Challenge of Low Carbon Development: Lessons from a Recent Evaluation

Making climate financework:lessons for and from evaluationKenneth ChomitzIndependent Evaluation GroupKchomitz [at] worldbank.orgwww.worldbank.org/ieg/climatechangeIEG’s Climate Evaluation SeriesPhase I:Win-win Energy Policies2009Phase II:MitigationNov 4 2010Phase III:Adaptation2011Outline?Assessing impact of protected areas on deforestation?Assessing local and global returns to renewable energy and energy efficiency projects?Assessing impact of carbon finance on clean energy investments?Feedback and learningProtected areas seem to be effectiveProtected Areas in the TF biomeCastanheira State Extractive ReserveEstablished 19959,700 hec.but protection may be due to terrain, not lawProtected Areas in the TF biomeGunung Leuser, National ParkIndonesiaEstablished 1980792,675 hec.How matching works: 2 variable exampleProtected Areas in the TF biomeNaïve fire ratesProtected1.78%Never Protected6.00%Effectiveness4.22%Matched fire ratesProtected1.39%Never Protected2.20%Effectiveness0.81%Protected areas do reduce deforestation024681012141618LAC strict LAC multi LAC IndigenousAfrica strict Africa multi Asia strict Asia multiPercentage reduction over 8 yearsMultiple use areas on average are even more effective thanstrictly protected areasmaxminIndigenous areas areextremely effectiveENERGY INVESTMENTSCarlosfpardo CC licenseAshden awardsEvaluation challenge:Inadequate monitoring?Bank Group has large, rapidly growing portfolio in energy efficiency/renewable energy/urban transit?But formal evaluations occur 5 to 10 years after initiation – often too late, sometimes too early to be informative? Even at ‘completion’, most project lack good documentation of basic economic impacts (to say nothing of climate impacts)Economic and carbon returns torenewable energy and energy efficiency projects01020304050600 10 20 30 40 50 60 70 80 90 100Economic return (%)Carbon return (kg / $ investment cost)WindHydroT&DEECFLT & D: transmission and distribution loss reductionEE: energy efficiency CFL: efficient lighting0204060801001201401601802000 20 40 60 80 100 120Economic return (%)Carbon return (kg / $ investment cost)WindHydroT&DEECFLEconomic and carbon returns torenewable energy and energy efficiency projectsEconomic and carbon returns torenewable energy and energy efficiency projects0501001502002503003500 20 40 60 80 100 120Economic return (%)Carbon return (kg / $ investment cost)WindHydroT&DEECFL0501001502002503003504004505000 20 40 60 80 100 120 140Economic return (%)Carbon return (kg / $ investment cost)WindHydroT&DEECFLEconomic and carbon returns torenewable energy and energy efficiency projectsEconomic and carbon returns torenewable energy and energy efficiency projects01002003004005006007008000 20 40 60 80 100 120 140 160Economic return (%)Carbon return (kg / $ investment cost)WindHydroT&DEECFLEfficiency projects offer returns that dwarf most other development projectsFINANCIAL INSTRUMENTS©Basri MarzukiCarbon finance: little impact on incentives, doesn’t address financing constraints5%10%15%20%25%5% 10% 15% 20% 25%RoE after carbonReturn on Equity before carbonEffect of carbon payments on return on equity, wind and hydro projectsFor instance, if 15% is an investment threshold, few projectsAre boosted over the threshold by carbon paymentsThe value of rapid feedback:CDM landfill gas projects as an exampleRegular, public reporting on output showed that theseprojects were underperforming as a class, prompting attention toremediesPressing need for rapid feedback/evaluation on:?Economic and carbon returns of innovative technologies?Adoption of energy efficiency behaviors?Social safety nets and energy price reform?Social, economic, and environmental impacts of forest interventions?Capacity utilization of renewable powerFor further info:www.worldbank.org/ieg/climatechangeKchomitz [at]worldbank.org Making climate finance?work:?lessons for and from evaluation?? IEG’s Climate Evaluation Series Outline Slide Number 4 Slide Number 5 Slide Number 6 Slide Number 7 ENERGY INVESTMENTS Evaluation challenge:?Inadequate monitoring Economic and carbon returns to?renewable energy and energy efficiency projects Economic and carbon returns to?renewable energy and energy efficiency projects Economic and carbon returns to?renewable energy and energy efficiency projects Economic and carbon returns to?renewable energy and energy efficiency projects Economic and carbon returns to?renewable energy and energy efficiency projects FINANCIAL INSTRUMENTS Carbon finance: little impact on incentives, doesn’t address financing constraints The value of rapid feedback:? CDM landfill gas projects as an example Pressing need for rapid feedback/evaluation on: For further info:?www.worldbank.org/ieg/climatechange