World Bank

Energy efficiency strategy, standards and investment

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

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Paris alignmentReasoning
UnalignedFew energy efficiency standards in key sectors, with transport being the only exception.
Overarching energy efficiency first strategy/principle
There does not appear to be an overarching energy efficiency principle applied to key infrastructure sectors
Transport energy efficiency Building energy efficiencyFinancial intermediary energy efficiency
Adopted the “avoid- shift-improve” approachNo standards included – likely to follow local market conditionsNo energy efficiency standards included for intermediaries

Explanation

Energy efficiency financing

IBRD and IDA have made slower progress on energy efficiency standards than IFC, with few publicly available standards. Between 2010 and 2016, 68% of the World Bank Group’s (this includes IFC) energy efficiency investments went towards supply-side energy efficiency, and 32% towards demand-side.

Buildings 

IBRD and IDA appear to have made slower progress on energy efficiency standards than IFC, with publicly available standards for buildings not available. The World Bank instead takes a project-by-project approach  assessing what is available and viable in local markets, local codes/standards, and seeks to deploy the most cost-effective available technology or technical standard for a given country.

Recommendation: E3G recommends that the World Bank adopts a principle of achieving performance equivalent to the top 15% benchmark

For new buildings, the World Bank is now assessing the feasibility of developing standards for new hospitals and expects to initiate an assessment of a similar standard for schools in the coming year. These are not yet in place.

Transport

On transport, IBRD and IDA have adopted the practice of using the ‘avoid-shift-improve’ approach. It does this by promoting modal shifts from higher emission modes such as roads to lower emission modes, including waterways and rail. IBRD/IDA promote ‘Avoid’ through urban-transport nexus projects that finance transit-oriented development and compact city development. The Bank states that ‘Improve’ is less applicable to its portfolio due to these projects being more relevant to the private sector and fleet improvements*.

IBRD and IDA also state that their goal is to encourage inland water-based transport to displace higher emission modes and low carbon trucking.

Financial intermediaries

The World Bank does not appear to require financial intermediaries (FI) to follow energy efficiency standards. The bank reportedly specifies minimum energy savings for every FI project, typically at least 20%. However, a source for this has not been found.

Industry

E3G intends to expand this metric to include industrial energy efficiency in the future.

Recommendation: IBRD and IDA are well placed to adopt the standards used by the IFC in other sectors.

Recommendation: World Bank should work to ensure that their common approach to the greenhouse gas accounting (GHG) of energy efficiency does not extend the lifespans and absolute emissions of fossil fuel assets.

 

*Information provided by World Bank

Last Update: November 2020

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