Ecosystems, Infrastructure and the Environment: Emerging Markets Considerations

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Ecosystems, Infrastructure and the Environment
Emerging Markets Considerations

• June 9, 2006
• Motoko Aizawa

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IFC Part of theWorld Bank Group
IFC is owned by its 178 member countries, which
collectively determine policies.
International Finance Corporation, 1956
International Bank for Reconstruction and
Development, 1945
Multilateral Investment Guarantee Agency, 1988
International Centre for Settlement of Investment
Disputes, 1966
International Development Association, 1960
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World Bank Group Institutional Roles

• IBRD lends to governments of middle-income
  developing countries.
• IDA provides concessional loans to governments of
  the poorest developing countries.
• ICSID facilitates the settlement of investment
  disputes between governments and foreign
  investors.
• MIGA provides guarantees to foreign investors
  against noncommercial risk.

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IFCs Mission

• To promote sustainable private sector investment
  in developing countries, helping to reduce
  poverty and improve peoples lives

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IFC Sustainability Policy Framework
IMPLEMENTATION
REQUIREMENTS
Disclosure Policy
Environmental and Social Review Procedure
IFC - INSTITUTIONAL
Sustainability Policy
8 Performance Standards

• 8 Guidance Notes
• Environmental, Health Safety Guidelines
• Good Practice Materials

CLIENT PROJECT LEVEL
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Overview Performance Standards

• PS 1 Social Environmental Assessment and
  Management System
• PS 2 Labor and Working Conditions
• PS 3 Pollution Prevention and Abatement
• PS 4 Community Health, Safety Security
• PS 5 Land Acquisition and Involuntary
  Resettlement
• PS 6 Biodiversity Conservation and Sustainable
  Natural Resource Management
• PS 7 Indigenous Peoples
• PS 8 Cultural Heritage

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Key Features of Performance Standards

• Principles based, not rules based
• Outcomes oriented, not procedure based
• PSs / GNs refer to relevant international
  agreements
• Human rights relevant to private sector
  operations are embedded in the standards
• Most comprehensive set of social standards for
  the private sector
• New climate, ecosystems and natural resources
  features

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Climate, Ecosystems and Natural Resources under
the Performance Standards

• PS 1 requires project sponsors to assess all
  potential adverse risks to the environment and
  people
• PS 6 requires particular attention to threats to
  biodiversity, including ecosystems services
• PS 3 requires
• Incorporation of resource conservation and energy
  efficiency measures
• GHG quantification and monitoring for projects
  with potential GHG emission over 100,000t
  annually
• PS 4 requires projects to have emergency
  preparedness and response plans
• PS 1 requires assessed risks to be managed
  through an appropriate social and environmental
  management system
• IFC reviews project proposals for compliance
  also provides technical and financial assistance
  

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Expected Impacts on the Market

• Easier for lenders to communicate for business
  people to apply requirements
• Modular structure is adaptable to various
  business models
• Adoption of the Performance Standards via the
  Equator Principles
• Levels the playing field for lenders
• Helps developers prepare projects for financing
• Multiplier effect beyond projects financed by IFC
  80 of global project financing arranged

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World Bank Groups Clean Energy Development
Investment Framework

• Following the Gleneagles Communiqué
• Three-prong structure of an Investment
  Framework
• Meeting the challenge of clean energy needs with
  no carbon constraints for developing countries
• Investments to realize low carbon economy and
  reduce GHGs
• Actions needed to adapt to climate change

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Clean Energy for Development

• IEA estimates from 2003 to 2030, 8 trillion
  capital investments (average of 300 billion
  annually) needed for developing / transition
  country energy needs
• Much needed are energy sector reform
  mobilization of energy demand and supply
  technologies
• Climate change presents an urgent and additional
  challenge
• Poorest countries and people are the most
  vulnerable

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Financing Options for Clean Energy

• Clean Energy Financing Vehicle
• A mechanism to transfer high efficiency
  technology for mitigation
• Power Rehabilitation Facility for rehab of
  inefficient power plants
• Project development fund for public and private
  sector participation
• Venture capital funds for technology adoption
• For financing and clean energy technologies for
  market penetration

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Adaptation to Climate Change

• Priority areas countries with highest of
  population affected by climate change
• Zimbabwe, Malawi, Samoa, China, Cambodia and
  Swaziland
• Transfer of existing and new technologies
  revision of planning standards systems
• Development of information and tools
• Disaster preparedness
• RD
• Private sector considerations