WORLD BANK GROUP Climate Change Stories of Impact This series provides examples of our impact, expertise, and lessons learned working with clients and partners. Joint Effort Taps into Russia’s Energy Efficiency Potential The Russian Federation is the world’s third largest RESULTS & IMPACT* energy-consuming country. Yet its market for  Joint IFC/World Bank work contributed investments in improving energy efficiency had been to the adoption of Federal Law #261 developing slowly. On Energy Savings and Energy Efficiency in 2009. In 2008, IFC and the World Bank, along with partners in Russia, conducted comprehensive market research  IFC helped 12 Russian banks, that concluded: If Russia maximized its energy including Center-Invest Bank, MDM Bank, Credit Bank of Moscow, NBD- efficiency potential, the country could reduce primary Bank, and Transcapitalbank, develop energy consumption by as much as 45 percent—an special financial products and launch amount equal to the annual consumption of France or lending for energy efficiency projects. the United Kingdom.  342 projects worth $289 million were financed. These striking results were presented to the President of Russia, marking the beginning of a new era for  The financed projects save 2.1 energy efficiency in the country. million megawatts of primary energy each year and reduce annual CO2 emissions by 558,532 tons. “IFC’s Energy Efficiency Program contributed to the transition of Center-Invest Bank to a sustainable banking business model. Energy *As of December 2012 efficient finance proved to be a financially and environmentally viable product. As a result, many other development institutions provided us with funding to expand energy efficiency finance across the south of Russia.” —Vasili Vysokov, President of Center-Invest Bank. In partnership with: Global Environmental Fund • Denmark • Finland WORLD BANK GROUP CLIMATE CHANGE The Opportunity Our Approach Russia is the largest greenhouse gas emitter in Europe and IFC and World Bank expertise on energy efficiency are Central Asia and the world’s third-largest energy-consuming complementary. country—up from seventh in 2007. IFC takes care of the private sector agenda for energy Since the mid-1990s, various local players had attempted to efficiency for both industry and housing, and focuses on change Russia’s regulatory framework in the area of energy efficiency, but to no effect. Several new draft laws on energy catalyzing external financing. efficiency were circulated among the local expert community, With the support of IFC’s Russia Sustainable Energy Finance but the government apparently paid no attention to them. Program, 12 Russian banks offered energy efficiency financing to their clients. IFC experts taught the banks’ credit IFC’s Russia Sustainable Energy Finance Program, launched officers how to identify, assess, and price such projects, and in 2005, worked with local banks to help them develop advised banks on their marketing campaigns. specialized financial products for energy efficient finance. Though the program was developing successfully, many In addition, IFC provided several companies in non-financial companies did not view their own excessive waste of energy sectors—like KuAZ, which produces chemicals, and OMK, which produces steel pipes—with debt financing and advice to as a high priority. In addition, the country’s regulat ions were improve energy efficiency at their production facilities. not conducive to energy efficient investment. The World Bank, on the other hand, works on broader issues After two years of catalyzing energy efficiency financing in of macroeconomic analysis. It focuses on sectors where it has Russia via client banks, IFC realized that achieving sustainable country-wide impact would require a government considerable experience, such as transport and urban issues, policy to increase awareness, set technical standards, and electricity, and carbon; and issues that impact the broader economy, such as tariffs and expenditure management. introduce incentives for energy efficiency. In 2007, both IFC and the World Bank realized that inefficient Meanwhile, energy efficiency was emerging as the World use of energy was a big issue for Russia. The two joined Bank’s next focus in its public policy dialogue with Russia. efforts to address the challenges of energy efficiency promotion, such as the lack of political will and a clear strategy, and inadequate regulations. A joint team, formed to study Russia’s energy efficiency potential, produced a report, “Untapped Reserves: Energy Efficiency in Russia.” The president of the World Bank Group presented Russian government leaders with the study during a 2009 visit to Russia. In addition, the report’s key findings were presented to Russian think tanks, universities, and the business community and covered by all major daily and weekly publications. Soon after, the Ministry of Finance included report recommendations on improving energy efficiency in public organizations as part of its Budget Strategy through 2023. Also, Federal Law #261 On Energy Savings and Energy Efficiency was adopted in 2009. The IFC and World Bank teams continue to work together to promote energy efficiency in Russia, and their success has been replicated in many other countries in the region. REGION: EUROPE AND CENTRAL ASIA | COUNTRY: RUSSIA | STRATEGIC PRIORITY: INFRASTRUCTURE | BUSINESS LINES: SUSTAINABLE BUSINESS ADVISORY, ACCESS TO FINANCE CONTACT Nezhdana Bukova | Moscow, Russia nbukova@ifc.org | +7 495-411-7555 June 2013 Ifc.org/sustainablebusiness