Energy Efficient Cities

Informing decisions, piloting new approaches and spurring investments in energy efficient city services and buildings.

Urbanization is a cornerstone of sustainable development. Approximately 3.5 billion people currently live in urban centers and are expected to grow to 5 billion by 2030. Approximately 90 percent of this increase will occur in developing countries, where poor urban communities are growing rapidly. This urbanization has led to massive demand for energy to power economic activity, expand infrastructure, and deliver municipal services. Cities now consume about two-thirds of the world’s energy, and are responsible for 70 percent of the global greenhouse gas (GHG) emissions. Given the long-term nature of urban infrastructure, cities can lock themselves into unsustainable and costly energy consumption patterns. Investing in energy efficiency (EE) can help expand and improve urban services, while contributing to cities’ efforts to be more competitive and address climate change. EE policies and investments can curb energy demand growth and emissions growth in the near term while fueling economic growth without compromising goals of greater access to reliable and affordable energy services.

Notwithstanding, projections reveal that under existing policies, the vast majority of economically viable EE investments (e.g. in buildings, transport, etc.) may remain unrealized. No country has fully utilized the potential to improve the EE of its economy and most still have scope to go considerably further. Numerous barriers are responsible for the persistent EE gap including financial barriers (e.g., higher upfront cost, difficult access to financing, lack of credit-worthiness, high transaction costs); awareness and incentive barriers (e.g., principal agent problems, lack of awareness of EE potential, low priority attached to energy issues, inadequate information, energy prices below the cost of supply, etc.); as well as implementation capacity barriers (lack of familiarity with EE technologies, limited technical capacity, and restrictive public procurement rules).

ESMAP’s EE activities seek to help client countries harness their EE potential as the “first fuel” (i.e., competitive, clean and widely available) to support the high-level goals of ensuring energy security, reliability and affordability, as well as capture the multiple benefits of EE including contributing to addressing climate change, responding to peak demand pressures, lowering operating and maintenance costs, creating budgetary space for other expenditures, enhancing comfort, increasing property value, and increasing competitiveness).

The initiative builds on ESMAP’s extensive work on urban EE, including support towards city energy diagnostics conducted with ESMAP’s Tool for Rapid Assessment of City Energy (TRACE) in nearly 70 cities to help quickly identify potential EE improvements, target underperforming sectors, and prioritize interventions. Other efforts include knowledge products on various urban energy efficiency topics and issues, as well as technical assistance in a number of countries across the globe.

Key features of the Energy Efficient Cities program:

Engages with private and public sectors (both national and sub-national governments)
Strives for integrated and cross-sectoral approaches, bringing higher value and multi-benefits to clients
Promotes innovation while still focusing on results
Fosters global partnerships
Helps mobilize different financing sources and
Responds to client demands and needs

ESMAP has supported teams from across the World Bank Group working hand-in-hand with local and national governments to provide:

Diagnostics and assessments of city energy use and energy efficiency potential
Advice on policy, regulatory, and institutional reforms
Training and capacity building to enhance understanding of urban energy efficiency and its delivery
Knowledge exchanges to share and disseminate experiences and good practices
Development of energy efficiency investment programs and support for project preparation

An overview of supported activities can be seen here.

To further broaden the reach of ESMAP’s Energy Efficient Cities activities, a public e-learning course featuring different municipal sectors where energy plays an important role (e.g., public lighting, water supply), and an EE Case Study Database has been created. In addition, an Energy Efficiency Project Resource Center has been developed in cooperation with Energypedia to provide practitioners from around the world with documents not widely available or easily accessible (e.g., sample terms of reference, contracts, surveys, and questionnaires; examples of economic and financial analysis; training material; methodologies and protocols; case studies). Additional knowledge products range from Mayoral Guidance Notes on urban EE, to lessons learned from city energy diagnostics, and to insights from public lighting LED delivery models.

RESULTS

During the FY14-16 business plan, ESMAP has supported scaling up of urban EE through 60 technical assistance activities in more than 50 cities and more than 25 countries. These technical assistance programs cover a broad spectrum of urban sectors including: public lighting, water and wastewater, buildings, power and heat, waste management, industry, and transportation. Together, these actiities will contribute to transformational impacts in cities’ energy use and to their sustainable development. For instance:

BRAZIL | ESMAP support began with EE prioritization in Belo Horizonte and Rio de Janeiro, resulting in focused efforts on the public lighting and buildings sectors. In the public lighting sector, pre-feasibility studies encouraged both cities to structure LED lighting programs. Belo Horizonte is now implementing a public-private partnership to replace all 178,000 lighting points with LEDs, and Rio de Janeiro has included the LED lighting project in its 2017 plans after the Olympics. Efficient public lighting is now being expanded to 300 other cities in Brazil and a scaled-up WB investment operation is under preparation. In the buildings sector, ESMAP support is focused on 2,000 schools in Rio de Janeiro and Belo Horizonte where pre-feasibility studies are examining rooftop solar panels combined with energy efficiency measures inside schools.

MEXICO | ESMAP supported city energy diagnostics (using ESMAP’s Tool for Rapid Assessment of City Energy, TRACE) in Puebla and Leon, which has been expanded to 30 other municipalities across Mexico. With this foundation, the Energy Ministry (SENER), with help from the Bank, is putting in place the first national program financing the design and implementation of municipal EE investments in Mexican cities (with USD100 million World Bank loan). ESMAP also helped build the project pipeline by supporting energy audits in the three energy-using municipal sectors targeted by the program (street lighting; municipal buildings; and water and wastewater) in six municipalities.

IFC’s EDGE Green Building Market Transformation Program (www.edgebuildings.com). ESMAP supports EDGE’s global knowledge infrastructure (i.e., certification and governance protocols, software design tool, training materials, a global IT platform), and implementation of a voluntary green building certification system in South Africa. Within seven years, the EDGE Program is expected to achieve: GHG reductions of 14 million tCO2e per year; $150 billion green investment catalyzed; and annual energy savings of 21,400 GWh and water savings of 129 million m3.

UKRAINE | ESMAP performed city-level energy diagnostics (with TRACE) to develop investment priorities in Kiev, Ternopil, Kamianets-Podilskyi and Zaporizhia. Public buildings were prioritized for pre-feasibility studies and financial analyses in these cities. As a follow-up measure, the Association of Energy Efficient Cities of Ukraine agreed to train 50 to 60 city representatives in deploying TRACE. Additionally, the World Bank supported the City of Ternopil in establishing a local ESCO and a revolving EE fund following recent legislative changes.

Kyrgyz Republic | EE assessments were performed in four cities to inform municipal energy savings plans and development of a $14 million investment for seismic and energy efficient retrofit of schools, street lighting, water pumps and waste collection equipment. In the framework of the project capacity of local construction companies was increased to perform EE retrofits. This work led to the Government’s request to the WB to extend the scope of the public buildings EE and resilience work under a $12 million Disaster Risk Management (DRM) lending operation as well as plans to extend it under another WB Energy operation, demonstrating the potential and benefits of integrating DRM and EE product lines to generate higher value for clients.

GOING FORWARD

Building on its first 3-years of experience, ESMAP is now pursuing its Energy Efficient Cities activities through 2 complementary focal areas to better respond to current and emerging needs and priorities.

Energy Efficient Services Objective | Integrate EE in the design, planning, management and implementation of projects that improve city services.

Efficient and Sustainable Buildings Objective | Integrate EE with renewable energy and other sustainability aspects in buildings, including how buildings are constructed, how they are retrofitted, how they use energy and where they are located.

Both these focal areas provide technical assistance, grants, knowledge activities and products. They both fit under ESMAP’s overall support to the Sustainable Development Goal 7 (SDG7, Affordable and Clean Energy), the World Bank Group’s (WBG) Climate Change Action Plan, and the World Bank’s twin goals of eliminating extreme poverty by 2030 and boosting shared prosperity.

RESOURCES