62366 IFC Climate Change Programs Russian Federation For IFC, a member of the World Bank Group, the main strategic priority in Russia is tackling climate change by using an integrated investment and advisory platform. IFC, with support from its donor partners, takes a comprehensive approach in Russia to catalyzing the market for investments in energy efficiency and cleaner production by: Providing financial institutions and real sector clients with dedicated credit lines and expert advice; Joining forces with the IBRD and Russian government agencies to promote new policies that stimulate private sector investments in energy efficiency and cleaner production; Engaging with a broad range of stakeholders to educate the market about the benefits of investments in energy efficiency and cleaner production, providing sector benchmarks, and disseminating best practices; and Partnering with technical experts and energy auditors, and linking them with financial institutions and their clients to develop a pipeline of bankable projects. As of July 2009, our climate change projects in Russia: Saved the estimated equivalent of 684,000 tons/year of GHG; Facilitated energy efficiency credit lines of up to $150 million, of which $94 million has already reached end users; and Generated over $70 million in annual energy cost savings for companies. On the market-building side, the findings of a joint WB-IFC policy paper on energy efficiency in Russia were raised by World Bank Group President Robert Zoellick in his meetings with Russian Federation President Dmitry Medvedev and Prime Minister Vladimir Putin in the summer of 2008 and now form the basis for continued policy advisory to the Russian government. IFC expects to generate an additional $200 million in investments and an additional $30 million in annual energy cost savings from its ongoing Russia Energy Efficiency and Cleaner Production programs by 2011. IFC Approach to Tackling GHG Emissions Reduction Potential Potential reduction in GHG emissions by sector Residential* Russia Residential Energy Efficiency 147 FINANCIAL SECTOR Electricity generation Russia Renewable Energy 123 INFRASTRUCTURE Manufacturing* 118 Sustainable Energy Finance FINANCIAL SECTOR Heat supply systems Cleaner Production 88 REAL SECTOR/SUBNATIONAL Non-residential* 41 CO2 reduction, mln tons/year Programs in development Active programs * Scope 2 carbon emissions are accounted in end-use sectors. INVESTMENT ADVISORY PROGRAMS: ACTIVE RUSSIA SUSTAINABLE ENERGY FINANCE PROGRAM The program was launched in 2005 to support financial institutions in building their energy efficiency finance business, as well as to develop the broader market for sustainable energy finance in Russia. To this end, IFC provides Russian banks with credit lines and advisory services to create a sustainable energy finance product by training credit officers and management, developing client assessment tools, and coaching banks on transaction support. Five partner banks have launched dedicated energy efficiency finance products using IFC credit lines of up to $150 million. RUSSIA CLEANER PRODUCTION PROGRAM The program is designed to stimulate at least $200 million in investments for cleaner production projects in Russia. By implementing cleaner production technologies and best practices, Russian companies will reduce costs, prevent pollution, and help offset the negative effects of climate change. The program will provide in-depth advisory support to at least 20 partner companies and reach more than 5,000 companies through public seminars and information materials. In June 2009, investment/advisory work with KuibyshevAzot in Russia’s chemicals sector resulted in five EE/cleaner production projects totaling $40 million, of which IFC provided $20 million, leading to a reduction in carbon emissions equivalent to 115,000 tons/year. SELECT CLIMATE CHANGE RELATED INVESTMENTS IFC’s $50 million equity investment and $25 million loan to Russian polysilicon producer Nitol Solar in southeastern Siberia is to support solar cell technology, contributing to the growth of the country’s renewable energy sector and helping combat climate change. Nitol Solar’s projected output of 3,700 tonnes annually equals about 9 percent of global polysilicon supply as of 2007, which is equivalent to about 300MW of solar power per year. Mytischi Heating is a joint IFC-IBRD investment project of $9.73 million under the sub-national initiative to co-finance the rehabilitation and improvement of the district heating infrastructure in Mytischi, a second-tier municipality of Moscow region. Because to the increased efficiency of the municipality’s heat distribution system, the project is expected to reduce CO2 emissions by the equivalent of about 15,000 tons per year. INVESTMENT ADVISORY PROGRAMS: IN DEVELOPMENT RUSSIA ENERGY EFFICIENCY STUDY (SUBNATIONAL) This joint IFC/World Bank initiative is designed to develop a comprehensive implementation plan for energy efficiency for four regions in northwestern Russia: Murmanskaya, Arkhangelskaya, Vologodskaya, and Leningradskaya. RUSSIA RENEWABLE ENERGY PROGRAM The program is being designed as a joint IFC investment/advisory program in strong partnership with the World Bank. Russia has a target of reaching 4.5 percent of its energy from renewable sources from a currently very low base of less than 1 percent. The program will join forces with various stakeholders and adopt a comprehensive approach to enable the development of a renewable energy market in Russia. At least $360 million in investments into renewable energy projects are expected through implementation of this program. RUSSIA RESIDENTIAL ENERGY EFFICIENCY PROGRAM The program will focus on unlocking the flow of finance to renovate common areas in multi-story apartment buildings. As the second-largest end user of energy in Russia, the residential housing sector has the greatest energy savings potential. Common spaces in residential buildings, in particular, account for 50 percent of this potential. To date, however, little investment in residential energy efficiency has taken place in Russia largely due to regulatory barriers and lack of experience on behalf of financial institutions. The above programs are supported with funds from the Global Environment Facility, the Ministry for Foreign Affairs of Finland, the Austrian Federal Ministry of Finance, the Danish Energy Agency, the Ministry of Employment and the Economy of Finland, the Free State of Saxony (Germany), and the Netherlands’ Agency for International Business and Cooperation (the Dutch Ministry of Economic Affairs).