can financial innovation promote energy efficiency? an impact analysis for china november 13, 2009...
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Can Financial Innovation Promote Energy Efficiency?An Impact Analysis for China
November 13, 2009
Hiroyuki HatashimaIndependent Evaluation Group-IFC
Evaluation 2009 The Annual Conference of the American Evaluation Association
2
• Dilemma of energy efficiency finance
• IFC’s program in China and its results
• Impact Evaluation methodology used
• Findings from impact evaluation
Outline
Constraints to energy efficiency investments• Profitable projects not realized because:
–Lack of knowledge about benefits;–Lack of design capabilities to prepare
energy saving projects;–Lack of financing
• Lenders’ perception (high risk) and skills (credit appraisal)
IFC Energy Efficiency Finance Program in China
Output
• Develop, implement, finance Energy Efficiency projects with end users
• Develop capacities of EE market partners
• Disseminate knowledge
Outcome
• Develop market for Energy Efficiency projects
• Improve access to financing for Energy Efficiency projects
• Demand for Energy Efficiency Finance
Input: loan loss guarantees and technical assistance
Energy efficiency loans for energy saving investments
Program met some targets
Cumulative investments from guarantees
2007 2008 2009 20100
100
200
300
400
500
600
700
800
900
1000
Actual Target
US
$ m
illi
on
Impact Evaluation
• Defined as: systematic comparison of project’s impact in contrast to the “without project” scenario.
• More systematic assessment of non-treatment group
Surveys are conducted for both treatment and control groups
Banks
Treatment group:
2 Banks
Comparison group:
Similar banks (8)
End Users
(Cement)
Treatment groupCompanies received loans from partner
banks (16)
Comparison group40 Random sampled
similar companies
IFC program – small but catching up
Bank loans to Energy Efficiency projects
2005 2006 2007 20080
5
10
15
20
25
30
35
40
45
50
Comparison Average Treatment
Bil
lio
n
Ch
ines
e Y
uan
Many investments took place without help
Comparison group:• High awareness on EE benefits, technical
knowledge• Government policy to promote EE• High implementation of project with its
own resources/bank financing
Many investments took place without help
Treatment group• “If you have not received a loan supported
by the program, would you still undertake the project?”
• Only about 10% said it would not implement if not supported by the program
IE identified key differences made by the program• Key differences are among small
companies–Large companies – have finance access,
technical knowledge, capacity;–Small companies –limited access to
financing, less projects undertaken
Summary
• Financial innovation and energy efficiency– Importance of access to financing for small
companies;– Government policy as important driver;
• Impact Evaluation– Effective in identifying intervention’s additional
contributions– Show the areas of unique contributions for future
focus