Energy crisis and climate change; a challenge for policy makers and economy in Southeast Europe

1
Energy crisis and climate change a challenge for
policy makers and economy in Southeast Europe

• International conference Southeast Europe
  Association (SOG)
• Tutzing, March 27 and 28,2009
• A view from the World Bank
• Franz Kaps, Senior Partnership Advisor
  (consultant)
• Europe and Central Asia Region

2
Countries with Ongoing WB EE Projects in SEE

• Bulgaria (GEF)
• Croatia (IBRD and GEF)
• Macedonia (GEF)
• Montenegro (IBRD) under preparation
• Romania (GEF)
• Serbia (IBRD)

3
Serbia EE Project

• IBRD loan 21 million implemented in Phase 1 and
  additional 28 million allocated for Phase 2
• Rehabilitation of Clinical Centre in Belgrade as
  well as schools, universities, hospitals and
  orphanages across Serbia
• Savings in the order of 40-50 expected
• Average pay-back time around 4 years

4
Macedonia Sustainable Energy Project

• Bank for Development Promotion
• Major Project period 2007-2011
• GEF grant of 5.5m
• Co-financed by 2.8m from GoM and the Macedonian
  Bank for Development
• Major emphasis on policy and institutional
  framework
• Particular emphasis on public sector buildings
  (e.g. schools and hospitals)
• Both debt finance and guarantees foreseen

5
Lessons Learned

• Subsidies often dominate and condition the market
  for EE
• Local FIs will need extensive training and
  hand-holding before they will be willing/able to
  lend for EE and develop a project pipeline
• EE funds can help kick-start EE market and get
  local FIs involved
• Public procurement regulations can be serious
  impediments for ESCO operations
• ESCO projects often need substantial
  co-financing because clients want high-cost
  measures
• Some market segments, e.g. hospitals, may need
  guarantees before EE investments are feasible
• Implementation capacity is often main barrier

6
Western Balkans Energy Efficiency Study

• Support implementation of National Energy
  Efficiency Assessment Papers (NEEAPs)
• Calculation of energy efficiency indicators and
  benchmarking
• Identifying gaps in existing data
• Analysis of institutional framework and barriers
• Focus on public sector
• Public sector should be first mover - leading by
  example
• Create a market for suppliers and consultants
  that will benefit private sector EE
• Country-specific reports during Summer 2009

7
Preliminary Findings

• Public sector Important potential for EE
  improvements
• Residential sector complex and with limited data
• Industrial sector Statistical data show
  potential but in reality there are large barriers
  
• Major gaps in the enabling framework for EE
• Institutional capacity to formulate and implement
  EE policy low
• Close coordination among IFIs/donors (e.g. EC,
  EBRD, EIB, KfW, USAID, UNECE) essential

8
Next steps

• Estimation of sector-specific potential and
  barriers
• Evaluation of the applicability and
  transferability of promising public-private
  models
• Identification of institutional, financing
  (including carbon finance) and financial
  intermediation models
• Proposing improvements to the institutional and
  regulatory framework

9
The Tools in the Toolbox

• IBRD loans to governments and directly to
  companies (including FIs)
• Grants from WB-administered trust funds (e.g.
  GEF)
• Partial credit and risk guarantees
• Sub-national loans WB/IFC cooperation
• IFC instruments
• Carbon Finance / Green Investment Schemes
• Technical Assistance

10
Climate Change and Energy Vulnerability
11
Context

• The energy sector is sensitive to changes in
  seasonal weather patterns and extremes, e.g.
• Affects energy supply
• Impacts transmission and distribution capacity,
  integrity
• Disrupts oil and gas production
• Significant investment is projected in coming
  decades to renew, replace or expand existing
  energy infrastructure
• Design codes are based on historic climate data

12
Challenge

• How to ensure the resilience of existing and
  planned infrastructure to current and projected
  climate change, and inherent modeling
  uncertainties?

13
Proposal

• Pilot an assessment of energy sector
  vulnerability to current and projected climate
  change (2030-50) and review options to adapt to
  identified risks
• Stakeholder engagement key
• Focus on understanding vulnerabilities
• Identification of flexible risk based adaptation
  strategies
• In parallel it will be important to ensure sector
  access to timely, tailored and and well targeted
  weather/ climate data

14
Proposed Work Plan

• Pilots vulnerability assessment in two countries
• Albania, first half 2009
• South Caucasus (TBD), second half 2009
• Develop operational toolkit based on pilot
  experience
• Disseminate toolkit across at least 5 other
  countries in South Eastern Europe and South
  Caucasus (2010)