2016/53
Supported by
The bottom line
Energy efficiency is among
the cheapest and cleanest
energy resources available.
The World Bank, together with
its development partners and
client governments, is making
a commitment to ensure that
energy efficiency becomes
the “first fuel” of energy policy
makers and governments around
the world. This brief highlights
lessons learned from two
decades of energy efficiency
programs in many countries.
Five recommendations are
offered at the end of the brief.
They are to focus on delivering
energy efficiency at scale, to
engage the private sector early,
to scale up energy efficiency in
the public sector, to include the
residential sector, and to plan.
Jas Singh is a senior
energy specialist in the
World Bank’s Energy and
Extractives Global Practice.
A Ak nKonwo lweldegdeg en oNtoet es eSrei re ise sf ofro rt hteh e nEenregryg yp r&a cE tx itcrea c t i v e s G l o b a l P r a c t i c e
Why Energy Efficiency Matters and How to Scale It Up
What is the problem?
Growing energy demands and continued economic
growth in developing countries will create major
fiscal, environmental, and social pressures
Global energy demand is increasing at a steady pace. To meet that
demand and sustain economic development, trillions of dollars
will be invested over the coming decades. The International Energy
Agency (IEA) projects that demand for energy will increase from
about 13,400 million tons of oil equivalent (Mtoe) in 2012 to 18,300
Mtoe in 2040—a 37 percent increase (IEA 2014a),1 with most of the
growth coming from developing countries.
As demand grows, energy subsidies, government transfers, guar-
antees to state-owned utilities, and energy imports will also increase,
placing enormous fiscal burdens on governments. But phasing out
energy subsidies and introducing new energy and environmental
taxes to curb demand will provoke social tensions and adversely
affect the poor and most vulnerable.
Concerns over energy security have led to a growth in domestic
resource exploitation, including fossil fuels. New coal power plants
are already planned or ready to start production. These develop-
ments will have substantial adverse impacts—locally and globally.
1. Data are from the IEA New Polices Scenario, which assumes that all existing and planned energy policies are fully imple-
mented. If only existing policies are considered, demand would be about 10 percent higher.
Can energy efficiency help meet the challenges?
Energy efficiency offers the cleanest and most
economical way to meet growing energy demands
Energy efficiency should be the “first fuel” of energy policy makers
and governments around the globe. It can help meet growing
energy demands cleanly and cheaply, increase competitiveness,
generate employment, secure energy, reduce poverty, and benefit
development (figure 1). The IEA notes that among single supply-side
resources, energy efficiency made the greatest contribution to meet-
ing energy demands between 1974 and 2010 (figure 2) (IEA 2014b).
Harnessing energy efficiency can facilitate more efficient allocation of
resources across the global economy, potentially boosting economic
output by US$18 trillion through 2035.
Energy efficiency contributes to a number of prevailing develop-
ment challenges (table 1), included the World Bank’s twin goals of
poverty reduction and shared prosperity. Improved energy efficiency
in industry modernizes factories, increasing productivity and com-
petitiveness. This fosters economic growth and creates and protects
long-term employment opportunities. In the urban and public
infrastructure sectors, energy efficiency can help local governments
provide more reliable public services, such as heating, power, public
lighting, and water, while reducing costs. Freed up fiscal resources
can then be used for socioeconomic development and for programs
benefitting people living in poverty. Energy efficiency mitigates the
impact of ongoing tariff reforms, which adversely affect poorer
households, and it is a relatively inexpensive method for reducing
global and local pollution. McKinsey Global Institute (Beinhocker
and others 2008) ranks energy efficiency as the top priority among
measures to mitigate climate change.
2 W h y E n e r g y E ff i c i e n c y M a tte r s a n d H o w t o S c a l e It U p

“Increased global
commitments are already
beginning to pay off. In
2011, energy savings in
Energy efficiency could curb demand by almost 10 percent (1,750
Mtoe, under the IEA New Policies Scenario) by 2040, decreasing
energy intensity by about 1.8 percent per year, still short of the
2.4 percent required to contain long-term increases in the global
temperature to 2°C or less.
The challenge is daunting. According to the World Bank and IEA
(2015), the rate of improvement in energy intensity from 2010–12
is almost a full percentage point slower than the objective of the
international Sustainable Energy for All initiative, which calls for a
2.6 percent average annual improvement for the period 2010–30.
Energy efficiency continues to be a mostly untapped resource
(figure 3). Although industrial productivity has improved dramatically
over the past few decades, substantial gains remain available
through the adoption of cost-effective measures, global best
Figure 2. “Avoided energy use” resulting from energy efficiency in
11 IEA countries
180
Hypothetical energy use had

Million tons of oil equivalent

4,000
160
there been no energy efficiency
11 OECD countries reduced However, increased global commitments are already beginning 140 improvements
Avoided energy equal
3,500

demand by an amount to pay off. In 2011, energy savings in 11 OECD countries reduced 120 to 65% of 2010 TFC 3,000

Exajoules
100
demand by 1,337 Mtoe—more than the total energy consumption of 2,500
that exceeded the total 80
the European Union (IEA 2014c). 60
1,500
energy consumption of the 1,000
40
European Union.” 20
TFC 500

0
Figure 1. The multiple benefits of energy efficiency 0
1974 1978 1982 1986 1990 1994 1998 2002 2008

Coal Oil Gas Electricity Other

Energy Avoided energy TFC (total fuel consumption)
Asset savings GHG
Source: IEA 2013.
values emissions

Disposable Energy Figure 3. Long-term energy-efficiency potential by sector

income security

100

Public Energy 80
budgets delivery

60

percent
Energy efficiency
improvment 40
Resource Energy
management prices
20

0
Macro-
Local air Industry Transport Power generation Buildings
economic
pollution
impacts
Realized energy efficiency potential
Unrealized energy efficiency potential
Employment Industrial
productivity Note: These energy efficiency potentials are based on the IEA New Policies Scenario outlined
Health and
in the World Energy Outlook 2012. Investments are classified as “economically viable” if the
Poverty
well-being alleviation
payback period for the up-front investment is equal to or less than the amount of time an
investor might be reasonably willing to wait to recover the cost, using the value of undiscounted
fuel savings as a metric. The payback periods used were in some cases longer than current
averages, but they were always shorter than the technical lifetime of individual assets.
Source: IEA 2014b.
Source: IEA 2012.
3 W h y E n e r g y E ff i c i e n c y M a tte r s a n d H o w t o S c a l e It U p
Table 1. How can energy efficiency help tackle today’s global challenges?
“Through energy efficiency,
Russia could eliminate
almost 800 million tons of
CO2 per year—equal to the
total energy consumption
of France.”
Sources: Media reports and technical studies available from the author upon request.
Development
challenge Energy efficiency can …
Infrastructure … mitigate impacts of supply
bottlenecks and constraints by better managing
shortfalls system peak loads and easing
demand during shortages, minimizing
productivity losses.
Fiscal constraints … ease fiscal limits through reduced
energy and fuel subsidies, fiscal
transfers to distressed public utilities,
and energy costs for publicly owned
assets (e.g., buildings and street
lighting).
Energy security … enhance energy security by easing
the need for energy imports, making
local energy resources last longer, and
reducing volatility in energy supply
and prices.
Economic growth, … develop new industries from
competitiveness, the reduction of energy waste (e.g.,
and jobs energy service companies), improving
industrial productivity and creating
employment opportunities.
Poverty reduction … lower overall energy bills and the
percent of household income devoted
to energy, thereby decreasing energy
poverty.
Environmental … reduce local and global pollution in
stewardship a most cost-effective manner.
Energy access … support reductions in energy losses
that increase energy access or lower
upfront costs for off-grid energy
services.
Costs and opportunities—examples
In Turkey, a seven-hour blackout in March 2015 resulted in an estimated US$700 million loss in
production.
The United States has saved 150 GW in peak demand over the past 30 years through refrigerator
efficiency standards alone.
Energy accounts for 8 percent of Serbia’s fiscal deficit due to energy subsidies, direct transfers to
state-owned energy utilities, and guarantees for utility borrowing.
An initial evaluation of the European Union’s advanced buildings directive expects €30–40
billion in direct benefits to the public budget. The addition of tax revenues and reduction of
unemployment benefits increases the estimate to €67–128 billion.
Vietnam’s energy consumption has tripled over the past decade, making it one of the most
energy-intensive economies in East Asia. It has, as a result, become increasingly reliant on
imported coal after having been virtually energy independent (1997–2007).
Japan has replaced half of its missing nuclear power capacity since the March 2011 earthquake,
tsunami, and subsequent nuclear disaster at Fukushima, solely with energy efficiency measures.
Small and medium-sized enterprises, which constitute over 80 percent of industrial firms in India,
face high and rising electricity costs coupled with supply shortages (about 10 percent overall; 17
percent at peak times), undermining their global competitiveness.
A study on the impacts of energy efficiency programs in Canada shows a net increase of
Can$234–580 billion in GDP, with 1 dollar of spending yielding 5 to 8 dollars in GDP and the
creation of 30–52 jobs.
The lack of cost-reflective tariffs cost countries in Europe and Central Asia 0.5–1 percent of GDP.
Effective social assistance programs and energy efficiency could alleviate these losses.
An electricity connection regularization program in the slums of Sao Paolo, Brazil, promoted
energy efficiency measures and formal connections. Nonpayment was reduced by 67 percent
and customer energy use by 40 percent.
Russia is the third largest energy-consuming country, but it is more energy-intensive than the top
10 energy-consuming countries. Through energy efficiency, it could eliminate almost 800 million
tons of CO2 per year—equal to the total energy consumption of France.
China has embarked on one of its most ambitious energy efficiency programs. From 1980–2010,
energy intensity declined by 70 percent, resulting in CO2 emission reductions of 24.4 billion tons.
Under a national grid extension initiative, Rwanda is distributing more than 900,000 compact
fluorescent lamps to new household connections, enabling it to reduce the load on the grid and
connect to more homes.
4 W h y E n e r g y E ff i c i e n c y M a tte r s a n d H o w t o S c a l e It U p
“Many energy efficiency
improvements have not
been made because of
systemic barriers that
prevent the realization
of energy efficiency’s
potential.”
practices, and available technologies. The building sector, which
represents almost 40 percent of global energy demand, can still meet
more than 80 percent of its potential through improved building
codes and deep retrofits. Tapping into these cost-effective measures
will require an additional investment of US$3.8 trillion by 2035, with
simple payback periods of two to eight years.
Why has energy efficiency been difficult to achieve?
Market failures and implementation barriers
have so far prevented energy efficiency from
reaching its potential
Energy efficiency investments are generally profitable and cost-ef-
fective, with energy savings repaying investment costs over time.
However, many energy efficiency improvements have not been
made owing to market failures—systemic barriers that prevent the
realization of energy efficiency’s potential. Those barriers include:
• Poor market incentives, including low energy pricing that makes
investments in energy efficiency less attractive and encourages
overconsumption.
• Weak capacity and governance of energy efficiency agencies,
which inhibits their ability to influence changes in policies and
markets, deliver effective programs, and be accountable for
results.
• Lack of data on energy use, baselines, and systematic evalua-
tions of programs, costs, and impacts.
• Absence of international consensus on the most-effective
policies and approaches for scaling up energy efficiency (e.g.,
regulations, incentives, or market-based mechanisms), the
appropriate role of government and public financing, and how
cultures and behaviors can be changed.
Thus, on-the-ground results and expanding policy targets have
substantially lagged behind the tremendous potential for energy
efficiency. But circumstances are beginning to change.
What have we learned?
The past two decades have yielded valuable lessons
to countries at all levels of development—but more
systematic evaluations are needed
Despite challenges, governments have continued to promote energy
efficiency with varying degrees of success. These initiatives have
yielded valuable lessons, some of which are being incorporated into
new policy and program designs or have already been operational-
ized and promise improved performance.
The lessons learned are first summarized in bullet form, followed
by details on each point.
• Policies must be accompanied by enforcement and
implementation.
• National targets and reporting improve accountability.
• Programs should be designed for implementation at scale.
• Simpler program and business models are needed.
• Incentives must drive markets.
Paper policies are insufficient. An expanding list of countries
have developed commendable policy frameworks backed by sound
secondary regulations. Governments must urgently shift to policy
implementation and enforcement to realize the gains these policies
represent. For example, since 2007, China has substantially stepped
up its enforcement of energy-saving building codes through: (i)
strong regulatory support, including the deployment of “acceptance
codes” at a building’s commissioning phase; (ii) stable government
budgets for implementation and enforcement agencies; (iii) trans-
parent management of the certification of third-party companies;
(iv) clear rules and responsibilities for noncompliance; and (v) an
effective national program for inspections (Bin 2012).
National targets focus attention. Broad energy efficiency
legislation and frameworks are useful when establishing institu-
tional mandates, a legal infrastructure, funding mechanisms, and
initial obligations. However, national targets are better at holding
policies, institutions, and programs accountable for results because
they usually require evaluations of policies and programs. The
ensuing assessments make it possible to adjust those that are
5 W h y E n e r g y E ff i c i e n c y M a tte r s a n d H o w t o S c a l e It U p
“National-level programs
that can create economies
of scale would allow for
the pooling of government
and donor resources into
country-led initiatives that
are ultimately sustainable.”
not performing. In 2008, India launched the National Mission on
Enhanced Energy Efficiency, which called for annual savings of at
least 23 Mtoe by 2015. Turkey’s 2012 National Energy Efficiency
Strategy calls for a 20 percent reduction in energy intensity by 2023
(compared with 2011 levels). Both countries are now improving their
monitoring and evaluation systems to better assess impacts and
enhance policy implementation and program designs.
One-off pilots are not helpful. Pilot projects are usually seen
as a way to test implementation mechanisms on a small scale.
However, most pilots are done without any commitments or means
for scaling up successful schemes, and the experiences are lost soon
after the program ends. Emphasis should be placed on national-level
programs that can create economies of scale. This would allow for
the pooling of government and donor resources into country-led
initiatives that are ultimately sustainable. For example, the World
Bank is helping the Mexican government launch a national municipal
energy efficiency program with a pilot in 32 municipalities covering
street lighting, municipal buildings, and water pumping. The pilot will
test the design and financing scheme. After savings and repayments
are verified, the program—designed to be scalable—will expand
to the national level, covering all 2,438 municipalities as well as all
municipal sectors.
Delivery models used in developed countries must be
simplified and adapted. When public financing is deemed nec-
essary to develop or scale up a target market, models from Europe,
Japan, and North America can offer valuable suggestions, but usually
they must be adapted to suit the local context. Feedback mecha-
nisms that enable learning from program lessons and improvements
during implementation are also important. For example, in 2010, with
World Bank assistance, South Africa’s power utility, Eskom, launched
the Standard Offer Program,2 a successor to its demand-side
management program. The program was based on a North American
model. It was then revised based on experience and customized to
meet the energy needs of South Africans (ESMAP 2011).
Energy service companies (ESCOs) can serve as a mech-
anism for financing and delivery of energy efficiency, but
2. A standard offer is a mechanism for acquiring demand-side resources. The utility, regulator, or other government agency
agrees to purchase energy savings or load reduction for a predetermined rate based on verified energy savings. Any end
user, energy service company, equipment supplier, or other entity can propose ideas to reduce energy use, but it will be
compensated only after completion of the plan and verification of savings.
this approach is often too complex for use in emerging markets.
ESCOs cannot succeed if they are undercapitalized, if clients are
only marginally creditworthy, if accounting and legal systems are
underdeveloped, and if data are insufficient or unreliable. Until the
market can develop organically, ESCOs should have simple business
models and modest requirements for performance guarantees and
verification of energy savings In 2011, the World Bank developed
an energy efficiency program for public facilities in Armenia using
simplified ESCO contracts under which the service company is paid
for an approved design, delivery of the project, and commissioning.3
Only the last payment is tied to a performance test. To date, the
Armenian R2E2 fund has signed more than 58 ESCO contracts.
According to World Bank project documents and progress reports,
all are performing well.
Incentives, incentives, incentives! Incentive gaps related to
energy efficiency are numerous. Public agencies investing in energy
efficiency fear budget reductions. Utility companies fear a decrease
in sales if they help customers cut energy use. When bills are based
on heated floor area, customers that are more efficient may not
realize any cost savings. And although landlords own buildings and
equipment, tenants often pay the energy bills, so neither party has a
sufficient incentive to invest in energy efficiency. Careful resolution
of misaligned incentives is critical to ensure good implementation
and high participation. In the United States, the Property Assessed
Clean Energy (PACE) mechanism was developed to overcome energy
efficiency challenges in commercial buildings. PACE allows for long-
term financing of energy efficiency measures, often for as long as
20 years, enabling more-ambitious retrofits. If a building is sold, the
PACE payments are transferred to the new owner.
Markets are responding to these lessons and informed policies.
Global estimates indicate that in 2012, the energy efficiency market
rose to an estimated US$310–360 billion, more than supply-side
investments in renewable energy or coal, oil, and gas (IEA 2014c).
Energy efficiency financing is becoming more mainstreamed and has
3. Under an energy service agreement, the financier (typically an energy efficiency fund or public ESCO) provides financing
for an energy efficiency project, usually to a public or municipal client. The client agrees to continue paying current energy
bills (or baseline energy costs). The new (lower) energy bills are paid from an escrow account, and the remainder goes
toward repayment to the financier. This kind of scheme offers clients a significant advantage by relieving them of operational
risks, enabling them to maintain a positive cash flow. Energy service agreements are typically viewed as long-term contract
obligations. They are therefore not generally counted against public debt. Such agreements are being used or considered in
Armenia, Belarus, Macedonia, Mexico, Turkey, and Ukraine, among other countries.
6 W h y E n e r g y E ff i c i e n c y M a tte r s a n d H o w t o S c a l e It U p

“Within the World Bank,
lending for energy
efficiency has become a
mainstreamed business
line, with more than
US$5.2 billion lent over
the five fiscal years ending
June 30, 2015.”
greater specialized products, from on-bill utility financing to ESCOs to
green bonds. International financial institutions provided more than
US$4.23 billion for energy efficiency in 2013.
What has the World Bank done?
The Bank has mainstreamed lending for energy
efficiency
Within the World Bank, lending for energy efficiency has become a
mainstreamed business line, with more than US$5.2 billion lent over
the five fiscal years ending June 30, 2015. However, the business
remains volatile: Lending has ranged from a high of US$2.1 billion
in fiscal 2011 to a low of US$218 million in fiscal 2015. Three-year
Table 2. World Bank program models for energy efficiency
averages indicate that lending is declining—from US$857 million per
year in 2008–10 to US$530 million in 2013–15—but several extensive
programs are in the pipeline in Bulgaria, China, Egypt, Mexico,
Russia, and Vietnam. The recent restructuring of the World Bank and
the formation of Global Solution Groups and Global Leads offer an
opportunity to scale up energy efficiency lending.
The Bank’s current energy efficiency portfolio covers the major
sectors: industry, public, and residential (table 2). The lending figures
include supply-side investments in generation, transmission, and
distribution of electricity and heat, but these are not included in the
table because their modalities are more typical, with commercial
and regulatory incentives to drive utilities to reduce their losses,
reinforced by World Bank lending toward the same end. However,

Sectors Industrial and commercial Public and municipal Residential

Program models Credit lines, loan guarantees, mezzanine
funds
Description Lending to one or more local banks
to support portfolio of smaller energy
efficiency investments in public/private
enterprises
Implementing Commercial banks, guarantee companies
agencies
Success factors Market analysis to identify target market(s)
Strong, stable demand built through multiple Target sectors with a strong stake in energy
channels and technical intermediation
Appropriate financial products, standardized
to lower transaction costs
Committed banking partners with internal
capacity raised as needed through technical
assistance
World Bank Ongoing: China, India, Jamaica, Tunisia,
examples Turkey, Ukraine, Uzbekistan
Public financing, energy efficiency/urban
development funds, super ESCOs, credit
lines, loan guarantees
Lending to government or financial
intermediary to support portfolio of energy
efficiency investments in public entities
Ministry PIUs, energy efficiency funds, public
ESCOs, commercial/development banks
Strong, committed implementing partners
efficiency and credible borrowing profile
Repayments and periodic recapitalization to
ensure sustainability
National program framework with regulatory
obligations to drive demand
Project bundling to lower transaction costs
Ongoing: Armenia, Bosnia & Herzegovina,
India, Kosovo, Montenegro
Utility DSM/rebates, bulk purchase, credit
lines, loan guarantees, manufacturer
incentives
Lending through utility/intermediary to
support efficient appliances and home
renovations
Utilities, commercial/development banks,
equipment manufacturers
Simple delivery mechanism to avoid
disrupting typical supply chains
Strong management commitment within
utility and appropriate financing/ regulatory
incentives for DSM
Incentives targeting poorer consumers
Effective outreach and social marketing
Ongoing: Bangladesh, Benin, Mexico,
Rwanda

In pipeline: Egypt, Russia, Vietnam In pipeline: Belarus, Macedonia, Mexico, In pipeline: Bulgaria
Turkey

Source: World Bank reports and data.

DSM = demand-side management; ESCO = energy service company
7 W h y E n e r g y E ff i c i e n c y M a tte r s a n d H o w t o S c a l e It U p
“Unlike supply-side
energy efficiency, which
focuses on a few large
investments, demand-side
energy efficiency programs
require intermediaries or
bundling agents to bring
many heterogeneous
investments under one
program.”
unlike larger infrastructure or supply-side energy efficiency, which is What are the priorities for future action?
focused on a few large investments, demand-side energy efficiency
programs require intermediaries or bundling agents to bring many
Once the prerequisites are met, policy makers
heterogeneous investments under one program. These bundling should treat energy efficiency as the first fuel
agents can be energy utilities, commercial or development banks, of the present century
special purpose funds, public or super-ESCOs, or equipment man-
National energy efficiency programs should be based on a compre-
ufacturers or suppliers. Program performance is frequently based
hensive policy and regulatory framework, strong and accountable
on the ability of the bundling agent to identify a strong subproject
institutions, dedicated financing mechanisms, detailed and reliable
pipeline, to finance and implement subprojects, and to monitor and
data and information, and measures to enhance technical capacity
report results.
(figure 4).
Figure 4. Framework for successful energy efficiency programs at the national level
Policy and regulations Institutions
Overarching EE legal framework Dedicated entity with EE mandate
Cost-reflective energy pricing Clear institutional roles/accountability
Codes/standards with enforcement Inter-ministerial coordinating body
mechanisms
Assignment of roles for monitoring and
EE incentive schemes with funding sources enforcement of compliance
EE targets by sector Authority to formulate, implement, evaluate,
and report on programs
Public budgeting/procurement to
encourage EE Tracking progress toward EE targets
Successful
Information energy efficiency Finance
Database on energy consumption programs Commercial bank lending
(credit lines and guarantees)
Industrial and building stock
Cash-flow–based EE financing
Information center; case study database
Commercial ESCO financing
Database of service providers,
EE technologies, and equipment providers Public sector EE financing
Broad, sustained public awareness Technical capacity Residential home appliance credit
Appliance labeling Energy auditor/manager training Equipment leasing
and certification programs
Private sector training programs
(banks, ESCOs, EE service providers,
and end users)
EE project templates (audits, M&V plans,
EPC bidding documents, and contracts)
Energy management systems
Source: World Bank 2015.
EE = energy efficiency; EPC = energy performance contract; ESCO = energy service company; M&V = measurement and verification.
8 W h y E n e r g y E ff i c i e n c y M a tte r s a n d H o w t o S c a l e It U p
“Most energy efficiency
potential lies in private
factories and buildings, so
the private sector should
be involved at the start of
any initiative, whether as
an end user, a potential
implementer, or a possible
financier.”
Once there is a solid framework in place, governments must
develop programs to address existing barriers and achieve national
energy efficiency goals. Energy efficiency programs can take many
forms—for example, providing information, special access to financ-
ing, incentives and subsidies, tools and guides, and training—to help
end users finance and implement energy efficiency measures. Such
programming should be systematic and based on market studies.
Plans should have clear objectives, measureable indicators, and
defined exit strategies, and they should be subject to broad consul-
tations with potential participants, service providers, financiers, and
other stakeholders. Key steps in program design and implementation
include:
• Collection of relevant market data to determine energy efficiency
potential and prevailing policy and market deficiencies
• Analysis and synthesis of data to determine program goals and
expected impacts
• Development of program strategies and designs
• Identification of target markets
• Development of implementation strategies and plans through
broad consultations
• Engagement of implementing agents and development of their
capacity
• Monitoring and evaluation of program results
• Learning from results to improve program designs and phase out
programs that have achieved their goals or have proven to be
ineffective.
After the foundations are laid, policy makers can begin to treat
energy efficiency as the first fuel for the next century. Five key
recommendations follow:
Focus on delivering energy efficiency at scale.
Policymakers should develop a range of program models for financ-
ing and implementation at the national level. Pilot programs should
be accompanied by commitments from the country and potential
financiers to expand successful initiatives to national scale. Donors
should be encouraged to pool funds in support of national programs
to avoid parallel and competing endeavors and to allow donors
broader policy engagement, ensuring that policies and regulations,
institutional setups, and enabling environments are in place to
sustainably support implementation of a national program.
Engage the private sector early. Most energy efficiency
potential lies in private factories and buildings, so the private sector
should be involved at the start of any initiative, whether as an end
user, a potential implementer, or a possible financier. Although early
consultations on programming and design can support efforts to
ensure that limited public funds will attract commercial financing at
a later stage, government support is necessary to develop financing
and implementation mechanisms. There must also be buy-in from
likely market actors on the approaches and models being tested
with public funds so that after government programs are phased
out, those actors will be willing to take over financing and expansion.
In addition, there must be agreement on the indicators needed by
private firms to meet their conditions for investing (e.g., rates of
return, default rates, and stable demand). Governments should also
seek input and feedback from the private sector on their policies and
programming—regulatory and voluntary mechanisms, incentives,
information, and technical support (e.g., industrial and building
tools, case studies and best-practice guides, recognition for high
performers).
Scale up energy efficiency in the public sector. Developing
countries have pressing needs to rehabilitate old and build new
infrastructure, because public buildings, schools, hospitals, street
lights, water pumps, and other infrastructure are often outdated
and poorly maintained. But credit constraints often limit access
commercial financing. Developing citywide or national programs
that target public energy users could have a catalytic effect on local
markets, attracting new service providers and equipment suppliers,
increasing competition, and driving down prices. Common ownership
and similar building types (e.g., schools and hospitals) offer excellent
opportunities to bundle projects or equipment purchases, which can
provide significant economies of scale. Local governments also have
huge investment needs across all sectors: transport, water, waste,
buildings, lighting, and energy. Regulations are critical for ensuring
that any new infrastructure—e.g., water systems, public buildings,
and municipal street or traffic lighting—adhere to national standards
that discourage overconsumption of energy.
 9 W h y E n e r g y E ff i c i e n c y M a tte r s a n d H o w t o S c a l e It U p
Make further
connections
Live Wire 2014/11.
“Designing Credit Lines for
Energy Efficiency,” by Ashok
Sarkar, Jonathan Sinton, and
Joeri de Wit.
Live Wire 2014/18.
“Exploiting Market-Based
Mechanisms to Meet Utilities’
Energy Efficiency Obligations,”
by Jonathan Sinton and
Joeri de Wit.
Live Wire 2014/25.
“Doubling the Rate of
Improvement of Energy
Efficiency,” by Jonathan
Sinton, Ivan Jacques, Ashok
Sarkar, and Irina Bushueva.
Live Wire 2016/54.
“Fostering the Development
of ESCO Markets,” by
Kathrin Hofer, Dilip Limaye,
and Jas Singh.
Live Wire 2016/55.
“Designing Effective National
Industrial Energy Efficiency
Programs,” by Feng Liu and
Robert Tromop.
Don’t forget the residential sector. The residential sector is References
among the largest (typically comprising 60–70 percent of building
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energy use) and most challenging for realizing energy efficiency.
J. Remes, T. Nauclér, and P. A. Enkvist. 2008. “The Carbon
Having regulations in place and increasing enforcement, particularly
Productivity Challenge: Curbing Climate Change and Sustaining
of national appliance standards, is an important first step. Many
Economic Growth.” McKinsey Global Institute, McKinsey &
countries have commercial credit programs for residential con-
Company, San Francisco, CA.
sumers, but too often these serve only high-income households.
Bin, Shui. 2012. “Third Parties in the Implementation of Building
Programs with incentive schemes tend to yield more positive results.
Energy Codes in China.” American Council for an Energy-Efficient
In terms of programming, bundling agents are more difficult to
Economy and Institute for Market Transformation, Washington,
recruit for the residential sector because investments are smaller
DC.
and the markets more heterogeneous, but utility DSM programs,
ESMAP (Energy Sector Management Assistance Program). 2011.
credit schemes through banks, and bulk purchases and discounts by
“Implementing Energy Efficiency and Demand Side Management:
manufacturers are viable responses to this problem. Strong com-
South Africa’s Standard Offer Model.” Low Carbon Growth
munication campaigns and behavior change mechanisms are also
Country Studies Program. Briefing Note 007/11, World Bank,
critically important owing to the diversity of behaviors, motivations,
Washington, DC.
access to information, financing, and other factors.
IEA (International Energy Agency). 2012. World Energy Outlook 2012.
Plan. In most developing countries, poor planning introduces
Paris: OECD/IEA.
inefficiencies that can take decades to resolve. Systematic energy
———. 2013. Energy Efficiency Market Report 2013: Market Trends
sector planning, integrated resource planning, coordinated infra-
and Medium Term Prospects. Paris: IEA/OECD.
structure planning, and careful land use and urban planning—all
———. 2014a. World Energy Outlook 2014. Paris: IEA/OECD.
are essential and should be accompanied by stringent codes and
———. 2014b. Capturing the Multiple Benefits of Energy Efficiency.
standards. Energy sector planning should consider demand-reduc-
Paris: IEA/OECD.
tion options as well as new supply, allowing the least-cost energy
———. 2014c. Energy Efficiency Market Report 2014: Market Trends
development plans to be formulated. Municipalities should empha-
and Medium Term Prospects. Paris: IEA/OECD.
size integrated city planning and urban designs to maximize energy
———. 2015. Energy Efficiency Market Report 2015: Market Trends
efficiency and improve the quality of life where people work and
and Medium-Term Prospects. Paris: IEA/OECD.
live. Examples include increasing density in urban areas, developing
World Bank. 2015. “Republic of Turkey: Institutional Review of Energy
transit corridors, and incorporating mixed-use space. Infrastructure
Efficiency.” Washington, DC.
planning should be integrated to ensure that implications to the
World Bank/IEA (International Energy Agency). 2015. Sustainable
energy cost and efficiency of other systems (e.g., roads, water,
Energy for All: Progress toward Sustainable Energy 2015—Global
heating, and cooling) are adequately considered.
Tracking Framework Report. Washington, DC: World Bank
The task team leader for the Energy Efficiency Outreach activity within the
World Bank’s Europe and Central Asia region is Kathrin Hofer. That activity
is sponsored by the Energy Sector Management Assistance Program, a
multidonor technical assistance trust fund administered by the World Bank
and cosponsored by 13 official bilateral donors. The authors acknowledge
the assistance of the following peer reviewers: Ashok Sarkar (senior energy
specialist, GEEDR), Ivan Jaques (senior energy specialist/ESMAP) and Jonathan
Davidar (knowledge management officer, GEEDR).
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e Pa c i f i c 2014/28
ainable energy for all in easT asia and Th
1 Tracking Progress Toward Providing susT

TIVES GLOBAL PRACTICE

A KNOWLEDGE NOTE SERIES FOR THE ENERGY & EXTRAC

THE BOTTOM LINE

Tracking Progress Toward Providing Sustainable Energy
where does the region stand
on the quest for sustainable for All in East Asia and the Pacific
2014/29
and cenTral asia
energy for all? in 2010, eaP easTern euroPe
ainable en
s Telectrification ergy for all in databases—technical measures. This note is based on that frame-
g s uan
v i d i n had rate of Why is this important?
ess Toward Pro work (World Bank 2014). SE4ALL will publish an updated version of
1 Tracking Progr 95 percent, and 52 percent
of the population had access
Tracking regional trends is critical to monitoring the GTF in 2015.
to nonsolid fuel for cooking. the progress of the Sustainable Energy for All The primary indicators and data sources that the GTF uses to
track progress toward the three SE4ALL goals are summarized below.
consumption of renewable (SE4ALL) initiative C T I V E S G L O B A L P R A C T I C E
ENERGY & EXTRA • Energy access. Access to modern energy services is measured
T E S E R I E S F O R T H EIn declaring 2012 the “International Year of Sustainable Energy for
energy decreased overall
W L E D G E N Oand
A K N Obetween 2010, though by the percentage of the population with an electricity
1990
All,” the UN General Assembly established three objectives to be connection and the percentage of the population with access
Energy
modern forms grew rapidly.

d Providing Sustainable
accomplished by 2030: to ensure universal access to modern energy
energy intensity levels are high to nonsolid fuels.2 These data are collected using household

Tracking Progress Towar

services,1 to double the 2010 share of renewable energy in the global surveys and reported in the World Bank’s Global Electrification
but declining rapidly. overall
THE BOTTOM LINE energy mix, and to double the global rate of improvement in energy
e and Central Asia
trends are positive, but bold Database and the World Health Organization’s Household Energy

for All in Eastern Europ

efficiency relative to the period 1990–2010 (SE4ALL 2012).
stand policy measures will be required
where does the region setting
Database.
The SE4ALL objectives are global, with individual countries on that frame-
on the quest for sustainable to sustain progress. is based share of renewable energy in the
their own national targets
databases— technical in ameasures.
way that is This consistent with the overall of • Renewable energy. The
note
version
energy for all? The region SE4ALL will publish an updated
their ability energy mix is measured by the percentage of total final energy
to Why is this important ? spirit of the
work initiative.
(World Bank
Because2014). countries differ greatly in
has near-universal access consumption that is derived from renewable energy resources.
of trends is critical to monitoring to pursue thethe in 2015.
GTFthree objectives, some will make more rapid progress GTF uses to Data used to calculate this indicator are obtained from energy
electricity, and 93 percent Tracking regional will excel and
othersindicators
primary
data sources that
elsewhere, depending on their
the
while
the population has access le Energy for All in one areaThe
goals are summarized below. balances published by the International Energy Agency and the
the progress of the Sustainab respective track starting
progress toward
points and the three SE4ALL
comparative advantages as well as on
services is measured
to nonsolid fuel for cooking. access. Accessthat they modern
to are able to energy
marshal. United Nations.
despite relatively abundant (SE4ALL) initiative Elisa Portale is an
the resources and support
Energy
withofan electricity connection of energy efficiency
Energy for percentage of thepopulation
forthe achievement the SE4ALL 2• Energy efficiency. The rate of improvement
l Year of Sustainable by the momentum
To sustain
access to nonsolid fuels.
hydropower, the share In declaring 2012 the “Internationa energy economist
in
of the population
global progress with
to 2030 is needed. is approximated by the compound annual growth rate (CAGR)
three global objectives objectives, andathe means of charting
percentage
of renewables in energy All,” the UN General Assembly
established
the Energy Sector surveys and reported
access to modernThe World
universalAssistance TheseBankdata andare thecollected
International household
usingEnergy Agency led a consor- of energy intensity, where energy intensity is the ratio of total
consumption has remained to be accomplished by
2030: to ensure Management Database and the World
of theenergy intium of 15
renewable World Bank’s
international
in the GlobaltoElectrification
agencies establish the SE4ALL Global primary energy consumption to gross domestic product (GDP)
energy share of
the 2010Program (ESMAP)
relatively low. very high energy services, to double Database.
measured in purchasing power parity (PPP) terms. Data used to
1
World Bank’s Energy
the global rate of improvemen
and Extractives t
Tracking Framework
Health (GTF), which
Organization providesEnergy
’s Household a system for regular
the energy
in
intensity levels have come and to double
the global energy mix, Global Practice. (SE4ALL 2012). based on energy. of renewable
The sharepractical,
rigorous—yet
energy
given available calculate energy intensity are obtained from energy balances
questions to the period 1990–2010 global reporting, Renewable energy consumption
down rapidly. The big in energy efficiency relative percentage of total final published by the International Energy Agency and the United
evolve Joeri
with Wit is an countries setting
deindividual mix is measured by the Data used to
are how renewables will The SE4ALL objectives
are global,
energy economist inwith the overall renewable energy resources.
on the planet has access
from published Nations.
when every person
1 derived
that isaccess
The universal goal will be achieved
when energy demand
picks up in a way that is consistent from energy balances
their own national targets through electricity, clean cooking fuels, clean heating fuels,
rates the Bank’s Energy and
countries differ greatly
in their ability calculate this indicator are obtained
to modern energy services provided
productive use and community services. The term “modern cooking solutions”
again and whether recent spirit of the initiative. Because Extractives Global
and energy for
Agency and the United Nations. Solid fuels are defined to include both traditional biomass (wood, charcoal,
agricultural
involve electricityEnergy
2

some will make more rapid progress by the

of decline in energy intensity
will continue.
Elisa Portale is an
energy economist in
the Energy Sector
Management Assistance
Program (ESMAP) of the
World Bank’s Energy and
Extractives
Global Practice.
Joeri de Wit is an
energy economist in
the Bank’s Energy and
Extractives Global
Practice.
refers to solutions thatInternational or gaseous fuels (including liquefied petroleum gas),
those of efficiency
is
and forest residues, dung, and so on), processed biomass (such as
pellets and briquettes), and
to pursue the three objectives, Practice. fuels paired with improvemen
overallofemissions
The rate
stoves exhibiting rates at or nearenergy
t of
will excel elsewhere, depending on their or solid/liquid Energy efficiency.
rate (CAGR) of other solid fuels (such as coal and lignite).
energy
in one area while others liquefied petroleum gas (www.sustainableenergyforall.org). annual growth
as well as on approximated by the compound
and comparative advantages total primary energy
respective starting points intensity is the ratio of
that they are able to marshal. intensity, where energy measured in purchas-
the resources and support domestic product (GDP)
for the achievement of the
SE4ALL consumption to gross calculate energy intensity
To sustain momentum terms. Data used to
charting global progress
to 2030 is needed. ing power parity (PPP) the International
objectives, a means of balances published by
International Energy Agency
led a consor- are obtained from energy
The World Bank and the SE4ALL Global Energy Agency and the
United Nations.
agencies to establish the the GTF to provide a regional
and
tium of 15 international for regular This note uses data from
which provides a system for Eastern
Tracking Framework (GTF), the three pillars of SE4ALL
on rigorous—yet practical,
given available country perspective on
global reporting, based
has access
will be achieved when
every person on the planet
The universal access goal heating fuels,
clean cooking fuels, clean
1 agricultural
provided through electricity, biomass (wood, charcoal,
to modern energy services The term “modern cooking
solutions” to include both traditional and briquettes), and
Solid fuels are defined
use and community services. biomass (such as pellets
2
and energy for productive petroleum gas), and so on), processed
fuels (including liquefied and forest residues, dung,
involve electricity or gaseous at or near those of
refers to solutions that overall emissions rates other solid fuels (such
as coal and lignite).
with stoves exhibiting
or solid/liquid fuels paired
(www.sustainableenergyforall.org).
liquefied petroleum gas
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where knowledge management is becoming everybody’s business. A KNOWLEDGE NOT

E SERIES FOR THE
ENERGY & EXTRACT
IVES GLOBAL PRAC
TICE

rgy
Providing Sustainable Ene
Tracking Progress Toward
Or 2014/5
1 U n d e r s ta n d i n g C O 2 emissiOns frOm the glObal energy seCt
THE BOTTOM LINE
pe and Cen tral Asia
for All in Eastern Euro
stand
where does the region
on the quest for sustaina
ble based on that frame-
measures. This note is
databases—technical updated version of
energy for all? The region SE4ALL will publish an
has near-universal access
to WhyD is this important? ERGY PRACTICE
work (World Bank 2014).
E G E N O T E S E R I E S F O R T H E E N to
electricity, and 93 percent
of A K N O W L
g regiona l trends is critical monitoring the GTF in 2015.
data sources that the GTF uses to
Trackin The primary indicator s and
the population has access s of the Sustain able Energy for All the three SE4ALL goals are summari
zed below.
the progres track progress toward

Understanding CO Emissions from the Global Energy Sector

nonsolid fuel for cooking. is measured
to modern energy services
THE BOTTOM LINE to

Your Name Here

t (SE4ALL) initiativ e Energy access. Access connection
despite relatively abundan 2 population with an electricity
ional Year of Sustainab
le Energy for by the percentage of the access to nonsolid fuels.
2

hydropower, the share

the energy sector contributes In declaring 2012 the “Internat objectives percenta ge of the population with
establish ed three global and the and reported
about 40 percent of global of renewables in energy All,” the UN General Assembly using household surveys
Why is this issue important? access to modern These data are collected
2030: to ensure universal and the World

Become an author
has remained
emissions of CO2. three- consumption to be accomplished by of renewable energy in in the World Bank’s Global
Electrification Database
high energy 2010 share
of the
very
relatively low. Mitigating climate change services, toknowledge
energy requires double the ld Energy Database .
1
quarters of those emissions rate of improvement Organization’s Househo CO2
intensity levels have come and to double the global Figure 1. CO2 emissions Health Figure 2. energy-related The share of renewable
energy in the energy
come from six major sources of COs2 emissions the global energy mix, 0 (SE4ALL 2012). Renewab le energy. by country
question to the period 1990–201 by sector emissions consumption
down rapidly. The big
economies. although coal-fired in energy efficiency relative countries setting percenta ge of total final energy
mix is measured by the

of Live Wire and

global, with individual
LICs
evolve
les will opportunities to cut emissions of greenhouse aregases used to
plants account for just are how renewab Identifying The SE4ALL objectives le energy resources. Data
0.5%

clearup that is consistent with

emis- the overall that is derived from renewab energy balances published
40 percent of world energy requires apicks
when energy demand understanding ofown
their
main sources
the national targetsofinthose
a way
ability are obtained from
80 percent of differ greatly in theirsectors
Residential Other
calculate this indicator
production, they were again and whether Carbonrates
sions.recent dioxide (CO2) accounts for more than
spirit of the initiative. Because countries 6% Other MICs
Agency and the United Nations.
progress nal Energy
will make more rapid
15%
intensity gas emissions globally, 1
primarily from the burning
s, some
10%
by the Internatio China improvement of energy efficiency
is

contribute to your
responsible for more than of decline in energytotal greenhouse to pursue the three objective on their Other HICs . The rate of
energy sector—defined include
willtoexcel elsewhere, depending Energy efficiency 30%
of energy
will continue. of fossil fuels (IFCC 2007). The in one area while others
Energy 8%
annual growth rate (CAGR)
70 percent of energy-sector
41tive advantagesIndustryas well as on 41% approximJapan ated4%by the compound energy
fuels consumed for electricity and heat generation—contributed
and compara the ratio of total primary
emissions in 2010. despite respective starting points 20%
intensity, where Russia energy intensity is
percent of global CO2 emissions that they are able to marshal.
in 2010 (figure 1). Energy-related USA product (GDP) measured in
purchas-
the resources and support
7%
improvements in some gross domestic

practice and career!

countries, the global CO2 Elisa
COPortale
emissions
emission factor for energy energy
thewaste,
generation has hardly changed
over the last 20 years.
Managem
Program (ESMAP)
World Bank’s Energy and
Global Practice.
Vivien Foster is sector
manager for the Sus-
tainable Energy Depart-
ment at the World Bank
(vfoster@worldbank.org).
Daron Bedrosyan
works for London
Economics in Toronto.
Previously, he was an
energy analyst with the
World Bank’s Energy Practice.
up the bulk of such ent of the SE4ALL
Other consump tion to
India 19% intensity
is an at the point of combustion make for the achievem calculate energy
2 emissions
To sustain momentum transport Road 7% EU terms. Data used to
by the burning
andinare generatedobjective of fossil fuels, industrial
is needed.
global progress to 2030 6% transport ing power parity (PPP) the International
economist s, a means of charting balances published by
11%
16%
EnergyandSector
nonrenewable municipal waste to generate Internatio nal Energy Agency led
electricity a consor- are obtained from energy
The World Bank and the
United Nations.
ent Assistance venting and leakage to establish the
emissions SE4ALL Global Energy Agency and the sector at the point and
and heat. Black carbon and methane
tium of 15 international
agencies Notes: Energy-related CO2 emissions are CO2 emissions from the energy
from GTF to provide a regional
thedomestic
of the for regular This note usesanddata
are not included in the analysis presented in this
rk note. which provides a system
(GTF), of combustion. Other Transport includes international marine aviation bunkers,
of SE4ALL for Eastern
Extractives Tracking Framewo aviationgiven available Other Sectors
rail and pipeline transport; perspect ive on the three
include pillars
commercial/public
and navigation,
on rigorous—yet practical, country and heat genera-
global reporting, based services, agriculture/forestry, fishing, energy industries other than electricity
elsewhere; Energy = fuels consumed for electricity and
Where do emissions come from? tion, and other emissions not specified
as has in the opening paragraph. HIC, MIC, and LIC refer to high-, middle-,
access
Joeri de Wit is an will be achieved when
on the planet
heat generation,
every person defined
The universal access goal of countries heating fuels,
Emissions
energy concentrated
economistarein 1
in a handful
to modern energy services
provided through electricity,
clean cooking fuels, clean
and low-income countries.
solutions” to include both traditional
biomass (wood, charcoal,
agricultural
term “modern cooking Solid fuels are defined and briquettes), and
the Bank’s Energy and community services. The Source: IEA 2012a. 2
biomass (such as pellets
and come primarily from burning
and energy coaluse and
for productive
electricity or gaseous fuels
involve
(including liquefied petroleum
gas),
of and forest residues, dung,
and so on), processed
Extractives Global refers to solutions that overall emissions rates
at or near those
other solid fuels (such
as coal and lignite).
with stoves exhibiting
or solid/liquid fuels paired emissions closelyforall.org).
The geographical pattern of energy-related CO
Practice. gas 2(www.sustainableenergy
liquefied petroleum middle-income countries, and only 0.5 percent by all low-income
mirrors the distribution of energy consumption (figure 2). In 2010,
countries put together.
almost half of all such emissions were associated with the two
Coal is, by far, the largest source of energy-related CO2 emissions
largest global energy consumers, and more than three-quarters
globally, accounting for more than 70 percent of the total (figure 3).
were associated with the top six emitting countries. Of the remaining
This reflects both the widespread use of coal to generate electrical
energy-related CO2 emissions, about 8 percent were contributed
power, as well as the exceptionally high CO2 intensity of coal-fired
by other high-income countries, another 15 percent by other
power (figure 4). Per unit of energy produced, coal emits significantly
more CO emissions than oil and more than twice as much as natural
2
Gas Inventory
1 United Nations Framework Convention on Climate Change, Greenhouse
0.php gas.
Data—Comparisons By Gas (database). http://unfccc.int/ghg_data/items/380