For more than 20 years, IFC has been has been helping the private sector respond to climate change. Today, IFC provides client companies with expert advice on reducing, managing, and mitigating the climate change impacts of their businesses. We invest in a range of clean energy projects, from wind and hydropower to biomass. With support from donors, we invest in innovative technologies and services. We are also developing innovative products that help companies meet the challenge.
In fiscal 2007, IFC made 25 investments totaling $450 million in energy efficiency and renewable energy. These investments mobilized $763 million from commercial investors. By leveraging our investments and partnerships, IFC can play a key role in helping the private sector address climate change.
Investing in Clean Energy
IFC aims to mobilize funding and expand climate change–related investments threefold to over $3 billion by fiscal 2011. Much of the focus is on clean energy.
Wind: Wind power is a free and renewable energy resource that offers substantial environmental benefits. In the Dominican Republic, IFC is investing in an 8.25-megawatt wind farm, the first of its kind in the country. The project provides a cleaner source of electricity and saves on fuel costs by displacing part of the local utility company's diesel generation.
In India, IFC is investing in a 37-megawatt wind project and working to purchase emission reduction credits from wind farms. We are also considering wind projects in other promising markets, including Argentina, China, Estonia, Pakistan, and Turkey.
Hydro: IFC has provided financing for more than 15 run-of-river hydropower projects, including Bujagali in Uganda. This 250-megawatt plant, a World Bank Group-supported investment, is an integral component of Uganda's strategy to close an energy supply gap that constrains development. When commissioned in 2011, the new plant will generate electricity by reusing water from two upstream facilities. The project is the lowest-cost option for supplying additional electricity to the country's power grid.
Recent IFC transactions in China and India involve bundling a number of small hydropower facilities. IFC has also purchased emissions reductions from a group of facilities owned and operated by the India Hydro Development Company. Other key hydropower ventures include Brazil's Brascan Energetica, Chile's Hidromaule and La Confluencia, and Sri Lanka's Eco Power.
Biomass: IFC has provided financing to several sugar producers in Brazil, India, Nicaragua, and Peru to build bagasse cogeneration plants, as well as ethanol distilleries in some cases. This has helped provide over 600 megawatts of new biomass-fired power generation facilities that dispatch surplus power to the grid. Agreements have also been signed to purchase carbon credits from some of these projects.
In March 2007, IFC agreed to invest $35 million to help build the Vale do Parana mill, a greenfield sugar and ethanol plant in Brazil. The project will use cutting-edge technology to minimize environmental impact and maximize production efficiency. It will generate 1,000 jobs and contribute significantly to the region's economic development.
Supporting Innovation
With donor resources and our own capital, IFC is testing new technologies and business models that can help mitigate climate change. IFC is also calling on banks in developing countries to increase their lending to companies seeking to invest in climate-friendly technologies. These efforts are particularly important in developing countries, which have no obligation under the Kyoto Protocol to reduce their carbon dioxide emissions.
Solar PV: IFC is the largest source of financing for off-grid solar businesses in emerging markets. With support from the Global Environment Facility, IFC has implemented the largest grid-connected photovoltaic installation in the developing world, including a 1-megawatt facility in the Philippines. IFC recently published Selling Solar, a report that presents lessons learned from investing in solar energy for more than a decade.
New Products for the Carbon Market: IFC's comparative advantage in assessing and assuming risk in emerging markets allows us to play a leadership role in developing new products for the carbon market. These include a carbon delivery guarantee, a credit enhancement product wherein IFC guarantees delivery of carbon credits from qualifying projects in developing countries to buyers in developed countries.
A Strategic Priority
IFC has made climate change a strategic priority throughout our operations. We also play a critical role in the World Bank Group's 2004 Bonn commitment to scale up support for renewable energy and energy efficiency by 20 percent annually through 2010.
Looking forward, IFC plans to develop best practices that will help clients move to less carbon-intensive growth. We also aim to develop a new methodology for measuring the greenhouse gas emissions of a lending portfolio. This will help us assess the impact of IFC client companies and establish a model for use by other financial institutions.
For more information contact:
Lucie Giraud
IFC Communications Officer
Phone: (202) 458-4662
E-mail: lgiraud@ifc.org
Published December 10, 2007
