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Über dieses Buch

Energy efficiency plays and will continue to play an important role in the world to save energy and mitigate greenhouse gas (GHG) emissions. However, little is known on how much additional capital should be invested to ensure using energy efficiently as it should be, and very little is known which sub-areas, technologies, and countries shall achieve maximum greenhouse gas emissions mitigation per dollar of investment in energy efficiency worldwide.

Analyzing completed and slowly moving energy efficiency projects by the Global Environment Facility during 1991-2010, Closing the Gap: GEF Experiences in Global Energy Efficiency evaluates impacts of multi-billion-dollar investments in the world energy efficiency. It covers the following areas:

1. Reviewing the world energy efficiency investment and disclosing the global energy efficiency gap and market barriers that cause the gap;

2. Leveraging private funds with public funds and other resources in energy efficiency investments; using these funds in tangible and intangible asset investments;

3. Investment effectiveness in dollars per metric ton of CO2 emissions mitigation in 10 energy efficiency sub-areas;

4. Major barriers causing failure and abandonments in energy efficiency investments;

5. Quantification of direct and indirect CO2 emissions mitigations inside and outside a project boundary; and

6. Classification and estimation of CO2 emissions mitigations from tangible and intangible asset investments.

Closing the Gap: GEF Experiences in Global Energy Efficiency can serve as a handbook for policymakers, project investors and managers, and project implementation practitioners in need of benchmarks in energy efficiency project investments for decision-making. It can also be used by students, researchers and other professionals in universities and research institutions in methodology development for evaluating energy efficiency projects and programs.



Chapter 1. Introduction

The Earth’s climate is changing and energy efficiency offers a powerful and cost-effective tool for mitigating greenhouse gas (GHG) emissions (IEA 2012). According to the International Energy Agency (IEA), governmental energy efficiency policies with increasing capital investment in energy efficiency technologies will help cut 8.2 giga metric tons of carbon dioxide (CO


) equivalent per year (GMTCO


/year) by 2030. This is equivalent to approximately twice the total European Union (EU) energy-related CO


emissions in 2010. The Global Environment Facility (GEF) has invested US$872 million and mobilized US$6.3 billion in 162 energy efficiency projects involving 35 countries around the world. Covering energy-efficient lighting, buildings, industrial processes, boilers and equipment, household appliances, and Energy Service Companies (ESCOs), these GEF projects invest in energy efficiency hardware assets (or equipment) as well as the development of policies, regulations, standards, and codes. Some GEF projects have direct CO


emissions mitigation impacts and some have indirect emissions reduction effects. On the basis of analyzing the 49 completed GEF energy efficiency projects, and the 65 that for various reasons were dropped or cancelled, this book presents an analysis of the GEF’s 20 years of experiences in closing the energy efficiency gap in developing countries.

Ming Yang

Chapter 2. Background and Literature Review on Energy Efficiency Gaps

This chapter presents background information on the potential for energy efficiency, global energy efficiency investment gaps, and market barriers that cause the gaps. The chapter also reports on efforts that have been pursued to close the gaps. These efforts include government policies and measures, capacity-building and enabling activities, technology transfer and deployment, and incremental costs and co-finance. Historic trends and key issues of global energy efficiency considered by international organizations are also reviewed. Finally, this chapter discusses how the Global Environment Facility (GEF) has addressed these trends and considered key issues while financing energy efficiency projects in developing countries over the past 20 years.

Ming Yang

Chapter 3. Overview of GEF Mandate in Energy Efficiency

As an operating entity of the financial mechanism of the United Nations Framework Convention on Climate Change (UNFCCC), the Global Environment Facility (GEF) has a mandate to provide financial resources to support the diffusion and transfer of Environmentally Sound Technologies (ESTs) to developing countries, and the development of such technologies within these countries. The GEF is also designated by the UNFCCC to finance capacity building and development in climate change mitigation and adaptation in developing countries. In addition, the GEF Council has frequently articulated the importance of co-finance to maximize global environmental benefits with limited resources of the GEF. This chapter presents basic information about the GEF as a financial institution and its governance. The information will improve the understanding of how a GEF project is designed, managed, implemented, and evaluated by different GEF stakeholders. A number of key parameters in GEF energy efficiency project development and evaluation are discussed in the context of closing the gap of global energy efficiency.

Ming Yang

Chapter 4. A Representative Energy Efficiency Project

This chapter provides a qualitative description of a representative project including project initiation, identification, preparation, design, application, review, redesign, approval, implementation, evaluation, completion, and post-evaluation. The project Efficient Industrial Boilers (IBs) in China was selected from among the 49 completed Global Environment Facility (GEF) energy efficiency projects because it is typical of all GEF projects and updated information on its outcomes recently became available. This chapter provides a more detailed picture to readers of how the various GEF project stakeholders work together to implement project activities. Several unique lessons and experiences that are different from those of other energy efficiency projects are learned from this project. These are: (1) governments should develop clear national energy strategies and establish strong energy efficiency standards to support the operation of energy efficiency projects; (2) national energy efficiency standards and the standards of energy efficiency performance of individual firms should be consistent; (3) investments on tangible assets such as technological assistance and intangible assets such as capacity building are equally important for developing and implementing energy efficiency projects successfully.

Ming Yang

Chapter 5. Quantitative Methodology, Data Analysis, and Assumptions

The quantitative methodology for this analysis of the Global Environment Facility (GEF) energy efficiency projects starts with a general portfolio analysis of GEF energy efficiency projects and develops a classification of the projects into 10 subareas: (1) appliances & equipment; (2) Energy Service Companies (ESCOs); (3) energy supply; (4) finance; (5) industrial processes; (6) lighting; (7) national strategy; (8) buildings; (9) heating; and (10) others. Projects are assessed against criteria on greenhouse gas (GHG) emissions reductions, co-finance, and project preparation duration. The effectiveness of funds utilization is then assessed. In addition, 65 GEF slowly moving energy efficiency projects are assessed for lessons learned. Conclusions from the analysis are presented using a variety of indicators.

Ming Yang

Chapter 6. GEF Energy Efficiency Investment Portfolio

As of 30 June 2010, the Global Environment Facility (GEF) had invested US$9.5 billion in six focal areas, with the climate change mitigation focal area receiving the largest proportion of funds. Within the climate change focal area, investments in energy efficiency received the highest proportion of funds when exclusive and mixed energy efficiency projects are included. From 1991 to 30 June 2010, the GEF has invested US$872 million in 162 exclusive energy efficiency projects in 35 countries. Of the 162 projects, 49 were completed by 30 June 2010. China has developed and implemented the largest number of GEF energy efficiency projects involving a significant amount of GEF funds. Two Agencies, the World Bank and the United Nations Development Programme (UNDP), implemented 85 % of the 162 projects and utilized almost 90 % of total funds (GEF resources and co-finance). Within energy efficiency, buildings projects received the most funding. In addition to the 162 financed projects, 75 energy efficiency projects were slowly moving and 65 of these were exclusively focused on energy efficiency alone. The 49 completed and 65 slowly moving projects are the basis for this analysis.

Ming Yang

Chapter 7. Cost-Effectiveness of Energy Efficiency Investments

This chapter shows how the Global Environment Facility (GEF) has utilized public funds to close the global energy efficiency gap. It provides an analysis of the cost-effectiveness of the 49 completed energy efficiency projects and compares levels of mobilized co-finance by sub-area; the length of project preparation period by sub-area, implementing Agency, and country; and the cost of GHG mitigation. A list of these 49 projects is presented in the appendix. On average, one dollar of GEF investment in energy efficiency was matched with approximately 8.2 dollars of co-finance. Heating projects generated the highest co-finance ratio. Appliances and equipment projects achieved the lowest unit abatement costs: US$0.24 per metric ton of direct greenhouse gas (GHG) emissions reductions (In this book, GHG emissions reductions refers to direct emissions reductions if they are not specifically indicated as “indirect emissions reductions”) with GEF resources, and US$0.96 per metric ton with total funds (GEF resources and co-finance). The unit abatement cost for all 49 projects, which collectively mitigated approximately 600 million metric tons of carbon dioxide (CO


) equivalent (MMTCO


) emissions, was approximately US$0.53 per metric ton with GEF funds and US$4.87 per metric ton with total funds. Six of the 10 sub-areas had below-average preparation period lengths. The average time used for preparation was approximately 4 months less than that estimated in the project preparation guidelines, signifying efficient project preparation. Both tangible and intangible technological investments can significantly mitigate GHG emissions if the investments are appropriate. Tangible investments can lead to visible or measurable GHG emissions reductions, and intangible investments are essential to completing market transformations for energy efficient technologies. Tangible investments in the 49 analyzed projects realized not only hardware acquisition, but also the transfer of 49 technology patents, the training of more than 1.3 million people, and the creation of 12 energy efficiency standards and codes, 21 financial instruments, and 29 market-based mechanisms for energy efficiency development.

Ming Yang

Chapter 8. Completed Energy Efficiency Projects: A Portfolio-Level Analysis of Funding

The main purpose of this chapter is to identify the resources and uses of the Global Environment Facility (GEF) project funds by conducting a detailed portfolio analysis. As of June 2012, the GEF mobilized a total of US$2.57 billion as co-finance with its US$313 million investments in the energy efficiency projects reviewed in this analysis. The mobilized co-finance consists of the following resources: US$903 million (35.1 %) from implementing Agencies, US$789.5 (30.7 %) million from the private sector, US$637 million (24.7 %) from the governments of host countries, and US$245 million (9.5 %) from other resources, including other international organizations and bilateral banks. The co-finance funds, together with GEF funds, were allocated to different project activities. Asset acquisition was the project activity that received the most significant amount of funds from both the GEF and the co-finance resources. Furthermore, in terms of asset acquisition, heating projects accounted for almost half of all expenditures. By providing quantitative information on funds and usage, this chapter provides information for investors, Agencies, and fund managers in future decision making.

Ming Yang

Chapter 9. Energy Efficiency Projects that Move Slowly

This chapter analyzes 65 slow moving energy efficiency projects (including dropped and cancelled ones) in the Global Environment Facility (GEF) portfolio. Slow moving projects are projects that did not reach the final stage of completion. There is a difference between dropped and cancelled projects. Projects classified as dropped are slowly moving before the GEF Chief Executive Officer (CEO)/Council endorsement or the approval by Agencies. cancelled projects are slowly moving after endorsement and approval, and sometimes even after the beginning of implementation. Slow moving projects lacked forward momentum and failed to mature in an acceptable time period. Because these projects did not proceed after the early stages of project development and preparation, and before CEO endorsement, the majority of them did not impose substantial business costs for the GEF. The analysis of slowly developing projects in the GEF portfolio provides information on GEF processes and practices, and the significant roles played by stakeholders in project preparation and implementation.

Ming Yang

Chapter 10. Conclusions and Implications

This book provides an overview of the global energy efficiency investment gap, and analyzes Global Environment Facility (GEF) activities as a financial mechanism for energy efficiency investments with implementing Agencies and participating countries. The analysis of GEF energy efficiency projects, including the completed and slowly moving ones, demonstrates that the GEF has financed global energy efficiency projects in a cost-effective way. The analysis also shows that the GEF has effectively utilized the public funds provided by donor countries to promote energy efficiency in developing countries by mobilizing co-finance, building and developing capacities, training personnel, transferring technologies, enhancing policies, designing new standards and codes, and thus maximizing global environmental benefits. The analysis of completed projects employs unit abatement cost, length of project preparation period, mobilized co-finance, and global environmental benefits as measures to evaluate the outcomes and impacts. Projects are grouped into two subareas according to the project objectives. Most project subareas have achieved an average abatement cost of less than US$ 1 per metric ton of greenhouse gas (GHG) emissions reduction. The appliances and equipment and industrial processes subareas have the lowest unit abatement cost—US$ 0.24 per metric ton of GHG emissions reduction. In terms of project preparation, projects in the finance, lighting, and appliances and equipment subareas require the least number of months for preparation. Projects in the heating and energy service companies (ESCOs) subareas have yielded the highest ratio of co-finance per dollar of GEF investments, and generated the greatest GHG emissions reduction. The analysis of slowly moving projects reveals that lack of momentum and co-finance shortages are among the major factors leading to dropping or canceling such projects. Important lessons learned from GEF energy efficiency projects include: (1) governments should develop clear national energy strategies and establish high energy efficiency standards to support the operation of energy efficiency projects; (2) national energy efficiency standards, and the standards of energy efficiency performance of individual firms, should be consistent; (3) investments in tangible assets such as technologies, and intangible assets such as capacity building, are equally important for developing and implementing GEF energy efficiency projects successfully.

Ming Yang


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