IFC SUPPORTS ENERGY EFFICIENCY FINANCE IN RUSSIA
July 24 2008
Moscow. OREANDA-NEWS . On 24 July 2008 was announced, that when IFC
launched a sustainable energy finance program in Russia in 2005,
few in the country considered energy efficiency a real business
opportunity. A 2006 survey of 625 Russian industrial companies
revealed that they were reluctant to borrow funds to upgrade their
old energy-intensive equipment.
Today, the effort is showing results and gaining momentum. IFC is
working with financial institutions and companies across Russia
to assess modernization projects. We are also providing advisory
services and long-term credit to banks to enable energy efficiency
loans, and we participate in public information campaigns to raise
general awareness about the need for greater energy efficiency.
Energy use in Russia is six times that of Canada and 12 times that
of the United Kingdom. This inefficiency has been attributed to,
among other things, low energy prices that are not sustainable. IFC
estimates that a USD 35 billion investment by Russia’s industrial
enterprises could reduce consumption by 37 percent while lowering
operational costs, increasing global competitiveness, and reducing
IFC has spearheaded several innovations, including:
The country’s only comprehensive study on industrial energy
efficiency practices, which serves as a valuable resource for bankers,
policymakers, and journalists.
Energy efficiency standards for industrial process equipment, generic
technologies, and cogeneration of heat and electricity.
An energy efficiency calculator that enables bankers to evaluate
project eligibility in 15 minutes.
Training for bank executives and loan officers.
IFC worked with Moscow’s Department of Fuel and Energy on an energy
efficiency strategy for the city. Thanks to an advertising campaign
that we helped launch, the sale of energy-saving lamps doubled
from 2.5 to 5 million, saving more than 300 million kilowatt hours
of electricitythe equivalent of a 584,000-ton reduction in carbon
emissions. The campaign has since expanded to the federal level.
In St. Petersburg, IFC partnered with the British Consulate and Afisha,
a popular magazine, to create a poster competition called "Switch
on Your Mind." The campaign helped spur creative ideas for energy
saving and was the start of a broader awareness campaign. IFC also
helped organize photo contests to support the sector, and a series
of roundtables have brought together market players and stakeholders
to discuss administrative barriers.
In Rostov-on-Don, a city in southern Russia, IFC has helped Centrinvest
Bank finance several energy efficiency projects and technologies
for smaller businesses. Local residents are also benefiting. With the
installation of individual heat stations and meters in 400 homes, their
heating costs will drop from USD 7.7 million to USD 4.5 million a year.
Through June 2008, IFC has:
Committed credit lines worth USD 85 million, with a target of USD
200 million by 2010
Financed 50 projects worth USD 32 million, saving clients USD 7
million annually in energy costs
Contributed to 674,000 tons of lifetime carbon dioxide reductions
Our clients value our work. During his recent trip to Russia, IFC
Executive Vice President and CEO Lars Thunell met with top managers
from three IFC client banksBank Saint Petersburg, MDM Bank, and URSA
Bankto discuss IFC’s role in energy efficiency financing, which the
banks now see as an important avenue for expanding their business.
"The work with IFC has been an eye opener for our people. This
is really an important job, with huge potential for impact. It
is striking that Russia’s wasted energy equals France’s overall
energy consumption. This key message should be communicated to our
MDM Bank’s representative
"Our bank operates primarily in Siberia and the Uralsareas with
a strong concentration of industrial enterprises. We know that the
equipment at these factories has not been replaced in 30 to 40 years,
so financing upgrades also lead to great energy savings. This is a
real opportunity for us."
URSA Bank’s representative
A Global Priority
Sustainable energy has become a global priority, and promoting energy
efficiency is central to IFC’s climate change strategy. The program
in Russia builds on work in Central Europe and has paved the way for
energy efficiency finance all over the world. IFC’s innovations and
lessons learned are being replicated in other countries, including
Armenia, Azerbaijan, Belarus, China, Georgia, Indonesia, Peru, the
Philippines, Vietnam, and Ukraine.
The work in Russia is supported by grants from IFC, the Global
Environment Facility, and the governments of Denmark and Finland.