AT A GLANCE: - Today, 1.6 billion people do not have access to basic modern energy services – in Sub-Saharan Africa, on average, only 25 percent of households have access to electricity.
- Indoor air pollution caused by the use of biomass in inefficient cook stoves is responsible for 1.5 million deaths per year – mostly of young children and mothers.
- Under a “business-as-usual” scenario to improve access to electricity, 1.4 billion people would still lack access in 2030 and 2.6 billion people would rely on biomass fuels.
- The World Bank Group is responding to these challenges. Energy commitments over the FY06–08 period have already exceeded the forecast of US$10 billion and are rising further, compared to US$7 billion in the FY03–05 period.
- The World Bank Group committed $1.4 billion in fiscal year 2007 to renewable energy and energy efficiency projects, representing 40% of total energy lending.
- As a strategic response to the continuing dual challenges of providing modern energy for economic growth while reacting to climate change, the World Bank Group has launched the Strategic Framework for Climate Change and Development (SFCCD) and the Sustainable Infrastructure Action Plan (SIAP) that affirm effective climate change adaptation and mitigation as core development mechanisms.
The Global Energy Challenge Access. Today, 1.6 billion people do not have access to basic modern energy services – particularly in Africa where only 25 percent of households have access to electricity. More than 2.5 billion people still rely on wood and biomass for cooking and heating. The ongoing search for wood to burn contributes to deforestation in some areas, and leads to indoor air pollution that, according to the World Health Organization, results in 1.5 million deaths annually (more than malaria and tuberculosis combined) – mostly of young children and mothers. Collecting wood for fuel is also time-consuming, reducing the time that women and children can devote to productive uses such as farming and education each day. Under “business-as-usual” projections of improving access to electricity, carried out by the International Energy Agency, 1.4 billion people will still lack access in 2030, and 2.6 billion people will rely on biomass fuels. Achieving the Millennium Development Goals. The economic impacts of energy deprivation can be devastating for households and for national economic growth. Poor people in developing countries sometimes spend as much as one quarter of their cash income on energy. Women without modern fuel sources spend on average an hour a day transporting wood. Access to modern energy underlies all of the Millennium Development Goals. Without access to modern and sustainable energy services, poor people are deprived of opportunities for economic development, and improved healthcare and living standards. Financing Gap. The way that energy and environmental challenges are addressed in the next two decades will determine sustainable growth, environmental quality, and national security. The demand for primary energy is projected to increase in non-OECD countries by a factor of 2.3 to 5.2 between now and 2050. To meet this demand, the power sector in the developing world in the current decade is estimated to be $165 billion annually, but funding currently is estimated to be about half of this. It is estimated that shifting these investments to a low-carbon growth trajectory would add an additional $30 billion per year. Unless ways are found to fill this gap, electricity access rates will remain low in poorer countries and reliability and quality will fail, resulting in rolling black-outs and brown-outs, seriously inhibiting economic growth and degrading the environment. Energy Security. Strengthening energy security is also essential to alleviate some of the macroeconomic concerns of developing countries by diversifying supply and rationalizing energy use. Over the past 10 years, many countries – both developing and developed – have been subjected to energy crises with serious consequences for their economies and the poor in particular. The recent increase in oil prices has had dire consequences on the poorest oil importing countries. It is estimated that each $10 increase in the price of a barrel of oil (starting at a $23 per barrel base) reduces GDP by close to 1.5 percent for the poorest countries with per capita GDP of less than $300. Today, when oil prices have reached more than $105 per barrel, the impact on the poorest and most vulnerable is greatest. Reports are emerging that people are foregoing essential services such as lighting and shifting to poorer quality forms of energy such as animal dung and straw – affecting quality of life, income and education opportunities, and health. Environmental Challenge. Developing countries and poor people are the most vulnerable to environmental degradation and climate change impacts. The increasing demand for energy will result in significant increases in carbon dioxide emissions. While OECD countries will remain the largest per capita emitters of greenhouse gases, the growth of greenhouse gas emissions in the next decades will come primarily from developing countries. Energy at the World Bank Group
Implementing the 2003 Infrastructure Action Plan 
The Bank’s 2003 Infrastructure Action Plan (IAP) aimed to revitalize the previously downsized energy business. The IAP reflected the fact that investment needs were accelerating, private investors had considerably reduced their exposure in the Bank’s client countries, and meeting the MDG challenge required continued support for infrastructure. The IAP outlined a clear strategy to rebuild the Bank Group’s infrastructure business, including energy.
In FY04-06, World Bank Group energy commitments ranged from $1.7 to 4.8 billion, or $9.3 billion for the entire three year period. In FY07, World Bank Group lending for energy reached $3.6 billion. Because of the “lumpy” nature of energy investments, there will continue to be fluctuations going forward, but the pipeline indicates a continued strong program. The World Bank Group has already exceeded the forecast for overall energy lending of US$10 billion over the FY06–08 period, compared to US$7 billion in the FY03–05 period. For FY06 and FY07, WBG lending for energy exceeded US$8 billion; over US$2 billion have been delivered during the first half of FY08. Meeting the Commitments Made at the Bonn International Renewable Energies Conference 
In Bonn, Germany, in June 2004, at the International Renewable Energies Conference, the World Bank Group committed to increase its support for new renewable (RE) and energy efficiency (EE) projects by an average of 20 percent/per year over the baseline from 2005 to 2009. The WBG has outperformed its Bonn Commitment. From June 2004 to December 2007, $2.5 billion have been committed for new RE and EE, thus exceeding the Bonn commitment of $1.9 billion one and half years ahead of schedule. All together, in FY07 the WBG supported low-carbon projects (including large hydro projects) of US$1.4 billion, representing 40 percent of WBG energy lending (up from 28 percent in FY03–05, and 36 percent in FY06). *Total energycommitmentsincludelargehydro,(>10MW) oil and natural gas distribution and refineries; coal mining; policy support and generation, transmission, and distribution of electricity.< /span> The World Bank’s Regional Energy Portfolio There is a wide regional variation in the Bank’s energy lending, with the strongest energy portfolio in the Europe and Central Asia region (29 percent of energy lending in FY03-07), followed by the Africa region (27 percent of energy lending in FY03-07). The portfolios in East Asia and Pacific and South Asia regions are moderate (about 18 percent and 12 percent of lending respectively). Latin America and Middle East and North Africa regions have small portfolios (about 7 percent each of overall lending). The World Bank’s Energy Partnerships The Bank is engaged in a wide variety of partnerships on energy, including: The Global Environmental Facility (GEF). GEF helps developing countries fund projects and programs that protect the global environment. The Bank is an implementing agency of the GEF and is the largest user of GEF resources.
Carbon Finance Operations. Carbon finance in the Bank began with the establishment the Prototype Carbon Fund in 1999. Today, the World Bank manages just over $2 billion across 10 carbon funds and facilities.
Energy Sector Management Assistance Programme (ESMAP). ESMAP was established in 1983 under the joint sponsorship of the World Bank and the UNDP, and is hosted by the World Bank. ESMAP works in countries all over the world to learn about successful energy policies and research innovative energy solutions.
Asia Sustainable and Alternative Energy Program (ASTAE). ASTAE, supported by multiple donors, has an overarching objective to reduce poverty in the Asia region and stimulate pro-poor growth particularly using clean energy options.
The Clean Energy Investment Framework. The G8 Gleneagles Summit in Scotland in 2005 mandated the World Bank Group to develop a roadmap for accelerating investments in clean energy for the developing world, in cooperation with the other international financial institutions and leveraging the private sector. The Clean Energy Investment Framework (CEIF) identifies the scale of investments needed to: increase access to energy, especially in Sub-Saharan Africa;
accelerate the transition to a low carbon economy; and
adapt to climate variability and change.
In March 2007, an Action Plan to implement the CEIF was developed, setting goals to: increase access to electricity in Sub-Saharan Africa from about 25 to 35 percent by 2015 and 47 percent by 2030; reduce greenhouse gas emissions from the current business-as-usual path through increased analytical work and lending for clean energy projects; and pilot adaptation instruments in order to mainstream climate change adaptation into the development process. In September 2007, a progress report demonstrated important achievements with respect to these goals. WBG support for energy in Africa rose to US$1.1 billion in FY07 from approximately US$0.6 billion in each of the preceding two fiscal years. Moreover, low carbon country case studies designed to pave the way for a transition to a low carbon economy were launched for India, Mexico, Brazil, China, South Africa and Indonesia. The Strategic Framework for Climate Change and Development Building on the successes and lessons of the CEIF and efforts to develop the Sustainable Infrastructure Action Plan (SIAP), the WBG is preparing a comprehensive Strategic Framework for Climate Change and Development (SFCCD) for the World Bank Group to support developing country efforts to adapt to climate change and achieve low-carbon energy growth, while reducing poverty. The SFCCD will: Make effective climate action – both adaptation and mitigation – part of core development efforts. Renewable energy and energy efficiency will be considered essential and high priority solutions towards mitigation;
Address the resource gap through existing and innovative instruments for concessional finance;
Facilitate the development of innovative market mechanisms;
Create an enabling environment for private sector finance;
Accelerate the deployment of existing climate-friendly technologies and enhance the development of new mechanisms;
Step-up policy research on climate change and its link with development issues.
The SFCCD will benefit from close coordination with the World Development Report 2010 on Climate Change and several other major analytical products that will be developed by the Bank Group.
The World Bank on the Internet:
Energy and the World Bank: http://www.worldbank.org/energy
Sustainable Development Network - SDN: http://sdn.worldbank.org
International Finance Corporation – IFC : http://www.ifc.org
Multilateral Investment Guarantee Agency – MIGA: http://www.miga.org
- ### - For more information about the World Bank Group’s work in energy, and renewable energy and energy efficiency, please visit: www.worldbank.org/energy or www.worldbank.org/re Updated March 2008 Contacts:
Roger Morier: (202) 473-5675, E-mail:Rmorier@worldbank.org | 
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