Financing energy efficiency: lessons from experiences in India and China

Purpose – Improving energy efficiency is considered one of the most desirable and effective short-term measures to address the issue of energy security, and also reduce the emission of greenhouse gases. However, lack of access to domestic finance is the major hindrance in achieving the potential in China and India. This paper aims to report the experience of a three-country United Nations Environment Programme/World Bank Energy Efficiency Project (involving China, India and Brazil) that is set up to address the financial barrier and identifies the lessons that can be learnt from the project. Design/methodology/approach – The paper follows the post-completion review approach of a project and presents the activities undertaken and results obtained from the project. Findings – The project seeks to remove the financial barrier through the development of a commercial banking window for energy efficiency, energy service company development and support, exploring the need for setting up guarantee facilities and need for facilitating equity financing to the sector. The project succeeds in creating awareness and better understanding among the financial institutions in both India and China on potential of energy efficiency and need to make financing available for this. The banks in India in created specialized schemes for energy efficiency financing, and in China, the project has a positive impact on the new initiatives with the on-lending facility and the guarantee fund for energy management companies. Experience sharing on these issues through cross-exchange workshops proves to be very useful. The project successfully creates a platform on which further energy efficiency work can be carried out in the participating countries. Originality/value – By disseminating the experience of energy efficiency financing in two developing countries, the paper contributes to knowledge that can be helpful in a wider context.