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Ecosystems, Infrastructure and the Environment: Emerging Markets Considerations

Ecosystems, Infrastructure and the Environment: Emerging Markets Considerations. June 9, 2006 Motoko Aizawa. IFC: Part of the World Bank Group. IFC is owned by its 178 member countries, which collectively determine policies. International Finance Corporation, 1956. International Bank for

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Ecosystems, Infrastructure and the Environment: Emerging Markets Considerations

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  1. Ecosystems, Infrastructure and the Environment: Emerging Markets Considerations June 9, 2006 Motoko Aizawa

  2. 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 International Centre for Settlement of Investment Disputes, 1966 Multilateral Investment Guarantee Agency, 1988 International Development Association, 1960

  3. 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.

  4. IFC’s Mission To promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives

  5. IFC Sustainability Policy Framework REQUIREMENTS IMPLEMENTATION 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. World Bank Group’s 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

  11. 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

  12. 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

  13. 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 • R&D • Private sector considerations

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