutions, since financing

from international financial

institutions is generally

less costly than from other

sources.”

Figure 1. Typical design of an energy efficiency credit line

international financial institutions is generally less costly than from other sources and participating financial institutions are required to lend at market rates. The logic behind the cheaper credit provided by the international financial institution is that it partially offsets the costs incurred by participating financial institutions in establishing the new business line in energy efficiency lending. Since many energy efficiency investments have shorter payback periods than the typical tenors of loans from international financial institutions, there is also a risk that funds provided for the credit line could be used simply to finance the balance sheets of participating financial institutions once the initial energy efficiency investments are fully repaid. One potential remedy is to require the participating financial institutions to roll over funds to new project lending. Another is for international financial institutions to shorten the tenor of loans for credit lines. A third solution may be to exploit the potential to combine credit lines for energy efficiency and renewable energy.

Accurate targeting of end users. The selection of the end-use sector to be targeted depends on the policy goals to which the credit line is designed to contribute. In practice, credit lines more

often target industry and large firms rather than smaller businesses and the residential sector. (This is the case for the World Bank credit lines described in table 1.) In part the bias toward larger enterprises is a consequence of the risk assessment and financial evaluation procedures that financial institutions use to determine whether a project developer will be eligible to borrow from it. Borrowers need to be creditworthy in the eyes of the lender, and most lenders do not recognize cash flow from energy savings as an acceptable form of collateral. The emphasis on asset-based or balance sheet financing limits lending to certain borrowers such as larger firms. Public sector agencies have rarely been the target of energy efficiency credit lines, those that KfW offers in Eastern Europe being an exception. Most commercial lenders are reluctant to provide debt financing to public sector agencies; reciprocally, most public agencies lack the inclina-tion and capacity to borrow commercial funds on market terms.

Project eligibility criteria. The criteria for determining project eligibility can vary greatly depending on the end-use sectors targeted by the credit line, the amount of energy the user consumes, and the technical, social, and environmental characteristics of the project.

• Lack of liquidity in financialmarkets for commercial debtfinancing of energy efficiencyprojects

Credit lineExternalfinancing

Credit line withPFI cofinancing

Credit line with PFIand developer

financing

Repayment Repayment RepaymentRepayment

Low interestrate

Market orconcessional rate

Technical assistance

• Perception of high financial risk ofenergy efficiency projects

• Inadequate expertise and capacityto evaluate energy efficiency projectsand understand financing needs

• High transaction costs for processing project financing

• Perception of high technical andfinancial risks of energy efficiency investments among energy users

• Limited interest in using internalfinancing for energy efficiencyprojects

BA

RR

IER

SA

DD

RES

SED

DONORInternational

financialinstitution

PUBLIC AGENCYGovernment

PARTICIPATINGFINANCIAL INSTITUTION

(PFI)Bank

Dedicated Unit

SUB-BORROWEREnd users

PROJECT

Technical organizationsand experts

N.B. Thickness of arrow represents relative size of financial flows to depict leveraging. Public agencies may offer credit lines without the aid of external donors (dashed border).


“Portfolio risk management

criteria usually preclude

the commitment of a large

share of the total amount

of financing available

through the credit line

to any single project or

company.”

The criteria may also include minimum energy savings or percentage savings. Portfolio risk management criteria usually preclude the com-mitment of a large share of the total amount of financing available through the credit line to any single project or company. (It would be undesirable to have the success of the credit line depend too heavily on just a few investments.)

Technical assistance. The type of technical assistance needed to support a new credit line depends on the sectors targeted, the capacity of the participating financial institutions, and the availability of other technical-assistance resources. The range of technical-as-sistance activities is broad: conducting market studies; developing appraisal procedures to assess energy efficiency cash flows and risks; developing financial products for energy efficiency projects; training staff of participating financial institutions; supporting pilot programs; marketing, monitoring and evaluating programs; dissemi-nating experience and lessons learned; adapting and disseminating

planning tools; and supporting business development among energy

service companies. To date, the most common focus of technical

assistance has been building the capacity of participating financial

institutions.

An example of how these features work in practice is provided in

box 1.

What have we learned?

Financial institutions are both the strength and the weakness of credit lines

Credit lines are just one mechanism for financing energy efficiency

investments. Others include demand-side management by utilities,

utility-funded consumer financing, energy efficiency funds, risk-shar-

ing programs, energy saving performance contracting, and equity

Table 1. World Bank energy efficiency credit lines

CountryLaunch

yearClose year

number of Pfis

is the line specific

to energy efficiency? Target sector

World Bank financing (Us$

millions)Cofinancinga (Us$ millions)

Cofinancing (percentage World Bank financing)

Total financing (Us$ millions)

Disbursement rate

(percent)

China 2008 2013 2 Y Large and medium industry 200 200 100 400 89

China 2010 2014 1 Y Large and medium industry 100 500 500 600 20

China 2012 2016 1 Y Industry, buildings, SMEs and ESCOs 100 200 200 300 0

China 2011 2016 3 Y Industrial 133 134 101 267 11

China 2012 2018 2 Y Buildings 100 100 100 200 0

Tunisia 2009 2014 2 Y Industrial 40 80 200 120 18

Turkey 2009 2014 2 N Industrial 600 550 92 1150 100

Turkey 2012 2016 2 N Industrial 500 150 30 650 44

Ukraine 2011 2016 1 Y Industrial, commercial and municipal 200 n/a n/a n/a 32

Uzbekistan 2010 2016 2 Y Industrial 24 4.8 20 28.8 49

Turkey 2013 2018 3 N Energy-intensive SME subsectors 201 50.25 25 251.25 7

Uzbekistan 2013 2016 3 Y Industrial 99 43 43 142 14

Source: Limaye 2013.

Note: PFI = participating financial institution; SME = small and medium-size enterprise; ESCO = energy service company

a. Excludes financing from end users.


“The unique feature of

credit lines is their use

of an existing delivery

mechanism: the lending

framework of the

participating financial

institution.”

funds. All of these mechanisms work best within a context of clear national objectives for energy efficiency and supporting policies that create a market pull for investments in efficiency.

The unique feature of credit lines is their use of an existing delivery mechanism: the lending framework of the participating financial institution. This delivery mechanism presents both advan-tages and limitations. Where the existing lending framework has well-established project-appraisal procedures and institutions have a deep fund of professional expertise, implementation of the credit line may be quick and easy. Where participating financial institutions have limited capacity to manage energy efficiency projects, the credit line’s effectiveness may be limited, and project-appraisal procedures

may restrict the pool of borrowers that can be reached by the credit line. Still, for donors, credit lines entail minimum risk, as the funds are guaranteed by the national government. Furthermore, credit lines can be instrumental in developing the market for energy service providers.

Accumulated experience with energy efficiency credit lines is leading to the identification of good practices for design and imple-mentation. In general, as with all types of support mechanisms, a credit line should be adapted to context, which includes the national economic, financial, legislative, and regulatory framework, as well as the specific characteristics of participating financial institutions, project developers, and targeted projects.

Box 1. example of credit line characteristics: China energy efficiency financing project (2008–14)

In the China Energy Efficiency Financing (CHEEF) project, the World Bank has provided a line of credit to three commercial banks in China—China EXIM Bank, Minsheng Bank, and Huaxia Bank—to enable them to finance energy efficiency projects.

Financing terms. The line of credit was structured as a financial intermediary lending operation with a sovereign guarantee from China’s Ministry of Finance. The World Bank loan was based on the London Interbank Offer Rate (LIBOR), was denominated in U.S. dollars, and has a variable spread. East of the three banks received $100 million to be repaid in 17.5 years, including a grace period of five years. The funds were on-lent by the Ministry of Finance to the three banks at the same financial terms and conditions, and were in turn loaned by the banks at market rates to industrial enterprises and energy service companies. The participating banks are responsible for debt servicing and bear all of the financial risks associated with the World Bank loan. The World Bank required each bank to invest an additional $100 million or more of its own resources in energy efficiency projects overall, while the participating banks required enterprises to which they made project loans to contribute about 30 percent of project costs. The banks in turn required loan recipients to contribute about 30 percent of the project costs. A Global Environment Facility (GEF) grant was used to provide technical assistance.

Targeted end users. The targeted end users are medium and large industrial enterprises in China having total annual revenues of at least CNY 30 million ($4.7 million), based on audited income statements no more than two years old. Under CHEEF III, sub-borrower eligibility was expanded to include industrial enterprises of all sizes, energy service companies (including leasing companies), and owners of buildings.

Project eligibility. Investments must be in renovation or rehabilitation. Any new construction must be within the boundaries of the existing premises. The cash flow benefit arising from energy savings associated with the project, as reviewed by the participating financial institution, must be adequate to repay the total investment cost of the subproject within 10 years. The sub-borrower must obtain approval from the appropriate Chinese environmental authorities.

Technical assistance. The GEF grant is used to train personnel in participating financial institutions; to develop new financial products for energy service companies; to adapt loan appraisal and underwriting criteria to energy efficiency investments; to conduct market-segment studies to broaden the end-use sectors and technologies in the portfolio; to build partnerships and engage selected bank branches in market development and in generating deals; and to develop market aggregation tools for projects and for small and medium-size enterprises. Policy-related technical assistance focused on helping the National Development and Reform Commission to develop market-based mechanisms, such as schemes for trading energy savings certificates; developing and implementing high-priority energy conservation programs during the 12th Five-Year Plan (2011-2015); and strengthening the National Energy Conservation Center.

The credit line leveraged $462 million from participating banks and industrial enterprises—a leverage ratio of 1:4. The investments made possible by the credit line are expected to save 1.7 million tons of coal equivalent (1.2 million tons of oil equivalent) and to reduce CO2 emissions by 4.2 million tons each year.

Source: Wang and others 2012.


“Concessional funding

remains a major factor

in securing the interest

of small and medium

enterprises in energy

efficiency.”

The overall success of a credit line depends to a great extent on the selection of competent and committed financial institutions. Institutions need management with an interest in and willingness to engage in energy efficiency as a new business line, as well as good access to, knowledge of, and relationships with the target market. Institutions should already be familiar with the sectors they intend to target. To deploy credit lines targeting small and medium-sized enterprises in India, JICA and KfW worked with the Small Industries Development Bank of India, which had the requisite experience with such customers. It is essential, too, that the institutions develop or work with a technical team that is experienced in energy efficiency technologies and their benefits. The energy efficiency business line should be handled by the department responsible for commercial loans to the target clients. Staff in the department should be moti-vated to develop business through performance incentives and other commercial management tools.

Technical assistance can help many financial institutions get the credit line working faster. To create a market conducive to sustained energy efficiency investments, capacity building for participating financial institutions and for the broader energy efficiency network is recommended. Technical assistance offered to end users and government can help develop the broader energy efficiency market, stimulate interest in energy efficiency projects, disseminate the positive results obtained from the credit line, and encourage other banks and local financial institutions to increase their lending for energy efficiency projects.

Concessional funding remains a major factor in securing the interest of small and medium enterprises in energy efficiency. Because the appraisal criteria of most financial institutions favor the financing of larger, more creditworthy energy users with strong balance sheets, a credit line targeted at small and medium enter-prises or public sector projects may require credit-enhancement techniques and much more forceful market-development efforts.

On the operational front, simplifying project review and appraisal procedures wherever possible and integrating them into the financial institution’s own systems can accelerate deployment of the credit line. The best example of this is JICA’s credit line to SIDBI (India), in which simple eligibility criteria (projects were eligible if they included preapproved technologies or equipment) allowed loan officers to quickly appraise a project, enabling SIDBI to make a large number of sound loans very quickly.

A last word. It should be kept in mind that a credit line that is jointly offered for both renewable energy and energy efficiency may tend to find more uptake in renewable energy investments than in energy efficiency investments, possibly because renewable energy projects are larger, have proportionally lower transaction costs, and involve assets that are easier to use as collateral.

References

Limaye, D. 2013. “Energy Efficiency Credit Lines: A Synthesis Paper.” Sustainable Energy Department, World Bank, Washington, DC.

Taylor, R. P., C. Govindarajalu, J. Levin, A. S. Meyer, W. A. Ward. 2008. Financing Energy Efficiency: Lessons from Brazil, China, India and Beyond. Washington, DC: World Bank. http://elibrary.worldbank.org/doi/book/10.1596/978-0-8213-7304-0

Wang, X., R. Stern, D. Limaye, W. Mostert, and Y. Zhang. 2012. Unlocking Commercial Financing for Clean Energy in East Asia. Washington, DC: World Bank. http://elibrary.worldbank.org/doi/book/10.1596/978-1-4648-0020-7.

This note is based on original work by Ashok Sarkar and Dilip Limaye (president, SRC Global), with updates and additional material prepared by Joeri de Wit and Jonathan Sinton. The peer reviewers for this note were Jas Singh (senior energy specialist in the World Bank’s Europe and Central Asia region), Gailius Draugelis (lead energy specialist in the Bank’s East Asia and Pacific region), and Luiz Maurer (principal industry specialist, IFC).

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1 T r a c k i n g P r o g r e s s T o w a r d P r o v i d i n g s u s T a i n a b l e e n e r g y f o r a l l i n e a s T a s i a a n d T h e Pa c i f i c

THE BOTTOM LINE

where does the region stand

on the quest for sustainable

energy for all? in 2010, eaP

had an electrification rate of

95 percent, and 52 percent

of the population had access

to nonsolid fuel for cooking.

consumption of renewable

energy decreased overall

between 1990 and 2010, though

modern forms grew rapidly.

energy intensity levels are high

but declining rapidly. overall

trends are positive, but bold

policy measures will be required

to sustain progress.

2014/28

Elisa Portale is an

energy economist in

the Energy Sector

Management Assistance

Program (ESMAP) of the

World Bank’s Energy and Extractives

Global Practice.

Joeri de Wit is an

energy economist in

the Bank’s Energy and

Extractives Global

Practice.

A K N O W L E D G E N O T E S E R I E S F O R T H E E N E R G Y & E X T R A C T I V E S G L O B A L P R A C T I C E

Tracking Progress Toward Providing Sustainable Energy

for All in East Asia and the Pacific

Why is this important?

Tracking regional trends is critical to monitoring

the progress of the Sustainable Energy for All

(SE4ALL) initiative

In declaring 2012 the “International Year of Sustainable Energy for

All,” the UN General Assembly established three objectives to be

accomplished by 2030: to ensure universal access to modern energy

services,1 to double the 2010 share of renewable energy in the global

energy mix, and to double the global rate of improvement in energy

efficiency relative to the period 1990–2010 (SE4ALL 2012).

The SE4ALL objectives are global, with individual countries setting

their own national targets in a way that is consistent with the overall

spirit of the initiative. Because countries differ greatly in their ability

to pursue the three objectives, some will make more rapid progress

in one area while others will excel elsewhere, depending on their

respective starting points and comparative advantages as well as on

the resources and support that they are able to marshal.

To sustain momentum for the achievement of the SE4ALL

objectives, a means of charting global progress to 2030 is needed.

The World Bank and the International Energy Agency led a consor-

tium of 15 international agencies to establish the SE4ALL Global

Tracking Framework (GTF), which provides a system for regular

global reporting, based on rigorous—yet practical, given available

1 The universal access goal will be achieved when every person on the planet has access

to modern energy services provided through electricity, clean cooking fuels, clean heating fuels,

and energy for productive use and community services. The term “modern cooking solutions”

refers to solutions that involve electricity or gaseous fuels (including liquefied petroleum gas),

or solid/liquid fuels paired with stoves exhibiting overall emissions rates at or near those of

liquefied petroleum gas (www.sustainableenergyforall.org).

databases—technical measures. This note is based on that frame-

work (World Bank 2014). SE4ALL will publish an updated version of

the GTF in 2015.

The primary indicators and data sources that the GTF uses to

track progress toward the three SE4ALL goals are summarized below.

• Energy access. Access to modern energy services is measured

by the percentage of the population with an electricity

connection and the percentage of the population with access

to nonsolid fuels.2 These data are collected using household

surveys and reported in the World Bank’s Global Electrification

Database and the World Health Organization’s Household Energy

Database.

• Renewable energy. The share of renewable energy in the

energy mix is measured by the percentage of total final energy

consumption that is derived from renewable energy resources.

Data used to calculate this indicator are obtained from energy

balances published by the International Energy Agency and the

United Nations.

• Energy efficiency. The rate of improvement of energy efficiency

is approximated by the compound annual growth rate (CAGR)

of energy intensity, where energy intensity is the ratio of total

primary energy consumption to gross domestic product (GDP)

measured in purchasing power parity (PPP) terms. Data used to

calculate energy intensity are obtained from energy balances

published by the International Energy Agency and the United

Nations.

2 Solid fuels are defined to include both traditional biomass (wood, charcoal, agricultural

and forest residues, dung, and so on), processed biomass (such as pellets and briquettes), and

other solid fuels (such as coal and lignite).

1 T r a c k i n g P r o g r e s s To wa r d P r o v i d i n g s u s Ta i n a b l e e n e r g y f o r a l l i n e a s T e r n e u r o P e a n d c e n T r a l a s i a

THE BOTTOM LINE



energy for all? The region

has near-universal access to

electricity, and 93 percent of

the population has access


despite relatively abundant

hydropower, the share

of renewables in energy

consumption has remained

relatively low. very high energy

intensity levels have come

down rapidly. The big questions

are how renewables will evolve

when energy demand picks up

again and whether recent rates

of decline in energy intensity

will continue.

2014/29

Elisa Portale is an

energy economist in

the Energy Sector




Global Practice.

Joeri de Wit is an

energy economist in


Extractives Global

Practice.



for All in Eastern Europe and Central Asia




(SE4ALL) initiative


All,” the UN General Assembly established three global objectives

to be accomplished by 2030: to ensure universal access to modern

energy services,1 to double the 2010 share of renewable energy in

the global energy mix, and to double the global rate of improvement

in energy efficiency relative to the period 1990–2010 (SE4ALL 2012).






















the GTF in 2015.



Energy access. Access to modern energy services is measured

by the percentage of the population with an electricity connection

and the percentage of the population with access to nonsolid fuels.2

These data are collected using household surveys and reported

in the World Bank’s Global Electrification Database and the World

Health Organization’s Household Energy Database.

Renewable energy. The share of renewable energy in the energy

mix is measured by the percentage of total final energy consumption

that is derived from renewable energy resources. Data used to

calculate this indicator are obtained from energy balances published

by the International Energy Agency and the United Nations.

Energy efficiency. The rate of improvement of energy efficiency is

approximated by the compound annual growth rate (CAGR) of energy

intensity, where energy intensity is the ratio of total primary energy

consumption to gross domestic product (GDP) measured in purchas-

ing power parity (PPP) terms. Data used to calculate energy intensity

are obtained from energy balances published by the International

Energy Agency and the United Nations.

This note uses data from the GTF to provide a regional and

country perspective on the three pillars of SE4ALL for Eastern




“Live Wire is designed

for practitioners inside

and outside the Bank.

It is a resource to

share with clients and

counterparts.”

1 U n d e r s t a n d i n g C O 2 e m i s s i O n s f r O m t h e g l O b a l e n e r g y s e C t O r

Understanding CO2 Emissions from the Global Energy Sector

Why is this issue important?

Mitigating climate change requires knowledge of the

sources of CO2 emissions

Identifying opportunities to cut emissions of greenhouse gases

requires a clear understanding of the main sources of those emis-

sions. Carbon dioxide (CO2) accounts for more than 80 percent of

total greenhouse gas emissions globally,1 primarily from the burning

of fossil fuels (IFCC 2007). The energy sector—defined to include

fuels consumed for electricity and heat generation—contributed 41

percent of global CO2 emissions in 2010 (figure 1). Energy-related

CO2 emissions at the point of combustion make up the bulk of such

emissions and are generated by the burning of fossil fuels, industrial

waste, and nonrenewable municipal waste to generate electricity

and heat. Black carbon and methane venting and leakage emissions

are not included in the analysis presented in this note.

Where do emissions come from?

Emissions are concentrated in a handful of countries

and come primarily from burning coal

The geographical pattern of energy-related CO2 emissions closely

mirrors the distribution of energy consumption (figure 2). In 2010,

almost half of all such emissions were associated with the two

largest global energy consumers, and more than three-quarters

were associated with the top six emitting countries. Of the remaining

energy-related CO2 emissions, about 8 percent were contributed

by other high-income countries, another 15 percent by other

1 United Nations Framework Convention on Climate Change, Greenhouse Gas Inventory

Data—Comparisons By Gas (database). http://unfccc.int/ghg_data/items/3800.php

middle-income countries, and only 0.5 percent by all low-income

countries put together.

Coal is, by far, the largest source of energy-related CO2 emissions

globally, accounting for more than 70 percent of the total (figure 3).

This reflects both the widespread use of coal to generate electrical

power, as well as the exceptionally high CO2 intensity of coal-fired

power (figure 4). Per unit of energy produced, coal emits significantly

more CO2 emissions than oil and more than twice as much as natural

gas.

2014/5

THE BOTTOM LINE

the energy sector contributes

about 40 percent of global

emissions of CO2. three-

quarters of those emissions

come from six major

economies. although coal-fired

plants account for just

40 percent of world energy

production, they were

responsible for more than

70 percent of energy-sector

emissions in 2010. despite

improvements in some

countries, the global CO2

emission factor for energy

generation has hardly changed

over the last 20 years.

Vivien Foster is sector

manager for the Sus-

tainable Energy Depart-

ment at the World Bank

([email protected]).

Daron Bedrosyan

works for London

Economics in Toronto.

Previously, he was an

energy analyst with the

World Bank’s Energy Practice.

A K N O W L E D G E N O T E S E R I E S F O R T H E E N E R G Y P R A C T I C E

Figure 1. CO2 emissions

by sector

Figure 2. energy-related CO2

emissions by country

Energy41%

Roadtransport

16%

Othertransport

6%

Industry20%

Residential6%

Othersectors

10%China30%

USA19%

EU11%

India7%

Russia7%

Japan 4%

Other HICs8%

Other MICs15%

LICs0.5%

Notes: Energy-related CO2 emissions are CO2 emissions from the energy sector at the point

of combustion. Other Transport includes international marine and aviation bunkers, domestic

aviation and navigation, rail and pipeline transport; Other Sectors include commercial/public

services, agriculture/forestry, fishing, energy industries other than electricity and heat genera-

tion, and other emissions not specified elsewhere; Energy = fuels consumed for electricity and

heat generation, as defined in the opening paragraph. HIC, MIC, and LIC refer to high-, middle-,

and low-income countries.

Source: IEA 2012a.

1 T r a c k i n g P r o g r e s s To wa r d P r o v i d i n g s u s Ta i n a b l e e n e r g y f o r a l l i n e a s T e r n e u r o P e a n d c e n T r a l a s i a

THE BOTTOM LINE



energy for all? The region

has near-universal access to

electricity, and 93 percent of

the population has access


despite relatively abundant

hydropower, the share

of renewables in energy

consumption has remained

relatively low. very high energy

intensity levels have come

down rapidly. The big questions

are how renewables will evolve

when energy demand picks up

again and whether recent rates

of decline in energy intensity

will continue.

2014/29

Elisa Portale is an

energy economist in

the Energy Sector




Global Practice.

Joeri de Wit is an

energy economist in


Extractives Global

Practice.



for All in Eastern Europe and Central Asia




(SE4ALL) initiative


All,” the UN General Assembly established three global objectives

to be accomplished by 2030: to ensure universal access to modern

energy services,1 to double the 2010 share of renewable energy in

the global energy mix, and to double the global rate of improvement

in energy efficiency relative to the period 1990–2010 (SE4ALL 2012).






















the GTF in 2015.



Energy access. Access to modern energy services is measured

by the percentage of the population with an electricity connection

and the percentage of the population with access to nonsolid fuels.2

These data are collected using household surveys and reported

in the World Bank’s Global Electrification Database and the World

Health Organization’s Household Energy Database.

Renewable energy. The share of renewable energy in the energy

mix is measured by the percentage of total final energy consumption

that is derived from renewable energy resources. Data used to

calculate this indicator are obtained from energy balances published

by the International Energy Agency and the United Nations.

Energy efficiency. The rate of improvement of energy efficiency is

approximated by the compound annual growth rate (CAGR) of energy

intensity, where energy intensity is the ratio of total primary energy

consumption to gross domestic product (GDP) measured in purchas-

ing power parity (PPP) terms. Data used to calculate energy intensity

are obtained from energy balances published by the International

Energy Agency and the United Nations.

This note uses data from the GTF to provide a regional and

country perspective on the three pillars of SE4ALL for Eastern




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