World Bank Global Review of Energy Policies

1. Energy Scenarios: From the Present to the Next DecadeThailand Infrastructure DialogueBangkok, Aug 28, 2006

2. World Bank Global Review of Energy Policies At its Annual Meeting in Singapore, in September 2006, the Bank will present the ‘Clean Energy and Development Investment Framework’ • It is a serious response to today’s cascade of severe energy challenges. • Current development scenarios have failed due to rapid price increases of fossil fuels. Net oil-importing countries have lost around 3.5 % of GDP. • Businesses – and the economy – suffer from higher prices, and heavier costs for energy • Households – and society – suffer from reduced benefits of energy • The evidence of climate change is requiring additional drastic steps in the energy, transport, and industrial sectors to adjust to change and reduce further climate change by reducing greenhouse gases from energy use and production.

3. RE+EE 48% growth

4. Magnitude of Energy Needs Total annual investment in renewable capacity: 2004: US$ 30 billion 2005: US$ 38 billion 2005: Annual investment levels (excluding large hydro): China: US$ 7 billion Germany: US$ 7 billion USA: US$ 3.5 billion Spain: US$ 2 billion Japan: US$ 2 billion Demand in 2006 is 4,300 million tons of oil equivalent. Demand will rise 60% by 2030. Required annual investment in NICs and developing countries between 2005 and 2030 = US$ 300 billion of which 73% for electricity. Public sector cannot meet needs. Policy changes are required to facilitate private sector investment

5. …Different investment characteristics • Low(er) carbon • Incorporate security and climate change risks: diversify technologies -> clean coal, oil and gas fueled, hydro and wind turbine, solarPV and solar heat, etc. • Diversify operations due to less firm energy capacity (droughts -> empty reservoirs, no wind, high cost for gas and oil) • Challenge and opportunity: diversified ownership: public, private, communities, etc. • Diversified maintenance and operation standards, need for different regulations. • Changing Financing Terms and Conditions: • Longer terms and different risk patterns: • Lend against Power Purchase Agreements • Reinsurance against security and weather conditions

6. Diversified Technologies Diversified Ownership

7. What other countries are doing • USA: 22 states have renewable portfolio standards (RPS) targets • Germany: Feed-in laws greatly stimulated capacity in wind (total installed capacity 18GW) • Spain: wind capacity of 10GW meets 6% electricity demand now and 12% in 2010 • China: Renewable Energy Law, including feed-in tariffs for biomass but not wind. Aims 15% of electricity from RE in 2015 • Japan: 830,000 grid-connected solar rooftop programs • Brazil: 2005: 15 billion liters of ethanol (equalled by USA) • Netherlands: 50%+ consumers buy Green Energy Certificates

8. Energy Impact on Competitiveness With generators Mean losses due topower outages (percent) Percent with generators Losses from outages 80 6 9% 72% 5.4% 71% Total Factor Productivity of Micro, Small, Medium and Large Enterprises can differ between countries by more than 60% due to Energy and Infrastructure factors 60 4 3.3% 42% 40 27% 2% 2 20 0 0 Bangladesh India Pakistan China

9. EAP energy trends 2005-2010 • Fastest growth in energy demand of any region in world • Coal will account for nearly half of primary energy  environmental impacts • Oil imports to rise  security concerns • Gas low; renewables low – aggressive promotion needed • Power generation dominated by coal (~50 -75%); oil (~10%); gas (~10%); rest renewables + nuclear • Biomass to remain significant

10. Development challenges Global and domestic environmental impacts • 1/3 of land in China is affected by acid rain People affected by climate change events over a 14 year period (1990-2004) • China 1.8 billion • Thailand 34 million

11. EAP has not exploited most of its hydropower potential Development challenges • Investment needs dwarf public resources • Energy efficiency is low • Unexploited hydropower potential

12. Renewables least cost energy solution? • Netherlands last week stopped applications for subsidies • Fiji aims to have Electricity supply 100% from renewables by 2012 in least cost scenario. • Shipping and Transport Companies in Pacific switching to Coconut Oil. • Renewables profitable investments …..

13. Practical Examples

14. Practical Examples • Long-term finance even at the micro-level, in Papua New Guinea now lets teachers reduce their energy costs by switching to renewables

15. This project transforms the initial high investment cost (US$250 – US$1,000) into less than….the current monthly cost of kerosene and torch batteries used for lighting, resulting in……. COST S A V I NG S TIME

16. Clean Energy Financing Vehicle • The Clean Energy Financing Vehicle (CEFV) will • provide a mechanism to transfer high efficiency technology • blend grants and carbon finance to buy down the costs of new technologies and mitigate technology risks. • The Vehicle will provide include: • • Power rehabilitation financing, with repayment provided from increased efficiency and capacity, plus carbon emissions reductions. • • Project development fund, to increase “Bankable” projects with private sector participation • • Venture capital funds for technology adoption

17. Carbon Finance Business • Relatively new business; launched in 2000 • Two Carbon Finance business lines: IBRD Carbon Finance and IFC Carbon Finance. • About $1.4 billion in funds under management since 2000 • Leverage public and private investments for projects that generate greenhouse gas emission reductions

18. World Bank Carbon Finance ProductsTotal funds under management: ~ $1.7billion Prototype Carbon Fund. $180 million (closed). Multi-shareholder. Multi-purpose. Netherlands Clean Development Facility. $222 million. Netherlands Ministry of Environment. CDM energy projects. Community Development Carbon Fund. $128.6 million (closed). Multi-shareholder. Small-scale CDM energy projects. BioCarbon Fund. $63.5 million (open). Multi-shareholder. JI and CDM LULUCF projects. Italian Carbon Fund. $100 million (open to Italian participation). Italian Multi-shareholder. Multipurpose. Netherlands ECF Netherlands European Carbon Facility. $40 million with IFC. Netherlands Ministry of Economic Affairs. JI projects. Spanish Carbon Fund. $280 million (open to Spanish participation). Spanish Multi-shareholder. Multipurpose. Spanish CF Danish Carbon Fund. $75 million (open to Danish participation). Danish Multi-shareholder. Multipurpose. Danish CF

19. 78% in East Asiasome Thai projects submitted for financing from other funds

20. Declining Supply fromExisting Hydro (Wailoa) in Fiji

21. 2006 Supply & Demand When the wind blows, or when it rains, and the Variable hydro and wind can generate, FEA needs to close the valves from the reservoir to save water for peak demand. While we have the technologies, we need to develop the experience to operate systems with multiple energy sources with variable availability.

22. Overview of Bank presentations • Peter Meier, economic analysis of RE benefits • Jan Hamrin, how to promote renewables • Dr. Masami Kojima, one possible technology: the challenges and promises of biomass and biofuel • Ashok Sarkar EE in Global Context • Vincent David, EE in Canada, Ireland and EU • Takeshi Sekiyama, EEE in Japan. • Mr. Chandrasekhar, Entrepreneur • Mr. Guido Delgado, Banker and Energy expert

23. Thank You ! Antonie de Wilde Coordinator Asia Alternative and Sustainable Energy (ASTAE)East Asia and Pacific Region Contact: adewilde@worldbank.org