Turkey’s greenhouse gas emissions are growing at one of the fastest rates in the world. Energy production and usage account for 77 percent of the country’s greenhouse gas emissions, with industry consuming about 32 percent of total energy.

To meet skyrocketing energy demands with the least environmental impact, the country is vigorously promoting an ambitious energy efficiency program that reduces waste and contributes to energy security.

According to the Ministry of Energy and Natural Resources, Turkey has the potential to cut 15 to 20 percent of total consumption through energy conservation. But creating a market for energy efficiency hinges on successful private sector involvement.

The government has enacted legislative and regulatory reforms, but an enabling environment has not been enough. Although energy efficiency is a government priority, the strategy has not been embraced by the private sector. The private sector’s limited experience in the field and a lack of access to energy efficiency finance are the key stumbling blocks.

The government has tapped CTF to attract greater private sector investments in energy efficiency across the board. In the commercial and public sectors, the focus is on more efficient lighting, heating, air conditioning, and insulation. For households, in addition to fluorescent bulbs and insulation, the program requires strict energy standards for appliances, particularly refrigerators. For large industries, a switch-over to new process technologies and the replacement of old motors, compressors, and pumps, are priorities.

The World Bank (including IFC), EBRD, and CTF are providing financing to state-owned and private banks and private lending companies to accelerate energy efficiency ventures in small, medium, and large renewable energy enterprises. The CTF has thus supported the implementation of a transformative program to overcome risks and reduce transaction costs in the entire Turkish banking and lease-finance sectors.

EBRD established the Turkish Sustainable Energy Finance Facility to help drive the transformation in the private banking sector. Only six months after CTF funds were approved in December 2009, the Facility signed with four Turkish banks, and the first loan agreements were signed in September 2010. The results illustrate how CTF can rapidly commit funding to energy efficiency and link technical assistance to funding from bilateral donors, such as the European Union. The experience that local banks gained in lending for energy efficiency and renewable energy—coupled with the relationships established by EBRD—are likely to lead to increased support for energy efficiency and renewable energy, independent of CTF funds.

Expected Results: Private sector support for energy efficiency and renewable energy projects will increase as a result of the experience local banks gained in lending for the sector and the relationships established by EBRD as a result of a CTF-funded initiative.