In FY11, we invested $1.7 billion in climate-friendly projects.
Confronting climate change is expensive and interlinked with some of the toughest development challenges—water, food, health, and conflict.
Within two decades, the cost of addressing global warming in developing countries could reach $275 billion a year, an investment that won’t be possible without the private sector, which is expected to pay for more than 80 percent.
IFC is working with the private sector to advance climate-friendly renewable energy projects in the poorest areas, where climate change has the potential to do the most harm. Our relationship with China WindPower Group shows how IFC is helping countries transition to low-carbon growth by supporting companies that are scaling up the use of clean technology and renewable energy sources.
China WindPower makes wind turbine towers, then designs, constructs, and maintains wind farms for itself and other developers. It’s already developed 12 midsize wind farms in China with large state-owned enterprises, and is now exploring opportunities for “South-South” investment in India and Africa.
In China, IFC is helping the company build a 201-megawatt plant in Gansu, a poor province whose Gobi Desert locations are favorable to wind projects. The new plant will allow China to avoid hundreds of thousands of tons of carbon-dioxide emissions, create jobs, and promote energy efficiency.
Projects like this are critical. China is the world’s fastest-growing wind market, but also the largest emitter of greenhouse gases. China’s wind-power capacity has doubled every year for the past four years and shows no sign of stopping—the country is committed to getting 15 percent of its power from renewable sources by 2020.
To fund China WindPower’s Xiehe plant, IFC is providing a $45 million loan, and mobilized $95 million more from commercial banks. This marks China’s first wind-power deal financed entirely through an international bank syndication. We’ve also taken a $10 million equity stake in the company to help it look for business outside China, where it can help other countries go green.
The investment is just part of our work in this area. In FY11, IFC invested $1.7 billion for our own account in climate-friendly projects. By FY13, at least 20 percent of our commitments will be in such projects, up from about 14 percent now.
To help the private sector better understand the risks involved with climate change, IFC is conducting research on its economic impact. A series of recently published climate risk studies provides insight into the implications of climate change for business—how it may affect companies’ financial, economic, environmental, and social performance. We also worked with the consulting firm Mercer on a report that shows how uncertainty around international climate policy will be a significant risk for institutional investors over the next two decades.