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close this book Sustainable Energy News - No. 4 March 1994
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Strategy & Practice

 

 

 

New Energy Policy

In October 1992 the World Bank's Executive Board approved the two above mentioned policy papers. The two papers call for an end to business as usual, and state that the Bank's energy loans will only be provided to those countries that have undertaken certain energy reforms. For example, the papers call for borrowers to increase the price of electricity to its long-run marginal cost.

The more significant observation of the new policy arise from the understanding that marginal costpricing and general capability improvements alone are insufficient to achive implementation of end-use energy efficiency. A new policy, introduced with the papers, is that energy loans should be based on or support energy strategies that consider both demandand supply-side resources. Another new policy is that the Bank will give high-level, in-country visibility to strengthen end-use energy efficiency institutions.

The report of EDF and NRDC states: If executed and if the (World) Bank more affectively enforces its pricing and regulatory reforms, these new energy policies could be the single most important factor in driving increased levels of investment in end-use energy efficiency in developing countries.

 

The Good Examples

Among the 46 loans evaluated by EDF and NRDC only the two described below are in reasonable agreement with the new World Bank Energy Policy. As local NGOs will know, these projects are in no way perfect; but they are the best World Bank financed projects in this respect.

The World Bank has played an active role in helping Poland to improve its power sector. The Bank has pushed forward to support energy efficiency in several sectors, despite the current oversupply of electricity. The Bank provides direct finance for end-use efficiency within the current Heat Supply Restructuring and Conservation Project. This will also be done in the proposed Katowice District Heating Project, evaluated by EDF and NRDC.

Components in these loans make it possible to provide small loans to costumers for insulation and improved metering, which allow costumers to realize the savings. Such investments have an estimated pay-back period of 5 years. In the future all loans to Polish Power sector will be based on Integrated Resource Planning (IRP), including an upcoming USD 800 mill. loan, that has an IRP component.

In Colombia, the World Bank is planning a loan for private sector energy development. The loan is planned as USD 15 mill. technical assistance loan, followed by a larger investment loan. The technical assistance loan will seek to strengthen the pricing, regulatory and environmental framework for the power sector as a needed pre-condition for investment. It will also include a Demand Side Management (DSM) component including efficiency standards, building codes and a pilot DSM program.

Source: Power Failure, EDF & NRDC, February, 1994.

 

Mixed Governmental Support for Energy Conservation

The Energy Policies of IEA Countries, 1992 Review, for the first time, published public sectors budgets for energy conservation between 1990 and 1992. The budgets do not include utility or research programs. Some includes state or regional programs.

The total IEA (International Energy Agency) budgets for energy conservation fluctuated with large swings with no discernible trend in the last three years:

1990

USD

1,726 million

1991

USD

1,962 million

1992

USD

1,862 mi11ion

The IEA report states that the overall increase contrasts with the declining emphasis and funding levels for energy efficiency during the latter part of the 1980s, when governments began to bring expenditures more into line with revenue and decrease energy efficiency spending as world energy prices declined.

The budgets of the IEA countries also demonstrate a wide variation in rates of annual growth between 1990 and 1992. Seven of the countries report a decline in funding between 1990 and 1992. The per capita expenditures also show the significant difference in effort for the selected countries. Three countries - Germany, the Netherlands and Norway - are by far the highest spenders on energy conservation, while many others spend less than one dollar per person.

Funding level - a reliable indicator? The level of funding is considered as an indicator of countries' commitment given to energy conservation serving both energy and environmental policy objectives. However, it can be a poor indicator of interest and support, since many programs - standards, regulations, voluntary actions, - require fairly low expenditure.

Energy Intensity Ratios show no difference!

The energy intensity of a country (total primary energy supply per unit of GDP) is a frequently criticised, but still widely used yardstick for efficiency improvements. However, the numbers do not show direct correlation between government spending and energy intensity. There are almost no changes in the counties' energy intensity ratios from 1990 to 1992. The yearly $11 per capita spent on energy conservation was far from making significant changes in the energy intensity. More efforts are needed to cut this ratio down.

Source: Energy ... in Demand 19 rue Paul Feval, 75018 Paris, France.