Can the U.S. meet President Obama's commitment to reduce U.S. greenhouse gas emissions by 17 percent? Franz Litz and Nicholas Bianco, with the World Resources Institute, have the answer in the following video.

Despite the increase in sustainable energy initiatives by Multilateral Development Banks (MDBs), a limited number of loans financed by the World Bank, Inter-American Development Bank (IDB) and Asian Development Bank (ADB) consistently support sustainable energy investments in developing countries.

Investing in Sustainable Energy Futures: Multilateral Development Banks’ Investments in Energy Policy, a report released today by the World Resources Institute (WRI), analyzes energy-related loan programs at the World Bank, ADB and IDB in addition to the newly created Clean Technology Fund (CTF). The report is being launched this week at the annual spring meetings of the World Bank Group and the International Monetary Fund.

“Over the last five years, MDBs have engaged countries on critical elements of sustainable energy and have launched several specialized initiatives to promote clean energy and low carbon technologies,” said Athena Ballesteros, manager of WRI’s International Financial Flows and the Environment Project. “However, if the development banks are going to finance climate change solutions in the future, they need to help developing countries put in place new, and more effective forms of oversight, pricing, and investment incentives that promote long-term investments in sustainable energy.”

Ballesteros added, “In most countries, policies and regulations currently tend to emphasize short-term costs and supply rather than the long-term benefits of clean technologies.”

The report finds that despite increased support for low carbon energy technologies, many loan programs do not address aspects of electricity policy, regulation, institutional capacity and governance that would enable investments in sustainable energy over the long-term. The findings are based on a framework developed by WRI that builds on the Electricity Governance Indicator Toolkit—a set of indicators benchmarking best practice and promoting accountability in the electricity sector.

The report makes the case for systematic attention to the following issues:

- Long-term Integrated Electricity Planning
- Policies and Regulations Encouraging Energy Efficiency
- Policies and Regulations Promoting Renewable Energy
- Pricing Structures Encouraging Efficiency and Reducing consumption
- Subsidy Reform to Reveal the True Costs of Fossil Fuesls and Promote the Viability of Sustainable Energy Options
- Executive Agencies’ Capacity for Sustainable Electricity
- Regulators’ Capacity to Oversee Implementation of Sustainable Electricity Policy
- Utilities’ Capacity to Promote Energy Efficiency and Renewables
- Transparency of Policy, Planning, and Regulatory Processes for Electricity
- Stakeholders’ Engagement in Policy, Planning, and Regulatory Processes

A relatively small number of MDB projects address the elements of sustainable energy listed above. Of the 31 World Bank loans reviewed, only 10 consider 5 of the 11 elements. The IDB considers at least 5 of the elements in 10 of 19 loans and the ADB considers more than 5 elements in 10 of 29 projects.

The report also reviews the investments made by the MDB administered Climate Investment Funds (CIFs), particularly the $4.73 billion Clean Technology Fund. While the Funds address some of these elements, the research concludes attention to them has been uneven. The CIFs represent more public finance than has ever before been dedicated to climate change.

Smita Nakhooda, a senior associate at WRI, said “A greater focus on institutional capacity and governance will be key to supporting developing countries to pursue low carbon energy options that effectively meet development needs without compromising the poor.”

“Green” building retrofits or new construction can protect the Asian real estate sector from increasing environmental risks emerging in the region, according to a new report released by the World Resources Institute (WRI) and HSBC’s Climate Change Centre of Excellence.

The report, Surveying Risk, Building Opportunity, assesses the commercial building sector in India, Indonesia, Malaysia, the Philippines, Thailand and Vietnam and the financial impacts it could face from energy insecurity, water scarcity and climate change. The report finds that green building investments can alleviate these risks in addition to achieving a positive return for building owners in a few years.

“The environmental challenges and resource constraints these countries have been experiencing will intensify and can result in increased utility, operating and construction costs for building owners,” said Shally Venugopal, an associate at WRI and lead author of the report. “Incorporating green features into design and construction can save real estate companies money, especially for energy use, and can increase occupancy rates and even rent premiums.”

According to the report, electricity prices are expected to increase as demand continues to rise, particularly in cities with weak electricity infrastructure. Most of the energy used by commercial buildings in the region goes toward air conditioning and lighting. In India, for example, lighting accounts for 60 percent of the energy used in commercial buildings while 32 percent goes toward air conditioning.

The region’s water constraints will also cause utility costs to rise. India, in particular, faces severe water availability and quality constraints in many areas. One estimate by the World Bank suggests that India will exhaust all available freshwater supplies by 2050.

The other focus countries will see localized water scarcity near major cities due to population growth and changing rainfall patterns. In Vietnam, the amount of freshwater consumed has tripled and in Malaysia and India it has doubled in the last two decades. This will not only lead to increasing water costs but will also affect the electricity grid since power generation depends heavily on water resources.

Major Indian cities already see power outages weekly. During peak season, Bangalore loses power an average of 1.5 hours a day while Kanpur loses power an average of 7 hours a day. In addition to losing power, the price of electricity will also increase.

As part of the study, HSBC’s analysts conducted a case study on the Indian real estate sector and the materiality of environmental factors. They found that for a typical commercial building (300,000 square feet) in Mumbai, a 1 percent increase in electricity costs could increase annual operating costs by approximately Rs 2.8 million, or around USD 60,000.

Building owners could protect themselves from energy price hikes by investing in energy efficient lighting, such as targeted task lighting, that could reduce energy demand by 20 to 25 percent. HSBC estimates that a 10 percent increase in energy costs would only increase operating costs in a green building by as little as only half as much compared to a typical building.

As the region sees increased rains, flooding, storms and landslides, weather-related insurance premiums for buildings could also increase. Jakarta, where 40 percent of land is below sea level, is especially vulnerable. Flooding in 2007 caused building insurance premiums to increase by 25 percent in 2008.

Building owners can protect themselves from damage caused by extreme weather events by examining climate risks for prospective sites even before purchasing land. Buildings can be designed to minimize damage from floods and storms by incorporating features such as flood vents and barriers, water-resistant flooring (e.g., tiles versus carpeting), and landscaping and exterior features that incorporate storm water management (e.g. rain gardens).

“Green buildings can protect investors from volatile and increasing power prices,” said Nick Robins, head of HSBC’s Climate Change Centre of Excellence. Roshan Padamadan, a HSBC analyst at the Centre, said “Our analysis shows that the upfront investment can payoff in as little as 3 years.”

Though green buildings are gaining momentum in the region, barriers to growth exist, such as the availability of local green building materials and expertise. The report recommends that governments create appropriate market incentives and institute stricter building codes to enable the green building movement to flourish in South and Southeast Asia.

This is the last report in a three-part series. Weeding Risk, the first report, analyzes environmental trends on the food and beverage sector in South and Southeast Asia. The second report, Over Heating, analyzes the power sector in the region.

Environmental trends could have significant financial repercussions for the $40 billion food and beverage industry in South and Southeast Asia, according to a report released today by the World Resources Institute (WRI) and HSBC’s Climate Change Centre of Excellence.

“The food and beverage industry is particularly vulnerable to climate change and water scarcity in Asia. The region is already struggling with increased water demand because of population and economic growth,” said Dana Krechowicz, a WRI associate and co-author of the report.

The industry’s dependence on agriculture, aquaculture and water resources for business operations makes it particularly susceptible in a region where climate change is projected to severely intensify water scarcity problems.

WRI’s report, Weeding Risk, examines the impacts these growing trends will have on seven economically important food and beverage sub-sectors in six countries – India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.

The report’s findings suggest that the edible oils, starches, and sugar sub-sectors will be most vulnerable to increasing agricultural prices, while aquaculture, poultry, and dairy will be vulnerable to disease and contamination. As part of the study, HSBC’s analysis on an Indian sugar company shows that a sugarcane price increase of 1 percent can lead to a decline in profit of up to 10 percent.

The risks identified in the report are already affecting some food and beverage sectors. Drought during the monsoon season in India caused sugar prices to reach a 28-year high in 2009. This is particularly troubling considering experts estimate that by 2020, the demand for water in India will exceed all its sources of supply.

“Water stress is set to have a growing role in shaping the sector,” said Nick Robins, head of the Climate Change Centre of Excellence at HSBC. Roshan Padamadan, a HSBC analyst at the Centre stated, “The strategic choices made by a company along its value chain can mitigate these risks, making it important for investors to understand its sourcing, inventory, and operational performance.”

Weeding Risk is the first report in a three-part series. The second report, Over Heating, analyzes the power sector in South and Southeast Asia. Surveying Risk, Building Opportunity, assesses the environmental risks to commercial real estate in the region.

More than half of existing and planned power plants in South and Southeast Asia are located in areas currently considered water scarce or stressed, according to findings in a report released today by the World Resources Institute (WRI) and HSBC’s Climate Change Centre of Excellence.

The new report, Over Heating: Financial Risks from Water Constraints on Power Generation, analyzes water-related risks facing thermal and hydroelectric power plants in India, Malaysia, the Philippines, Thailand and Vietnam. These plants require large amounts of water for cooling and generation.

WRI mapped the water stress level across the region and the location of more than 150 existing and planned facilities of the largest power-generation companies in the region. The analysis found that water shortages pose the highest risk for power generation companies in India.

“Water-related risks are hard to quantify, yet they present a growing risk to power generation,” said Piet Klop, acting director of WRI’s Markets and Enterprise Program. “The next step is to take our analysis to specific companies and their exposure and response to those risks. On the upside, investors have investment opportunities that can come from better understanding water-related risks.”

In India, approximately 62 percent of existing and 79 percent of planned thermal and hydroelectric power plants of the three largest power generation companies (NTPC, Tata Power, and Reliance Infrastructure) are located in water scarce or stressed areas. The country’s water demand is expected to outgrow supply by 50 percent by 2030 and estimates by the World Bank indicate that all available water supplies will be exhausted by 2050.

“The power sector investors and analysts are making long-term bets on water that, in the future, might no longer be reliable,” said Amanda Sauer, a senior associate at WRI. “They need to start assessing their exposure to water-related risks when considering long-term investment strategies.”

The report’s findings suggest that project delays due to water-permitting problems and general shortages may be costly. As part of the study, HSBC’s analysts found that a 12-month delay in commercial operation could lower the rate of return on investment by 1.5 percent. Furthermore, each 5 percent drop in power production due to water shortages could result in nearly a 0.75 percent drop in the project’s rate of return.

“The projected expansion of power generation - whether coal, hydro or gas – is exposed to growing water stress,” said Nick Robins, head of the Climate Change Centre of Excellence (C3E) at HSBC.

Roshan Padamadan, a HSBC analyst at the Centre said, “Investors need to understand how companies are managing these risks, including the specific steps to optimize water use at the plant level.”

Over heating is the second report in a three-part series. The first report, Weeding Risk, looks at climate change and water scarcity impacts on the food and beverage sector in India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. The third report, Surveying Risk, Building Opportunity, assesses environmental risks to commercial real estate in the region.

The forests of the Southern United States are a vast local and national treasure. They provide hundreds of thousands of jobs, hunting and hiking opportunities and are part of the climate change solution. But according to new research by the World Resources Institute (WRI), these treasured woodlands are at risk of disappearing and their fate rests in the hands of private woodland owners.

Find out more by watching my first video. I still have a lot to learn, but you gotta start somewhere.




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The online tool featured in the video is the first step in a multiyear WRI project, Southern Forests for the Future, aimed at helping landowners, conservation organizations, and others to learn and appreciate the range of benefits, or ecosystem services, these forest provide.

“At a time when the world is concerned about climate change, freshwater availability, the economy and jobs, southern forests are part of the answer,” said Jonathan Lash, president of WRI. “The pattern of forest cover loss in this region has been acres here and acres there. Continuous but dispersed change often goes unnoticed. This new online system addresses that.”

Stretching from Texas to Virginia and from Kentucky to Florida, the southern U.S. forests are among the world’s most biologically diverse temperate forests. Though they comprise just two percent of the planet’s forest cover, they underpin hundreds of thousands of jobs and produce more pulp for paper by volume than any single nation – other than the entire United States. In addition, they supply other ecosystem services, such as watershed protection, recreation, and carbon storage.

“A lot of focus in global climate change discussions to date has been on tropical rainforests,” said Susan Minnemeyer, a WRI senior associate. “But U.S. forests are important too. When domestic forest acreage declines, the nation’s carbon sink shrinks.”

The future of these forests mostly rests in the hands of private landowners. Approximately 27 percent of southern forest acreage is held by companies and financial institutions while another 60 percent is owned by individuals and families. But three-quarters of these family forests are owned by people 55 years of age and older. A generational transfer is on the horizon.

“In many ways, the next 20 years will shape the fate of southern forests,” said Todd Gartner, manager of Conservation Incentives at the American Forest Foundation. “Surveys indicate that most families want to pass their forests on to the next generation. However, with increasing development pressure, market-based incentives are needed to ensure that private forests remain as forests.”

WRI’s new online mapping system can help forest landowners in the South see the history of their forests through satellite images and better understand the forces of change affecting their properties. It also showcases examples of successful approaches for owners who want to retain their forests.

“SeeSouthernForests.org will be really helpful when engaging a community and working with local landowners regarding forest conservation and sustainable management,” said Tom Bancroft, chief scientist at the Audubon Society. “If a picture is worth a thousand words, satellite images and a good map are worth 10,000.”

“We hope the site will raise awareness about the economic and environmental benefits of southern forests and put important information at people’s fingertips,” said Patricia Pineda of Toyota, which is sponsoring WRI’s work as part of the company’s commitment to the Clinton Global Initiative.

“We were thrilled that Toyota and WRI committed to launch SeeSouthernForests.org at the Clinton Global Initiative’s Annual Meeting last year,” said Robert S. Harrison, CEO of the Clinton Global Initiative. “We hope this site will empower more and more people to appreciate southern forests and the benefits they provide to people in the region and beyond.”

Check out the blog post on WRI...

China is making progress toward controlling greenhouse gas emissions, according to new research by the Word Resources Institute (WRI).

“In the last five years, Chinese leaders have embarked on policies to increase energy efficiency, using targets, quotas and a few taxes,” said Deborah Seligsohn and lead author of China, the United States, and the Climate Challenge. “While these policies may not provide the environmental certainty of a cap-and-trade system, our analysis shows they can control emissions and may be more suited to the current state of development of China’s financial markets and regulatory structure.”

China’s approach is founded on two main targets: reducing national energy intensity by 20 percent by the end of 2010 and to increasing renewable energy’s share of the national energy mix to 15 percent by 2020.

WRI’s analysis finds that China is on track to meet these two ambitious goals by enacting a broad range of measures. Chinese leaders have recognized that reducing energy intensity-the amount of energy used per unit of GDP-and expanding its energy portfolio improves energy security and air quality, as well as limiting greenhouse gas emissions.

“In 1979, China’s reform and opening policy began with a saying by Deng Xiaoping, ‘It doesn’t matter whether the cat is white or black as long as it eats mice.’ That also holds true for world efforts to control dangerous climate gases,” said Seligsohn. "Countries will use different approaches suitable to their particular circumstances.”

One key program, for instance, requires 1,000 of China’s largest state-owned enterprises to implement comprehensive reductions in energy intensity, and monitors their progress. This “Top 1,000 Enterprises Program” met its goals in the first year and exceeded its targets in 2007.

Another policy is to shut down small-scale inefficient facilities. In 2007, China closed 1,000 cement plants with a combined capacity of 50 million tons, 14.4 GW worth of small power plants, and plants producing 35 million metric tons of steel.In the electricity sector, China has steadily improved the efficiency of its power plants, and the government now requires all new coal-fired power plants to be state-of-the-art commercially available technology.

WRI’s analysis shows that the average efficiency of coal-fired plants is now higher in China than in the United States. China is also on pace to meet very ambitious renewable-energy goals. Installation of new wind power capacity since 2006 has consistently exceeded targets. By 2010, China will have at least 10GW of installed wind power capacity, rising to an expected 150 GW in 2020 - five times the current U.S. level. China’s solar reliance is also growing rapidly: ten percent of Chinese homes have solar water heaters and the number is growing at 20 percent per year.

“WRI’s research shows that China is making substantial progress in controlling its emissions of climate gases, and in monitoring emissions by major companies,” said Seligsohn. “The challenge for U.S.-China collaboration in climate change mitigation is for each country to understand the other’s approaches, and to find creative solutions when those approaches don’t align.”

The report suggests the U.S. could selectively issue free carbon allocations to protect some firms from overseas competitors that enjoy a lower carbon price. Carefully targeted measures can address differences in carbon policies without threatening global trade.