Publication:
Mobilizing Commercial Financing to Scale Up Energy Efficiency in the Public Sector

Loading...
Thumbnail Image
Files in English
English PDF (681.92 KB)
426 downloads
English Text (55.04 KB)
38 downloads
Published
2025-01-22
ISSN
Date
2025-01-22
Editor(s)
Abstract
Scaling up energy efficiency is critical to the energy transition—and the public sector is a good place to start. Programs in public buildings, in particular, can introduce new models and thus help shape markets. Given the limits of public financing against huge investment needs, countries must unlock commercial financing. The first steps are to adopt international best practices and select financing mechanisms suited to local policy and regulatory frameworks, public agency characteristics, implementation barriers, and the maturity of financial markets.
Link to Data Set
Citation
Limaye, Dilip; Singh, Jas; Lee, Selena Jihyun. 2025. Mobilizing Commercial Financing to Scale Up Energy Efficiency in the Public Sector. Live Wire; 2025/137. © World Bank. http://hdl.handle.net/10986/42714 License: CC BY-NC 3.0 IGO.
Digital Object Identifier
Associated URLs
Associated content
Report Series
Report Series
Live Wire
Other publications in this report series
  • Publication
    Measuring the Climate Resilience of the Power Sector: Harmonization, Not Homogenization
    (Washington, DC: World Bank, 2025-08-31) World Bank
    Although by its very nature climate resilience can never be fully “standardized”, the development and mainstreaming of climate resilience metrics can benefit from greater consensus around key topics. Areas such as metric categories, methodologies, and reporting frameworks can be aligned through coordinated efforts among regulators, utilities, and other stakeholders, enabling more consistent, effective, and scalable resilience planning across the sector. The key is harmonization and not homogenization.
  • Publication
    Exploiting the Potential of Energy Efficiency in Residential Buildings
    (Washington, DC: World Bank, 2025-10-31) Singh, Jas; Mori, Takeshi
    The residential sector makes up about 70 percent of building energy demand. This demand is expected to grow rapidly over the next decade. Although the sector offers huge potential for energy efficiency gains, a range of barriers impedes the realization of these benefits. Fortunately, a wealth of global experience shows how these challenges can be overcome through a combination of sound planning, strong policy and regulatory frameworks, well designed financing and incentives, robust institutional and market development, and accessible information to scale up residential energy efficiency.
  • Publication
    Decarbonizing Ammonia and Nitrogen Fertilizers with Clean Hydrogen
    (Washington, DC: World Bank, 2025-03-12) World Bank
    Synthetic fertilizers are essential to sustaining the world’s population, but their production is responsible for 1.8–2.4 percent of global greenhouse gas emissions. Clean hydrogen holds growing potential (amid falling costs) to decarbonize fertilizer production. Hydrogen produces synthetic ammonia, a building block of most fertilizers. With the fertilizer market as a reliable off-taker, this shift could support the overall expansion of clean hydrogen, even as it boosts global food security. However, this transition may require adjustments, including changes in fertilizer types and modifications to existing subsidy schemes.
  • Publication
    Shared Infrastructure for Clean Hydrogen
    (Washington, DC: World Bank, 2025-08-31) World Bank
    Studies of the development of clean hydrogen have often focused on the production side. Infrastructure built and used for storage and transportation warrants more attention. Among the topics that should be assessed are system design, operation, integration, and ownership; market design and governance; and planning. This Live Wire examines case studies and literature on the infrastructure for hydrogen hubs, with an emphasis on the benefits of shared infrastructure. Given the breadth of hydrogen production and infrastructure, the focus is on renewable hydrogen production for domestic use and for export after conversion to ammonia.
  • Publication
    Using Biomass or Green Ammonia to Replace Coal in Existing Thermal Power Plants
    (Washington, DC: World Bank, 2024-06-06) Tavoulareas, Stratos
    Finding fuel sources to replace coal in power plants is crucial in the march toward decarbonization. Biomass and ammonia are two options offering significant potential. Both can be used with coal or alone in newly constructed facilities or in modified power plants. Relatively new power plants are good candidates for modification. While work is underway demonstrating the feasibility of each material, there are logistical challenges to address, particularly in the case of ammonia.
Journal
Journal Volume
Journal Issue
Collections

Related items

Showing items related by metadata.

  • Publication
    Energy Services Market Development : Scaling Up Energy Efficiency in Buildings in the Western Balkans
    (World Bank Group, Washington, DC, 2014-05-01) Limaye, Dilip; Singh, Jas; Hofer, Kathrin
    The development of private sector energy service providers (ESPs), including energy service companies (ESCOs), that specialize in energy efficiency (EE) project development and implementation can help overcome some of the important barriers to scaling up implementation of energy efficiency (EE) projects, particularly in the public sector. ESPs can offer a range of services spanning the energy services value chain and provide the technical skills and resources needed to identify and implement EE opportunities, perform services using performance based contracts (thereby reducing the risks to the energy users), facilitate access to financing from commercial lenders, and enable the energy users to pay for the services from the cost savings achieved. This guidance note provides examples of actions taken by governments in many countries (such as Armenia, Bulgaria, Croatia, Czech Republic, Germany, Hungary, and India) to foster the energy services market and help establish and grow ESPs in their countries. Experience from these countries shows that governments need to adopt a three-pronged approach, involving policy and regulatory initiatives, technical assistance (TA), and financing strategies, to build ESP and public agency capacity, implement ESP projects in the public sector, and provide the platform for moving to more complex implementation and financing models in the future. TA or financing alone does not offer an effective strategy to overcome the multidimensional challenges of ESP market development; efforts in all three areas are needed. Key conclusions of this guidance note are that: (i) there is no specific formula that can be prescribed to instruct governments on how to develop energy services markets; and (ii) fostering the ESP market requires governments to undertake a concerted set of legislative, regulatory, policy, financing, and awareness and information initiatives.
  • Publication
    Establishing and Operationalizing an Energy Efficiency Revolving Fund : Scaling Up Energy Efficiency in Buildings in the Western Balkans
    (World Bank Group, Washington, DC, 2014-05) Limaye, Dilip; Singh, Jas; Hofer, Kathrin
    An energy efficiency revolving fund (EERF) is a viable option for scaling up energy efficiency (EE) financing in the public sector in the Western Balkans. Under a typical EERF targeting the public sector, loans are provided to public agencies to cover the initial investment costs of EE projects; some of the resulting savings are then used to repay the EERF until the original investment is recovered, plus interest and service charges. The repayments can then be used to finance additional projects, thereby allowing the capital to revolve creating a sustainable financing mechanism. This guidance note is intended for government decision makers interested in establishing such EE revolving funds. It defines the typical structure of such funds, conditions under which they can be useful and effective, ways they can address some of the financing barriers, and implementation options. The note also provides examples, case studies, and lessons learned, and a 'road map' for establishing such funds.
  • Publication
    Public Procurement of Energy Efficiency Services : Lessons from International Experience
    (Washington, DC: World Bank, 2010) Singh, Jas; Limaye, Dilip R.; Henderson, Brian; Shi, Xiaoyu
    This book explores energy savings performance contracts (ESPCs) as a means of overcoming some of the more difficult hurdles in promoting energy efficiency in public facilities. ESPCs represent a very attractive solution to many of the problems that are unique to public agencies, since they involve outsourcing a full project cycle to a service provider. From the detailed audit through implementation and savings verification, ESPCs can relieve public agencies of bureaucratic hassles, while service providers can secure the off-budget project financing and be paid from the actual energy savings, thus internalizing project performance risks. ESPC bidding also allows public agencies to select from a range of technical solutions, maximizing the benefit to the agency. Global experience suggests that ESPCs have been more effective at realizing efficiency gains than many other policy measures and programs, since the service providers have a vested interest in ensuring that a project is actually implemented. Many of the country governments interviewed for the study also saw enormous potential in bundling, financing, and implementing energy efficiency projects on a larger scale in the public sector, a method that increases the rate of efficiency gains and creates further benefits through economies of scale.
  • Publication
    The Greening of Macedonia's Public Buildings : Financing Options for the National Program for Energy Efficiency in Public Buildings in the Former Yugoslav Republic of Macedonia, 2012-18
    (World Bank, Washington, DC, 2014) Limaye, Dilip; Meyer, Anke
    The Government of Macedonia (GOM) plans to launch a National Program for Energy Efficiency in Public Buildings (NPEEPB, or "the program") to achieve energy efficiency (EE) improvements in the buildings sector and meet the strategic targets outlined in the energy development strategy of the Republic of Macedonia until 2030, the EE strategy until 2020, and the national EE action plan in 2010-18. The NPEEPB, coordinated by the Ministry of Economy (MOE), aims to retrofit existing public buildings and to lead by example in the implementation of EE measures. Its targets are public buildings that are used for administrative and other activities of public interest and that are fully owned by government institutions or municipalities. This report focuses on the financing mechanisms that are considered the best fit with the institutional environment to achieve the goals of the NPEEPB, and describes in detail the implementation of the proposed financing mechanisms: a full-service EE fund, a dedicated EE credit line, and a municipal EE improvement program implemented within the government. The national EE target is a 9 percent savings in final energy consumption by 2018, compared to average energy consumption in 2002-06. The NPEEPB target for energy savings in public buildings is 13.6 thousand tons of oil equivalents (ktoe) 2 per year, which is about 56 percent of the national EE target for the commercial and service sector.
  • Publication
    Unlocking Commercial Financing for Clean Energy in East Asia
    (Washington, DC: World Bank, 2013-09) Wang, Xiaodong; Stern, Richard; Limaye, Dilip; Mostert, Wolfgang; Zhang, Yabei
    Overwhelming evidence indicates that climate change, caused in large part by human activities, is already adversely impacting all people, with the very real prospect of worse to come. Nevertheless, a global treaty to curb carbon emissions remains elusive. In East Asia, all middle-income countries have set national targets for energy efficiency and renewable energy, and some even have targets for carbon reduction. This report focuses on recent experiences in applying public financing instruments and tries to draw the lessons to date: when and how to use the instruments, which instrument to select, and how to design and implement them. The wide range of financial instruments designed to support and catalyze clean energy investment over the last decade is truly remarkable. Such instruments include credit lines and risk guarantees designed to increase both the capacity and confidence of commercial banks for clean energy lending; dedicated funds and concessional financing mechanisms to kick-start new technologies; mezzanine and equity financing targeted at start-ups; small and medium enterprises and energy service companies; and various consumer financing instruments designed to lower the upfront costs of clean energy equipment. This report systematically reviews the successes and failures of innovative interventions and distills the lessons of applying them. This report is organized in following four parts: part one gives overview; part two focuses on financing energy efficiency; part three focuses on financing renewable energy; and part four focuses on clean energy financing case studies.

Users also downloaded

Showing related downloaded files

  • Publication
    Gabon Country Climate and Development Report
    (Washington, DC: World Bank, 2025-11-01) World Bank
    Gabon has a unique opportunity to drive inclusive growth, reduce poverty, and build a resilient post-oil economy, with climate action accelerating progress toward these goals. The country’s main development challenge is achieving higher growth and poverty reduction, as stronger growth is needed regardless of projected climate shocks to create jobs, raise living standards, and enable a viable post-oil economy. While pursuing growth-promoting economic reforms, climate action that prioritizes people must remain central to its development pathway. However, climate change risks exacerbating poverty and regional inequalities in a country already facing long-term challenges in expanding economic opportunities and basic public services, especially in rural areas. Climate shifts compound these challenges, making stronger private sector-led growth driven by reforms essential for resilience, diversification, job creation, and poverty reduction, though targeted investments in adaptation will still be required to mitigate climate shocks. Using a whole-of-economy approach, the Gabon Country Climate Development Report (CCDR) estimates that climate change impacts could result in GDP losses of 3.5 to 5.3 percent per year through 2050 compared to a business-as-usual baseline trajectory.
  • Publication
    Jobs in a Changing Climate: Insights from World Bank Group Country Climate and Development Reports Covering 93 Economies
    (Washington, DC: World Bank, 2025-11-05) World Bank
    The World Bank Group’s Country Climate and Development Reports (CCDRs) provide a crosscutting look at how countries’ development prospects, and the job opportunities they offer to their people, can be threatened by climate impacts and supported by climate policies. Climate change and policies affect jobs through impacts on productivity, energy and material efficiency, and physical, human, and natural capital. They can also transform employment opportunities, especially through complementary measures that help workers and firms adapt to and benefit from new technologies and production practices. Prepared by the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), CCDRs integrate country perspectives, climate science and economic modeling, private sector information, and policy analysis to assess how countries can successfully grow and develop their economies and create jobs despite increasing climate risks and while achieving their climate objectives and commitments. Each CCDR starts from the country’s development priorities, opportunities, and challenges, and is developed in close consultation with governments, businesses, and civil society, ensuring the recommendations reflect national priorities. By combining evidence on adaptation, resilience, and emissions pathways, CCDRs highlight where climate action can reinforce development and job creation, and where targeted policies are needed to manage risks and smooth labor market transitions. Taken together, these elements can help create local jobs, ensure economic transitions are just and inclusive, and equip workers and firms to navigate the disruptions and opportunities of a changing climate and changing technologies.
  • Publication
    Comoros Country Climate and Development Report
    (Washington, DC: World Bank, 2025-06-18) World Bank Group
    The Union of the Comoros (The Comoros) has significant vulnerability to climate change-related risks but has considerable opportunities to strengthen preparedness and resilience against these challenges. According to the Notre Dame Global Adaptation Index, the Comoros is the 29th-most vulnerable country to climate change and the 163rd most ready to adapt (out of 191). The Comoros archipelago is exposed to many natural hazards that adversely affect the country’s natural capital, people, and physical infrastructure. In 2014, the economic cost of climate-related disasters was estimated at 5.7 million dollars annually, equivalent to 9.2 percent of Gross Domestic Product (GDP). Between 2018 and 2023, as many as 11 tropical depressions or cyclones impacted the country, with Cyclone Kenneth causing the greatest damage, equivalent to 14 percent of GDP, resulting in total economic growth falling from 3.6 percent in 2018 to 1.9 percent in 2019. More than 345,000 people (40 percent of the population) were affected by the cyclone, with 185,000 people experiencing severe impacts and 12,000 people displaced. However, there is an opportunity for the country to grow more robust and shock-responsive, and to establish pre-positioned funding mechanisms to enhance future crisis response efforts. For the Comoros, adaptation and climate-resilient development are the key climate change focus areas, with the country projected to face 836 million dollars 2050 in additional costs due to climate-related impacts. Current plans to adapt to the impacts of climate change in the Comoros include efforts to improve water management, strengthen coastal protection, and develop climate-smart agriculture practices. Given the country’s reliance on its natural resource base for economic growth and mobility, protection of these resources from climate change will be essential for promoting resilient growth and development. In addition to growing the adaptive capacity of the country’s natural resource sectors, strategic economic diversification will be important to help minimize future climate impacts, and development activities will need to be undertaken in such a way as to attract low-carbon co-benefits. The Union of the Comoros is committed to addressing climate change through its Nationally Determined Contribution (NDC) and national priorities. The country’s NDC (which was revised in 2021 for a ten-year horizon) sets ambitious targets, with a goal of reducing greenhouse gas emissions by 23 percent by 2030. The country also plans to significantly increase the share of renewable energy in its energy portfolio, reaching 33 MW by 2030. This will not only promote low-carbon development but also reduce the country’s dependency on imported oil and coal, which currently make up 95 percent of the energy mix. Additionally, the Comoros has declared its intention to increase CO2 removals by 47 percent by 2030, compared to BAU.
  • Publication
    Kyrgyz Republic Country Climate and Development Report
    (Washington, DC: World Bank, 2025-11-03) World Bank Group
    This Country Climate and Development Report (CCDR) on the Kyrgyz Republic aims to support the country’s development goals amid a changing climate. The CCDR considers two policy scenarios up to 2050: the business-as-usual (BAU) and high-growth scenarios. As it quantifies the likely impacts of climate change on the Kyrgyz economy between now and 2050, the report highlights key government actions to best prepare for and adapt to climate impacts (referred to as “with adaptation” measures), with a particular focus on the time horizon up to 2030. The CCDR also outlines a path to net zero emissions by 2050 (referred to as “with mitigation” measures, “decarbonization,” or, simply, “net zero 2050”), highlighting associated development co-benefits.
  • Publication
    Guinea-Bissau Country Climate and Development Report
    (Washington, DC: World Bank, 2024-10-23) World Bank Group
    Guinea-Bissau is endowed with a wealth of natural resources, with the highest natural capital per capita in West Africa (US3,874 dollars per capita), which could be leveraged for sustainable and resilient growth. However, Guinea-Bissau faces significant development hurdles, such as high poverty rates, political instability, and economic challenges, including an over-reliance on cashew nuts. Rural poverty has increased, and the nation's infrastructure, education, and health care systems are underdeveloped. Climate change poses a severe threat, potentially impacting agriculture, fisheries, and infrastructure. Without adaptation, it could lead to a significant cut in real GDP per capita (minus 7.3 percent by 2050) and increase in poverty (with up to over 200,000 additional poor by 2050, that is, 5 percent of the expected population, in the worst scenario). The country's low greenhouse gas emissions are expected to rise, mainly due to agriculture and land-use changes, with deforestation being a major contributing factor. Although Guinea-Bissau is a low emitter, it has high mitigation ambitions, targeting a 30 percent reduction in greenhouse gas emissions by 2030. The Nationally Determined Contribution outlines significant climate actions, with initiatives focused on forest conservation, sustainable agriculture, and community development. However, the country's political instability, institutional weaknesses, and limited financial resources pose challenges to implementing these climate commitments, which depend heavily on external funding. The financial sector's underdevelopment and vulnerability to external shocks limit its ability to support green investments, though reforms could enhance resilience. Guinea-Bissau must consider its climate financing as development financing and vice-versa, engage the private sector, and integrate climate goals with national development plans to ensure a sustainable future. Concessional climate financing is vital due to the underdeveloped financial sector and the government’s limited borrowing capacity. Addressing Guinea-Bissau's vulnerability to climate change and its structural issues requires a cohesive approach that integrates development and climate strategies. This could involve improving governance, diversifying the economy, protecting natural capital, developing human capital, and investing in sustainable agriculture and infrastructure. The transition to a more sustainable and inclusive development pathway that supports economic growth is possible, but requires focusing on key strategic sectors, enhancing institutional capacity, and creating the conditions to mobilize finance. As a highly vulnerable country, there are myriad needs in the different sectors; however, to be more efficient and effective, Guinea-Bissau should prioritize actions in a few sectors, especially actions on biodiversity, agriculture, and social protection. Low carbon development, especially in energy and forestry sectors, could provide cost-efficient solutions and attract climate finance, including from the private sector, which will support the overall development agenda.