region could play a prominent role in contributing to theinternational effort to combat climate change. INCREASING CLIMATE CHANGEMITIGATION INVESTMENTThe EBRD, whose mandate also promotes the growth ofthe private sector, has developed a range of instrumentsto support and mobilise private sector financing forclimate change mitigation under its Sustainable EnergyInitiative (SEI). The SEI has enabled the EBRD torapidly scale up its activities in this area. In the transition region, energy efficiency has thelargest potential for carbon reduction in the short tomedium term, while renewable energy sources are alsokey to a cleaner and more diversified energy supply. Arange of factors need to be addressed to provideappropriate incentives to invest in climate changemitigation. These include distorted energy prices, lackof modern energy efficiency regulations and standards,obsolete technologies, and lack of awareness, and theyare caused by a limited political or managerial focus onenergy savings and climate policy. The EBRD is usingpolicy dialogue and direct project-related technicalassistance to address these underlying problems. The experience of the EBRD also shows that themultilateral development banks (MDBs) can play animportant role in expanding the resources available forclimate financing by leveraging both private and publicfunding. EBRD climate mitigation financing, which isprovided at market rates, triggers other investment at aratio of 1:5. Funds from bilateral sources, whichsupport energy audits and feasibility studies, triggerinvestment at a ratio of close to 1:50. When incentivesare necessary to compensate for high risk and a weakpolicy framework, the ratio of grants to investments isclose to 1:20.THE EBRD'S SUSTAINABLE ENERGYINITIATIVE (SEI)The SEI is the EBRD's strategic vehicle to address theclimate change challenge, with a particular focus onenergy efficiency. It responds to the specific needs ofenergy transition in the EBRD countries of operations,as well as to the call of the G8 at the 2005 GleneaglesSummit for the MDBs to scale-up climate changemitigation investment. The SEI pursues climateinvestments across all sectors in which EBRD is active: . industrial energy efficiency; . sustainable energy financing facilities through localbanks; . energy efficiency in the power sector; . renewable energy development; . municipal infrastructure energy efficiency; and . carbon finance. Phase 1 of the SEI (2006-08) has been completedwith results significantly above the original investmenttarget. Building on the record and experienceestablished during Phase 1, the EBRD is furtherscaling up its energy efficiency and renewable energyfinancing in Phase 2 (2009-11) with an investmenttarget ranging from ?3 to ?5 billion, a total projectvalue ranging from ?9 to ?15 billion and a carbonreduction target within a range of 25 to 35 milliontonnes of CO2 emissions reductions per annum.By September 2010, EBRD SEI financing reached a milestone at ?5.2 billion in 300 projects since the launch of the initiative in 2006. Annual carbonemissions reduction from these investments isREGIONAL 048PERSPECTIVES""THE EBRD HAS DEVELOPED ARANGE OF INSTRUMENTS TO SUPPORT AND MOBILISE PRIVATE SECTOR FINANCING FORCLIMATE CHANGEMITIGATIONUNDER ITS SUSTAINABLE ENERGY INITIATIVE(SEI)Right:Thomas Mirow,President of theEuropean Bank forReconstruction andDevelopment

estimated at around 30 million tonnes CO2. CONCLUSIONThe Copenhagen Accord has placed a renewedemphasis on financing as a key to achieve a robustclimate agreement and meaningful carbon emissionreductions. Financing must be large-scale, targeted yetflexible, easy to use, and rapidly deployed. The EBRDexperience in climate mitigation finance demonstratesthe significant scaling up which can be achieved byfocusing the organisation as a whole both strategicallyand operationally on this challenge. It also shows theimportance of close operational and financialcollaboration involving government agencies, privatefirms, donors and other MDBs. The challenge now is to accelerate and expand activity. While the EBRD experience shows how meaningful carbonemission reductions leveraging private sector financingcan be achieved, the meeting in Cancún muststrengthen the policy and financial basis for climateaction commensurate with the scale and urgency ofthe challenge. nABOUT THE AUTHORThomas Mirow became the President of the EuropeanBank for Reconstruction and Development in 2008. Before joining the EBRD, he was State Secretary atGermany's Federal Ministry of Finance (2005-2008)and Director General for Economic Policy in the FederalChancellery (2001-2005). Earlier in his career, MrMirow, who holds a degree from University of Bonn,held senior cabinet positions in the government of thestate ("Land") of Hamburg and senior managementand advisory positions in the private sector.REGIONAL PERSPECTIVES049