IFC, a member of the World Bank Group, has published research highlighting up to $1 trillion of investment potential in renewable energy, resource efficiency, and climate change adaptation – including $70 billion in improved water usage - across Emerging Europe, Central Asia, and the Middle East and North Africa.

The IFC report, Investment Potential in EMENA, covers 49 countries and assesses the potential for climate-smart investment in a region facing unprecedented increases in energy demand, population growth, and urbanization, as well as an acute need for improved infrastructure for more efficient industry, transport, and utilities.

Globally, the water-energy nexus is one of the four investment “megatrends” to watch, according to the U.S. National Intelligence Council’s Global Trends 2030.

According to the report, IFC estimates a conservative investment potential of $640 billion to 2020 across the region including:

• $270 billion in renewable energy generation, rehabilitation of power infrastructure, and improved transmission and distribution;
• $240 billion in energy efficiency in the commercial and consumer sectors, via building insulation, appliance upgrades, lighting, and water and space heating;
• $60 billion in cement, metals, and manufacturing, via improved industrial processes and equipment upgrades;
• $70 billion in improved water usage, including for power.

The investment potential increases to $1 trillion by factoring in reductions in energy-related subsidies and ambitious and consistent public incentive schemes including funds, tax exemptions, feed-in tariffs and mandatory efficiency standards.

The report says the greatest potential is in Russia, Turkey, Ukraine, and Pakistan, but opportunities exist across the region. Turkey’s climate-smart business investment potential alone is valued at over $89 billion with energy generation accounting for almost $42 billion, of which $22 billion is in renewables.  

The report flags up the Gulf Cooperation Council (GCC) countries as representing one of the the fastest growing investment opportunities. Independent water and power projects (IWPP) are on the rise in these countries, with 15 projects in Saudi Arabia worth $8.8 billion, 19 projects in Kuwait worth $4.2 billion, and 10 projects in the UAE worth $1.5 billion. Saudi Arabia, referred to regionally as the “desalination nation,” is said to have earmarked around $66 billion over the next decade for new hybrid and solar desalination capacity along its Red Sea and Arabian Gulf coastlines.

According to the report, Japanese firms and government agencies have “jumped on” the opportunity, helping design models that combine solar-and fuel-powered units to reduce the cost of fuel used in desalination plants by 65 percent.

In line with the World Bank Group’s growing strategic emphasis on climate change, the IFC is increasingly focused on private sector investment in climate-smart business with a goal to invest $3 billion a year globally in climate-smart projects by 2015 and to tie at least 20 percent of long-term financing directly to climate change. IFC in EMENA invested $2.5 billion in climate-smart business in the last four years.

IFC is the largest global development institution focused exclusively on the private sector. In FY13, IFC investments climbed to an all-time high of nearly $25 billion.