IFC and Partners Address Climate Change

As part of the World Bank Group's strategic priorities, IFC is building partnerships with key stakeholders to address climate change worldwide. This month, we began a series of regional multistakeholder consultations with donor agencies, the private sector, and commercial and development financial institutions to identify and forge partnerships for addressing climate change in developing countries.

The Danish government hosted the first meeting, which brought together participants from the Nordic region and focused on the theme: Global Climate Change – Financing Private Sector Opportunities in Developing Countries.

Rachel Kyte, IFC Vice President for Business Advisory Services, explained that climate change poses both risks and opportunities for the private sector. She said, "Many companies in industrial countries have started adapting their business strategies to these risks and opportunities successfully. However, the opportunities remain untapped in emerging economies. One way to bridge the gap is for development agencies and donor governments to inject seed money. This can help make those business models that rely on lower carbon emission technologies commercially viable."

An estimated $200 billion in investments is needed each year to address climate change in the developing world. Although a significant amount of this can be generated from transfers from the carbon market and donors, there is growing recognition that the private sector has a critical role to play if the consequences of climate change are to be addressed fully.

Potential Challenges

Private sector participants at the meeting shared some of the challenges of investing in climate-related projects in developing countries.

Challenges include: A lack of appropriate risk-sharing facilities Limited framework and incentives for developing and deploying clean technologies The high cost of Clean Development Mechanism transactions Limited ways to combine private sector funds with public sector funds Limited data for hydro, geothermal, and wind energy companies to develop new businesses

IFC is working with partners to find solutions to many of these challenges. To remove barriers and lower costs to climate-friendly investments, for example, IFC uses the Global Environment Fund and other donor funding for private sector projects that help transform markets.

Investing in Clean Energy

IFC already invests in a range of clean energy projects, from wind and hydropower to biomass. IFC also provides advice to governments and companies on structuring and implementing private sector participation in power sector projects. An example is a completed advisory mandate that introduced private sector participation into power generation in non-grid areas of the Philippines.

IFC expects to continue increasing investments in renewable energy and energy efficiency. Focus areas include: Wind Hydro Biomass Solar photovoltaic New products for the carbon market

To learn more about IFC and climate change, visit www.ifc.org/sustainability

For more information about IFC and its donor partners, visit www.ifc.org/ifcext/about.nsf/Content/Partners_Stakeholders

For more information contact:

Thoko Moyo
IFC Communications Officer
Phone: (202) 458-8517
E-mail: tmoyo@ifc.org

Lucie Giraud
IFC Communications Officer
Phone: (202) 458 4662
E-mail: lgiraud@ifc.org