1. Addressing Policy & Legal Framework
Selcuk Tanatar
MENA Sustainable Business Advisory
June 1, 2011

2. AGENDA
• IFC’s CLIMATE CHANGE AGENDA
• MENA CLIMATE CHANGE CHALLENGES
• POLICY CHALLENGES AND APPROACH
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3. Member of the World Bank Group
We foster sustainable economic growth in developing
countries by supporting private sector development,
mobilizing private capital, and providing advisory and risk
mitigation services to businesses and governments.

4. IFC’s mandate:
Helping Businesses Combat Climate Change
• Addressing climate change and
environmental and social
sustainability is a top priority
• In year 2010, IFC invested more
than $1 billion in renewable
energy and energy efficiency
projects
• IFC climate change mitigation
Advisory Services especially
useful in middle income
countries

5. Climate Business:
technology, products and services that
“do more with less”
Private sector solutions for climate mitigation / adaptation and inclusive development
ENERGY: Low carbon generation, TRANSPORTATION: Vehicles, WATER: Capture, treatment, AIR & ENVIRONMENT: Emission
energy efficiency, storage, smart systems, fuels and logistics conservation, wastewater control, trading and offsets
grids. treatment
BUILDINGS: Low carbon strategy, MANUFACTURING: Green chemicals, AGRICULTURE & FORESTRY: Land RECYCLING & WASTE: Recycling
energy efficiency, sustainable RE/EE supply chain, cleaner mgmt, low carbon and adaptation and waste treatment services
materials. production. strategies, biomass.
Climate business will only scale and have impact with significant private
sector participation – that is where IFC has an important role to play

6. MENA
Climate Change
Challenges
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7. MENA CLIMATE CHANGE CHALLENGES
GHG emissions
increased 118%
since 1990 while
world av. is 20% and
Europe is 0%
Energy intensity is
the worlds second
highest after Russia
and 50% higher
than world average
Frequent power
outages, 4-8 h/day
in some countries
leads to prod. and
sale losses
All countries under
water scarcity.
Jordan and all GCC
countries under
severe scarcity
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8. SO, WHAT WE NEED TO DO IS...
Resource Efficiency: Reduce resource Clean Energy:
Facilitate investment in intensity and Demonstrate commercial
efficient use of energy, support low viability and removal of
water and materials carbon growth barriers for RE
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9. HOWEVER, IT IS NOT AN EASY JOB!
• Very high fuel and electricity subsidies across MENA
• Only energy scarce countries reflect costs or tax fuel – to a
certain degree
High fuel, electricity and water subsidies, combined
with lack of adequate regulation, are serious
barriers preventing investments in energy
efficiency and renewable energy.
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10. WHERE IT MAKES SENSE?
Resource Efficiency: Reduce resource Clean Energy:
Facilitate investment in intensity and Demonstrate commercial
efficient use of energy, support low viability and removal of
water and materials carbon growth barriers for RE
In energy scarce countries, In energy scarce countries,
• fully or in great part depending on • who have problems with access to
fuel import, (reliable) energy,
• with declared policies for resource • with political will for renewable
savings energy
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11. LEBANON
POLICY CHALLENGES
and
OPPORTUNITIES
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12. WE KNOW THE IMPACT OF ENERGY SCARCITY…
In Lebanon
• Oil import meets 94 - 96% of
total primary energy supply
• Daily black-outs are
• Equivalent to US$ 4 billion (~ experienced between 3-8
15% of GDP) hours more than 200
days/year
• Of which great share is lost
or costs not recovered • Countered by the highest
level of self-generation
capacity in the region
• Leading to estimated,
• $ 400 million loss in
profits for the industry,
and
• $ 1 – 2 billion burden on
the government budget
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13. AND THE GREAT POTENTIAL AND OPPORTUNITIES…
300 sunny days/year
Wind Solar thermal
electricity generating
generating potential of
potential of 38,752 TWh/year
6.1 GWh/year
Levelised costs:
Oil based electricity ~ 10 – 17 $c/kWh
Hydro, SWH and Wind ~ 5 – 15 $c/kWh
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14. POLICY BARRIERS IDENTIFIED GLOBALLY
Costs and Pricing Legal and Regulatory Market Performance
• Subsidies for competing • Lack of legal framework • Lack of access to credit.
fuels for independent power
• Perceived technology
producers
• High initial capital costs performance
• Restrictions on siting uncertainty and risk
• Difficulty of fuel price
and construction
risk assessment • Lack of technical or
• Transmission access commercial skills and
• Unfavorable power
information
pricing rules • Utility interconnection
requirements • Insecurity of the
• Transaction costs
markets vs. long pay-
• Liability insurance
• Environmental back period
requirements
externalities
• Lack of awareness and
• Standards
incentives
Beck & Martinot, 2004
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15. HOW MUCH OF THIS IS APPLICABLE TO MENA?
Costs and Pricing Legal and Regulatory Market Performance
√
• Subsidies for competing √
• Lack of legal framework √
• Lack of access to credit.
fuels for independent power √
• Perceived technology
√High initial capital costs
•
producers
performance uncertainty
√
√Difficulty of fuel price • Restrictions on siting and and risk
•
risk assessment
construction √
• Lack of technical or
√
• Unfavorable power
√Transmission access
• commercial skills and
pricing rules √Utility interconnection
•
information
√Transaction costs
•
requirements √Insecurity of the markets
•
√Environmental √
• Liability insurance
vs. long pay-back period
•
externalities
requirements √Lack of awareness and
•
√
• Standards
incentives
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16. THE LIST IS LONG, IT IS HARD WORK TO GET THINGS
RIGHT, AND IT WILL TAKE TIME…
Denmark
Mid 1970’ies Late 1980’ies 2010
Grass-rooters build Government starts Renewable energy
first windmills incentivizing wind sector meets ~ 29% of
despite no regulation energy industry energy consumption
and incentives
Turkey
Late 1980’ies 2005 2023
First windmill built Parliament enacts Government targets
for a hotel. Policy feed-in tariffs for to reach 20GW
makers discuss “who renewable energy installed wind power
owns the wind” capacity
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17. BUT WE SHOULD NOT BE PESSIMISTIC…
Policy/ Long Term
Regulation Impact
Need
HIGH HIGH ..AS WE KNOW THE
COUNTRY/ BIG IMPACT IS
REGIONAL
LEVEL CREATED BY POLICY
AND REGULATION.
AND WORK SECTOR
LEVEL
UPWARDS,
WE CAN STILL MAKE
PROGRESS BY FIRM
STARTING WHERE IT LEVEL
IS EASIER.. LOW LOW
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18. EXAMPLES OF INITIATIVES
Resource Efficiency: Reduce resource Clean Energy:
Facilitate investment in intensity and Demonstrate commercial
efficient use of energy, support low viability and removal of
water and materials carbon growth barriers for RE
HIGH
Incentivize REff through lead COUNTRY/
Improve the investment climate
organizations such as utilities, REGIONAL
policy/regulation need
LEVEL for renewable energy sector
FIs, etc.
Support to extend REff practices
to firms in group, supply chains, SECTOR
Support off-grid / mini-grid
clusters, through NGOs, LEVEL systems based on renewables
associations, etc.
Support and incentivize REff FIRM Support auto/co-generation
LEVEL with renewable energy
LOW
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19. TO SUMMARIZE - WITH POLICY AND REGULATION…
Policy/ Long Term
Regulation Impact
Need
3. LINK THE DOTS, HIGH HIGH
REMOVE DISTORTIONS COUNTRY/
REGIONAL
AND ENSURE LEVEL
COMPETITION.
2. ENABLE EXPANSION SECTOR
THROUGH “INTEGRATORS” LEVEL
AND SERVICE PROVIDERS
1. EMPOWER AND
SUPPORT FRONT FIRM
RUNNERS LEVEL
LOW LOW
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