International Finance Corporation

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
Some progressGood energy efficiency standards for buildings and financial intermediaries, but few standards in other sectors.
Overarching energy efficiency first strategy/principle
There does not appear to be an overarching energy efficiency principle applied across key infrastructure sector.
Transport energy efficiencyBuilding energy efficiencyFinancial intermediary energy efficiency
Modal shift for transport from road to water or rail alternative.Reduce absolute energy use by at least 20%.Energy efficiency through financial intermediaries must achieve minimum thresholds.

Explanation

Transport

For transport, the IFC has a practice of supporting a modal shift for transport of cargo from road to a water- or rail-based alternative. It also supports a shift to the electrification of transport and reducing greenhouse gases (GHG) through improved demand-side optimisation. As of June 2017, ports account for 42% of IFC’s committed transport portfolio and airports accounted for 19%. Urban transport and railways combined account for only 5%.

Recommendation: The IFC should look to adopt the Avoid-Shift-Improve framework for transport lending

Buildings 

For building energy efficiency, the IFC’s EDGE (Excellence in Design for Greater Efficiencies) programme defines a “green building” as one that reduces energy and water use by at least 20%. IFC aims for 20% of new construction in new markets to be certified green within seven years of launching EDGE. The same document also states there is a goal for at least 50% of building interventions to be green. Other development institutions should look to adopt a similar approach to IFC and strengthen their energy efficiency requirements, noting that IFC must follow legally mandated national building codes if more stringent.

Financial intermediaries

IFC requires energy efficiency standards to be upheld by its financial intermediaries. At least one of these minimum thresholds must be met:

  • Reduce absolute energy consumption by at least 15%
  • Reduce GHG emissions by at least 25,000 tCO2e/year,
  • Reduce electricity consumption by at least 50 GWh/year.

Energy efficiency is part of the IFC’s Climate Assessment for Financial Institutions (CAFI) tool, designed to help support financial institutions in assessing and documenting climate finance sub-projects. It is currently used by 74 client financial intermedaries in 37 countries.

Industry and policy support

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

For energy efficiency investments in the cement industry, IFC uses the following thresholds:

  • Energy consumption below 3.0 GJ/t of clinker.
  • Power consumption below 90 kWh/t of cement.

For reference, the EU taxonomy states that cement production facilities that meet the identified EU green taxonomy standards are expected to achieve thermal energy intensity in the range of 2.9 – 3.4 GJ/t clinker.

Last Update: November 2020

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