The European Bank for Reconstruction and Development has played a key role in the transition to market-based economies for countries that were formerly planned economies, primarily under the influence of the former Soviet Union. It was created in 1991 and is now the largest financial investor in its region of operations which now stretches from central Europe to central Asia and the southern and eastern Mediterranean. The energy sector is one of the primary sectors for investment. Note the first priority area listed below.
The EBRD’s energy strategy
The European Bank for Reconstruction and Development (EBRD) has adopted a new energy strategy which will guide its investments in the energy and natural resources sector.
In the strategy the EBRD, already the largest investor in renewable energy and energy efficiency projects in its region, reaffirms its commitment to helping the countries where it invests move towards sustainable energy sectors.
As the new strategy points out, the energy sector’s “economic importance, the interaction of public and private and its environmental impact” put it “at the centre of the Bank’s mandate to foster the transition to market-oriented economies and its function to promote environmentally sound and sustainable development”.
The countries in the EBRD region, which stretches from Morocco to Mongolia, are faced with the challenge of providing sustainable, secure and affordable energy. The energy strategy identifies energy efficiency as the first and best response to this challenge.
The strategy also reinforces the EBRD’s growing support for renewable energy, which will include financing both energy-generating capacity and key infrastructure such as transmission lines and backup generation.
It highlights the role of EBRD as an enabler of renewable energy, working with governments and regulators on improving energy sector regulation and putting in place stable and predictable regulatory frameworks.
The new energy strategy was adopted after extensive consultation and engagement with the public, civil society organisations, governments, academia and industry.
The pre-consultation phase included an Invitation to Comment on the existing EBRD Energy Operations Policy from November 2012 until 16 January 2013 and brainstorming/workshop meetings with experts and civil society organisations specialising in energy issues.
In July 2013 the EBRD launched a formal public consultation to allow all interested stakeholders to comment on the draft strategy.
As part of the consultation period the Bank also organised four public meetings in London, Istanbul, Belgrade and Moscow to discuss the draft document and receive comments. In total, 121 representatives of various stakeholders participated and provided comments during these four public consultations. Additionally, 83 sets of written comments were received as well as two petitions from 350.org and the Price of oil campaign.
The strategy also sets out a revised policy for thermal generation, highlighting that EBRD will help countries switch from coal to gas and that it will not finance coal-fired generation except in rare and exceptional circumstances where there are no feasible alternative energy sources.
The new strategy explains in detail the EBRD’s approach to the energy sector. Of particular interest is Chapter 5 which outlines the EBRD’s operational activities around seven key areas:
• promoting energy efficiency and demand side measures,
• building deep and liquid energy markets (strengthening private participation and market-enabling infrastructure),
• rethinking energy systems (supporting smart grid infrastructure and advanced technologies),
• the low-carbon transition (increasing deployment of renewable energy and helping economies meet global climate change goals),
• cleaner energy production and supply (helping countries switch from coal to gas and reducing wasteful gas flaring),
• setting standards and best practice (implementation of the Extractive Industry Transparency Initiative is one example) and
• the wider role of the energy sector in building stronger economies.
“Our region of operations is dealing with the legacy of decades of command economies which created some of the most wasteful energy sectors on the planet,” the EBRD Managing Director for Energy and Natural Resources, Riccardo Puliti, said at the time of the new strategy’s adoption.
“These sectors are slow to reform, both for economic and political reasons. But our existing work there proves that market forces can be harnessed to make energy sectors more sustainable – environmentally, economically and politically”.
Over the period from January 2006 to October 2013 the EBRD invested over €8.6 billion in 172 energy sector projects. The new strategy is available on the EBRD website. The executive summary is below.
Energy Sector Strategy Executive Summary
Economies run on energy; it fuels all commercial and public life. The energy sector is intensively regulated and in many countries the state is heavily involved. However, private sector engagement is essential to improve efficiency, strengthen markets and meet the investment and operational challenges the sector faces. Countries that are major energy producers face the challenge of managing their natural resource endowments responsibly and ensuring that the benefits are distributed sustainably and equitably. Nearly all energy subsectors have large environmental and social impacts and the sector is one of the largest contributors to global greenhouse gas emissions. Combined, these characteristics place the energy sector at the heart of EBRD’s mandate to foster the transition to market-oriented economies and to promote environmentally sound and sustainable development.
EBRD has operated in the energy sector since 2006 in accordance with its existing Energy Operations Policy, during which period it has invested EUR 8.6 billion in 172 projects. This Energy Strategy restates EBRD’s role in the energy sector for the period from 2014 to end 2018, taking account of the major developments that have occurred in the past seven years.
The Energy Strategy sets EBRD’s general direction and identifies how it will prioritise its activities in the sector; the detailed focus for each country and region is set, within the parameters of the Energy Strategy, in the Country Strategy prepared for each country of operations.
Energy in Demand - Sustainable Energy - Rod Janssen 