OREANDA-NEWS. On 24 July 2008 was announced, that when IFC launched a sustainable energy finance program in Russia in 2005, few in the country considered energy efficiency a real business opportunity. A 2006 survey of 625 Russian industrial companies revealed that they were reluctant to borrow funds to upgrade their old energy-intensive equipment.

Today, the effort is showing results and gaining momentum. IFC is working with financial institutions and companies across Russia to assess modernization projects. We are also providing advisory services and long-term credit to banks to enable energy efficiency loans, and we participate in public information campaigns to raise general awareness about the need for greater energy efficiency.

Energy use in Russia is six times that of Canada and 12 times that of the United Kingdom. This inefficiency has been attributed to, among other things, low energy prices that are not sustainable. IFC estimates that a USD 35 billion investment by Russia's industrial enterprises could reduce consumption by 37 percent while lowering operational costs, increasing global competitiveness, and reducing greenhouse gases.

Innovations

IFC has spearheaded several innovations, including:

The country's only comprehensive study on industrial energy efficiency practices, which serves as a valuable resource for bankers, policymakers, and journalists.

Energy efficiency standards for industrial process equipment, generic technologies, and cogeneration of heat and electricity.

An energy efficiency calculator that enables bankers to evaluate project eligibility in 15 minutes.

Training for bank executives and loan officers.

Results

IFC worked with Moscow's Department of Fuel and Energy on an energy efficiency strategy for the city. Thanks to an advertising campaign that we helped launch, the sale of energy-saving lamps doubled from 2.5 to 5 million, saving more than 300 million kilowatt hours of electricity—the equivalent of a 584,000-ton reduction in carbon emissions. The campaign has since expanded to the federal level.

In St. Petersburg, IFC partnered with the British Consulate and Afisha, a popular magazine, to create a poster competition called "Switch on Your Mind." The campaign helped spur creative ideas for energy saving and was the start of a broader awareness campaign. IFC also helped organize photo contests to support the sector, and a series of roundtables have brought together market players and stakeholders to discuss administrative barriers.

In Rostov-on-Don, a city in southern Russia, IFC has helped Centrinvest Bank finance several energy efficiency projects and technologies for smaller businesses. Local residents are also benefiting. With the installation of individual heat stations and meters in 400 homes, their heating costs will drop from USD 7.7 million to USD 4.5 million a year.

Through June 2008, IFC has:

Committed credit lines worth USD 85 million, with a target of USD 200 million by 2010

Financed 50 projects worth USD 32 million, saving clients USD 7 million annually in energy costs

Contributed to 674,000 tons of lifetime carbon dioxide reductions

Client Testimonials

Our clients value our work. During his recent trip to Russia, IFC Executive Vice President and CEO Lars Thunell met with top managers from three IFC client banks—Bank Saint Petersburg, MDM Bank, and URSA Bank—to discuss IFC's role in energy efficiency financing, which the banks now see as an important avenue for expanding their business.

"The work with IFC has been an eye opener for our people. This is really an important job, with huge potential for impact. It is striking that Russia's wasted energy equals France's overall energy consumption. This key message should be communicated to our top leaders."

MDM Bank's representative

"Our bank operates primarily in Siberia and the Urals—areas with a strong concentration of industrial enterprises. We know that the equipment at these factories has not been replaced in 30 to 40 years, so financing upgrades also lead to great energy savings. This is a real opportunity for us."

URSA Bank's representative

A Global Priority

Sustainable energy has become a global priority, and promoting energy efficiency is central to IFC's climate change strategy. The program in Russia builds on work in Central Europe and has paved the way for energy efficiency finance all over the world. IFC's innovations and lessons learned are being replicated in other countries, including Armenia, Azerbaijan, Belarus, China, Georgia, Indonesia, Peru, the Philippines, Vietnam, and Ukraine.

The work in Russia is supported by grants from IFC, the Global Environment Facility, and the governments of Denmark and Finland.