Climate Change: 

Assessing Our Actions 

Overseas Private Investment Corporation 

October 2000 
Table of Contents 

________________________________________________________________________ 

A Message from the OPIC President...................................................................................1 

Independent Review ............................................................................................................3

Executive Summary.............................................................................................................5

Part One 

Chapter I: OPIC and Climate Change 

 Summary................................................................................................................. 6 

 Developmental Benefits of Power ...........................................................................6 

 CO2 Emissions from Power Projects.......................................................................7 

 Climate Change .......................................................................................................7 

 International Response to Climate Change..............................................................8 

 OPIC and Climate Change.......................................................................................8 

 Renewable Energy ...................................................................................................9

Chapter II: Greenhouse Gas Emissions from OPIC-Supported Power Projects 

 Summary................................................................................................................12 

 Methodology..........................................................................................................13 

 OPIC Power Portfolio............................................................................................15 

 OPIC Power Portfolio CO2 Emissions ..................................................................16 

 Future OPIC Portfolio Emissions ..........................................................................18 

Part Two 

Chapter III: An Introduction to Climate Change 

 Summary................................................................................................................21 

 Greenhouse Gases..................................................................................................22 

 Increasing Atmospheric GHG Concentrations ......................................................24 

 Carbon Dioxide - Global Temperature Relationship.............................................25 

 Climate Feedback Mechanisms .............................................................................27 

 Natural vs. Anthropogenic Effects.........................................................................28 
 Anticipated Impacts ...............................................................................................29 

Chapter IV: Global Production of Greenhouse Gas Emissions 

 Summary................................................................................................................30 

 GHG Emissions and Development........................................................................31 

 Global CO2 Emissions...........................................................................................32 

 Electricity Generation............................................................................................35 

 Implications for the Kyoto Protocol ......................................................................37 

Chapter V: International Response to Climate Change 

 Summary................................................................................................................39 

 United Nations Framework Convention on Climate Change ................................40 

 Kyoto Protocol.......................................................................................................40 

 Global Environment Facility .................................................................................41 

 World Bank Group ................................................................................................41 

 Organization for Economic Co-operation and Development ................................42 

 U.S. Government ...................................................................................................43 

Chapter VI: OPIC and the Environment 

 Summary................................................................................................................44 

 Environmental Handbook......................................................................................45 

 Public Consultation and Disclosure.......................................................................45 

 Common Environmental Standards.......................................................................46 

 Partnerships for the Environment ..........................................................................46 

 OPIC Climate Change Initiatives ..........................................................................47 

Chapter VII: Conclusion....................................................................................................49 

Appendix I 

 OPIC-Supported Power Projects ...........................................................................50 
1

A MESSAGE FROM THE OPIC PRESIDENT 

_________________________________________________________________________

Preserving the environment and building economies need no longer be seen as competing 

goals. Increasingly, new technologies are beginning to harness sustainable energies in ways 

that both protect the global environment and expand economic opportunity for global 

citizens. Indeed, if we are to endow future generations with the environment and the 

economic opportunity they deserve and require, this trend must continue. As a step in that 

direction, the Overseas Private Investment Corporation (OPIC) is issuing the enclosed 

report, Climate Change: Assessing Our Actions. 

The report found that OPIC’s power portfolio is driven predominantly by clean-burning, 

low-carbon natural gas (45 percent) and carbon-free hydro- and geothermal energy (27 

percent). It concludes that OPIC-supported projects “are not a major contributor to global 

greenhouse gas emissions or climate change.” Current carbon dioxide emissions from 

OPIC-supported projects represent 0.24 percent of global CO2 emissions. In addition, 

OPIC projects tend to utilize highly efficient advanced technologies, more than 45 percent 

of them making use of combined cycle technology – the most efficient electricitygenerating technology available. 

For OPIC, the report is satisfying on several counts. First, it affirms our leadership role 

among bilateral investment finance and export credit agencies in assessing the 

environmental impact of the projects we support. Rather than calculating only the annual 

aggregate emissions of CO2 from OPIC’s thermoelectric power projects, the report takes 

into account the cumulative impacts of OPIC’s entire thermoelectric portfolio. 

Secondly, a third party verifier reviewed OPIC’s methodology – the same methodology 

applied by the World Bank and other leading international financial organizations to make 

their calculations – and confirmed the validity of the results. Independent verification is the 

best support for OPIC’s effort to undertake responsible environmental protection. 

Lastly, the report represents OPIC’s progress down a road less travelled. Since 1985, when 

Congress gave OPIC a specific environmental mandate, OPIC has evaluated the 

environmental consequences of each and every prospective project. Not only will OPIC 

reject support for projects that pose major or unreasonable adverse environmental impacts, 

but we actively look for opportunities to make a positive environmental difference through 

the projects we support. 
2 

In 1998, OPIC began to calculate and report on annual aggregate emissions of carbon 

dioxide from its thermoelectric power projects, responding to the need for responsible 

environmental stewardship in the face of the growing importance of transboundary and 

global environmental impacts. And, throughout, OPIC has carefully monitored the projects 

in its portfolio to ensure ongoing compliance with World Bank-level standards. 

In that context, Climate Change: Assessing Our Actions represents the latest and most 

advanced OPIC measure to track the environmental impacts of the projects it supports. We 

at OPIC see our commitment to natural gas as part of our role in helping the developing 

world make a transition to less carbon-intensive fuels. Without question, that is the single 

greatest contribution OPIC can make to the trend toward weaving together environmental 

and economic needs. 

Yet this report is one of only many steps OPIC intends to take in that process. More needs 

to be done to harness and support renewable energy sources such as wind and solar power. 

OPIC looks forward to working with the renewable energy industry to develop innovative 

financing mechanisms which will help lead newer technologies into the marketplace. 

In the meantime, we are issuing Climate Change: Assessing Our Actions as a 

demonstration of OPIC’s commitment to the principle that economic development and 

environmental protection can go hand in hand. 

Sincerely, 

George Muñoz 

President and Chief Executive Officer 

Overseas Private Investment Corporation 
3 

Independent Review 

_________________________________________________________________________ 

OPIC is to be congratulated for its forthright effort to assess the global warming and other 

environmental impacts of the power projects that it finances and insures. The greatest 

growth in electric power is expected in developing countries and Eastern Europe, and so 

the greatest opportunity for avoiding the locking in of carbon dioxide, methane and air 

pollution emissions over the next half-century lies in the investments now being made 

there. 

Before I begin, I have just two caveats. My analysis is based solely upon the report itself, 

and I did not independently examine the raw data, nor did I verify the types of projects that 

OPIC has supported. 

First, the methodology used by OPIC for the analysis of its projects is a standard and 

generally accepted method for estimating CO2 emissions from power plants. A rough 

estimate shows that the reported figures are of the right scale. The only additional related 

greenhouse gas emissions that might be significant are from methane. Methane is a much 

more potent greenhouse gas than CO2 and is associated with leaks from aging gas 

pipelines, from coal mining, and oil and gas production. However, OPIC is either not 

invested at all (e.g. coal mining) or is not heavily invested in these sectors compared to 

thermoelectric power. 

The report appropriately calculates CO2 emissions three ways: total tons, as a percentage of 

global and of developing country emissions, and as an index of tons of carbon dioxide per 

Gigawatt of OPIC supported power capacity. The total tons provides a measure of the total 

contribution of OPIC projects to global warming, while the percentages place that in an 

overall context. The figure of 0.24% of world emissions, projected to grow to 0.43% by 

2015 may seem small, but still represents a measurable contribution and should not be 

ignored. The third intensity measure may be the most useful in determining how OPIC 

projects compare with other investments. From the high efficiency and the mix of projects 

supported to date, OPIC projects have lower GHG emissions than the average constructed 

in the regions, but in the future this comparison should be quantified. OPIC might also 

utilize this index as a criterion and as a measure of progress for future projects. The 

relevant question is what will be OPIC’s greenhouse gas policies towards future projects; 

should it consider adopting an incentive program for lowering emissions from future 

projects? As stated, the potential for emissions growth in developing countries justifies 

OPIC’s efforts to support lower emitting power projects. OPIC might also wish to take 

more credit for the co-benefits of clean air that accompany their projects as well as the CO2

reductions. 
4 

The proposal to develop a workshop for renewable supply options in the near future is 

commendable, and builds upon two ongoing trends. The first is the high success 

demonstrated by the Danish government in promoting Danish built wind turbines in 

countries such as India. The second is the emerging potential of some sort of a Clean 

Development Mechanism for low carbon energy projects in developing countries that will 

be decided at a meeting in the Hague this November. 

The proposal to “reach out to the renewables industry” has real potential for identifying 

low carbon options for future OPIC projects. For example, wind turbines are the fastest 

growing source of energy supply on a percentage basis, and world installed capacity now 

exceeds 15,000 MW – nearly equaling OPIC’s total installed capacity of 16,775 MW. The 

potential for OPIC to finance low carbon emitting options in the power sector could lower 

their projected increase in carbon dioxide emissions, and help establish a standard for 

others to follow. The pessimistic forecast of EIA and DOE for renewables could be correct 

for the US, but may not apply to the opportunities in developing countries that lack the 

extensive transmission and distribution system of the US. Also, the opportunities for 

renewables in deregulated markets is largely untested, and projections of their potential, 

even in the US, vary widely. 

The US Senate position on the participation of developing countries in meaningful 

reductions must be seen in the following context: the UNFCCC and the Berlin Mandate 

both clearly state that developing countries have “differentiated responsibilities” and that 

industrial countries must be the first to proceed with reductions. That said, OPIC, whose 

sole focus is on the developing world, has the unique opportunity to play an important role 

facilitating the participation of the developing countries critical to the resolution of the 

climate problem. 

Prof. William R. Moomaw 

Director, International Environment and Resource Policy Program 

The Fletcher School of Law and Diplomacy, Tufts University, Medford, MA 
5 

Executive Summary 

_________________________________________________________________________ 

• OPIC has undertaken a review of the cumulative annual greenhouse gas (GHG) 

emissions and climate implications of all OPIC finance and political risk insurance 

projects since 1990. This review is consistent with OPIC’s long-standing commitment 

to the environment and sustainable development. OPIC’s review concludes that the 

cumulative annual GHG emissions from OPIC-supported projects do not substantially 

contribute to global GHG emissions and associated climate change impacts. Current 

CO2 emissions from OPIC-supported projects represent approximately 0.24% of global 

CO2 emissions. 

• OPIC attributes its conclusions to the fact that its 16,775 MW power portfolio relies 

primarily on less carbon-intensive natural gas and carbon-free renewable hydroelectric 

and geothermal rather than carbon-intensive coal and oil. OPIC-supported power 

projects, on a capacity basis, are approximately 45% gas-fired, 24% hydroelectric, and 

3% geothermal, while coal- and oil-fired projects make up approximately 21% and 7%, 

respectively. In addition, OPIC-supported power projects tend to use highly efficient 

advanced technologies that emit fewer GHGs per unit of electrical output. For 

example, more than 43% of OPIC-supported fossil fuel-fired power projects 

incorporate combined cycle technology, the most efficient fossil-based electricity 

generating technology. 

• Although OPIC-supported projects are not in themselves a substantial contributor to 

climate change, OPIC recognizes that renewables, such as wind and solar power, have a 

potentially important role to play in reducing global reliance on fossil fuels and their 

concomitant GHG emissions. Therefore, OPIC will seek to support these emerging 

power sources through better outreach to the renewable energy industry and by 

providing innovative financing. 

• OPIC’s methodology and conclusions have been independently validated by a noted 

climate change expert. 
6 

I. OPIC and Climate Change 

Summary: OPIC is a bilateral development agency and a major source of financing 

and support for the development of U.S. private sector participation in a wide range of 

investments, including many independent power projects, in developing countries and 

emerging economies. OPIC-supported power projects serve a critical development 

objective and bring considerable economic and social benefits to developing regions. 

However, the power sector is a major source of the anthropogenic greenhouse gas 

(GHG) emissions that threaten the stability of the global climate system. OPIC 

understands the serious implications of GHG emissions and climate change and was the 

first bilateral finance, investment insurance or export credit agency to commit to 

tracking and reporting annual CO2 emissions. This report, however, goes beyond 

OPIC’s annual GHG assessments, to evaluate the cumulative climate implications of all 

OPIC finance and political risk insurance projects since 1990. The results of this 

report demonstrate that OPIC is not a substantial contributor to global GHG emissions 

or to climate change. Annual CO2 emissions from OPIC-supported power projects 

represent less than 0.24% of global CO2 emissions. Although OPIC activities are not in 

themselves a substantial contributor to climate change, OPIC recognizes that 

renewables, such as wind and solar power, have a potentially important role to play in 

reducing global reliance on fossil fuels and their concomitant GHG emissions. 

Therefore OPIC will seek to support these emerging power sources through better 

outreach to the renewable energy industry and by providing innovative financing for 

such projects. 

OPIC is an independent government agency whose mission is to mobilize and facilitate the 

participation of United States private capital and skills in the economic and social 

development of less developed countries and areas, and countries in transition from 

nonmarket to market economies. In carrying out this mission, OPIC’s finance and political 

risk insurance programs support a wide range of investments in some 140 developing 

countries. All OPIC projects support the U.S. economy, contribute to the economic and 

social development of the host country, protect the rights of workers, and safeguard the 

environment. All OPIC projects meet World Bank environmental, health and safety 

standards, and OPIC carefully monitors projects in its portfolio to ensure ongoing 

compliance with these standards. 

Developmental Benefits of Power 

The power sector represents 30% of the OPIC project portfolio. OPIC-supported power 

projects serve a critical development objective and bring considerable economic and social 

benefits to developing regions. Access to energy supply is fundamental to eradicating 

poverty and improving standards of living around the world, where nearly two billion 

people live below the poverty line without access to modern forms of energy, such as 

electricity. The availability of energy to provide water supply and sanitation or 
7 

refrigerators for vaccines, for example, has a great impact on health. Freeing rural people, 

usually women and children, from the daily routine of collecting fuelwood or carrying 

drinking water over long distances makes them available for more productive work or for 

education, both of which are primary development objectives and lead to future income 

opportunities and increased standards of living. 

CO2 Emissions from Power Projects 

However, while power projects have considerable economic and social developmental 

benefits, they are also responsible for a significant share of the anthropogenic emissions of 

greenhouse gases (GHG) that threaten the stability of the global climate system. The 

consumption of fossil fuels, which provides electricity, heat and steam to the industrial, 

commercial and residential sectors, and fuel to the transportation sector, is by far the 

largest contributor to global carbon dioxide (CO2) emissions. Approximately 38% of total 

global energy consumption goes to supply power plants which are the largest emitters of 

CO2, accounting for nearly 32% of total global CO2 production. 

Power plants produce electricity by converting chemical energy stored in fossil fuels into 

electrical energy. During the energy conversion process, fuel-bound carbon is oxidized to 

CO2 and released to the atmosphere. Fossil fuels like natural gas, that have relatively high 

chemical energy contents and low carbon contents, produce the lowest emissions of CO2, 

while coal generally produces the greatest CO2 emissions. In addition, some power 

generation technologies, like combined-cycle plants, are more efficient at converting 

chemical energy into electrical energy and produce fewer CO2 emissions per unit of 

electrical output. As a result, fuel and technology choices have a significant impact on the 

level of CO2 emissions produced by power generation facilities, with natural gas and high 

efficiency combined cycle plants producing significantly lower CO2 emissions than other 

fossil fuel-based plants. Renewable energy projects generally produce little or no CO2. 

Climate Change 

Carbon dioxide and other atmospheric greenhouse gases have long been known to absorb 

infrared radiation and create a natural greenhouse effect that warms the Earth. The natural 

greenhouse warming of the atmosphere keeps the Earth approximately 60°F warmer than it 

would be without an atmosphere. However, humans have been emitting increasing 

quantities of these greenhouse gases since the advent of the fossil fuel-driven industrial age 

and now emit 25 billion tons of CO2 annually. As a result, atmospheric CO2

concentrations are now at their highest levels in more than 160,000 years and global mean 

temperature has increased approximately 1°F over the past century. There is a strong and 

growing scientific consensus that these steady additions of GHGs have tipped a delicate 

balance and begun to impact our climate and may be the dominant force driving recent 

warming trends. (For more information on climate change, see Chapter III: An 

Introduction to Climate Change.)
8 

Given the link between GHG emissions and development, industrialized countries are 

responsible for the bulk of past GHG emissions. However, the rapid economic and 

population growth forecast for the coming decades, particularly in the developing world, is 

expected to substantially increase demand for energy and global GHG emissions. Global 

CO2 emissions are projected to increase from 22.6 billion metric tons in 1997 to 29.9 

billion metric tons in 2010 and 36.7 billion metric tons in 2020 (not taking into account the 

potential impact of the Kyoto Protocol, as discussed below). Developing countries as a 

group are expected to account for as much as 70% of this increase. Current forecasts 

suggest that growth in GHG emissions could double atmospheric concentrations of CO2 by 

2060 with a resulting temperature increase of as much as 2° to 6.5°F over the next century. 

Even the low end of such a temperature increase would be an unprecedented rate of 

warming and may alter patterns of precipitation and evaporation and lead to more severe 

weather, rising sea levels, and potentially adverse economic, ecological and human health 

impacts. (For more information on GHGs, see Chapter IV: Global Production of 

Greenhouse Gas Emissions.)

International Response to Climate Change 

The potential adverse effects of “enhanced” greenhouse warming and climate change have 

been the focus of much international debate. Power plants and other major energy systems 

in particular have been the focus of attention from the Intergovernmental Panel on Climate 

Change (IPCC), the international organization tasked with assessing the risk of human 

induced climate change. International efforts to reduce GHG emissions and stabilize 

atmospheric GHG concentrations culminated in 1997 with the Kyoto Protocol to the UN 

Framework Convention on Climate Change (UNFCCC), which commits industrialized 

countries to legally-binding GHG emissions reduction targets. Although 83 countries have 

signed the Protocol, only 16 countries have ratified it to date. Given the critical role of 

energy in development and in improving living standards, the goal of the Protocol is not to 

limit access to energy, but to provide energy that is less carbon intensive. As different 

approaches to achieve emissions reductions are carefully evaluated and international 

negotiations continue, most countries have implemented programs similar to those in the 

U.S. that promote research, tracking and reporting of carbon emissions, voluntary 

mitigation measures, energy efficiency and renewable energy technologies. For the most 

part, governments and international organizations continue to support fossil fuel power 

plants. The U.S. government does not currently regulate CO2 domestically and the EPA 

has not promulgated emission limits for CO2. (For more information on the international 

response to climate change, see Chapter V: International Response to Climate Change.)

OPIC and Climate Change 

OPIC has a longstanding commitment to the environment and sustainable development and 

recognizes the serious implications of climate change and the need to stabilize atmospheric 

GHG concentrations. OPIC continually strives to make its portfolio more climate friendly 
9 

by proactively seeking renewable energy projects and by seeking to harmonize its approach 

to climate change issues with that of other U.S. Government entities. OPIC’s actions with 

respect to climate change are generally consistent with the international response to climate 

change and clearly ahead of its foreign bilateral counterparts. In February 1998, in an 

effort to support global GHG management efforts, OPIC became the first bilateral finance, 

investment insurance or export credit agency to commit to tracking and reporting annual 

CO2 emissions. OPIC’s most recent annual GHG assessment demonstrates that OPICsupported power projects continue to be heavily weighted toward climate-friendly natural 

gas and that these projects contribute only small amounts to global GHG emissions. (For 

more information on OPIC’s environmental polices, procedures and recent initiatives, see 

Chapter VI: OPIC and the Environment.)

This report goes beyond OPIC’s annual Greenhouse Gas Assessment Reports, to 

evaluate the cumulative (CO2) climate implications of all OPIC finance and political 

risk insurance projects since 1990. OPIC conducted this analysis of its role in GHG 

production in accordance with prescribed methods of assessing GHG emissions. As will 

be seen in the following section, the results of the analysis demonstrate that OPIC is not a 

substantial contributor to global CO2 emissions or climate change. Annual CO2 emissions 

from OPIC-supported power projects, which produce the bulk of OPIC-related GHG 

emissions, represent approximately 0.24% of global GHG emissions. OPIC’s power 

portfolio relies primarily on less carbon-intensive natural gas and carbon-free renewable 

energy sources rather than carbon-intensive coal and oil. In fact, natural gas (45%) and 

renewable energy (27%) drive 72% of the OPIC power portfolio. In addition, OPIC 

projects incorporate advanced technologies that reduce GHG emissions. 

Renewable Energy 

Although OPIC-supported projects are not in themselves a substantial contributor to 

climate change, OPIC recognizes that renewables, such as wind and solar power, have a 

potentially important role to play in reducing global reliance on fossil fuels and their 

associated GHG emissions. Renewable energy projects, particularly wind and solar, offer 

compelling environmental advantages when compared to conventional fossil fuel-based 

power generation, including little or no conventional pollutant and GHG emissions. 

However, renewable energy projects face serious challenges competing with conventional 

fossil fuel-fired power projects and have achieved only limited success in the marketplace. 

In addition to high capital costs, one of the most significant challenges facing renewable 

energy projects is the subsidy given by many governments to conventional forms of energy. 

Another challenge facing renewable energy development is the remote, decentralized 

nature of many renewable energy projects. Very large conventional power projects, a 

gigawatt-sized fossil fuel-fired plant for example, can find investment capital at much 

lower interest rates and longer tenors than can hundreds of thousands of micro-hydro 

projects or wind installations of a few kW each. Banks and financing agencies are 

generally ill-equipped to manage myriad micro projects, so aggregation of demand is 

necessary if a “level playing field” is to be established in financing renewable energy 
10 

projects. Such challenges led the U.S. Department of Energy (DOE) to conclude that over 

the next two decades it is unlikely that renewable energy can compete economically with 

conventional fossil fuel-based power generation. According to the U.S. DOE, “failing a 

strong world wide commitment to environmental considerations, such as the limitations 

and reductions of CO2 emissions outlined in the Kyoto Climate Change Protocol, it is 

difficult to foresee significant widespread increases in renewable energy use” in the near to 

medium term1. 

However, there are indications that the market for renewables may be brighter than the 

above assessment would indicate. The wind industry, arguably one the biggest renewable 

energy success story, now has a global installed capacity of 14,000 MW and is growing at 

35 to 40% per year. Last year, for the first time, more new wind capacity was brought on 

line than nuclear power. And the solar photovoltaics industry, which is now a $1 billion 

industry, is growing a 30% per year. The potential of renewables has not escaped the big 

conventional energy companies, including BP Amoco, ABB, Enron and others, all of 

which have made considerable investments in the renewable sector. ABB, for example, 

has divested much of its conventional power portfolio and announced a new ‘Alternative 

Energy Solutions’ program, with a target of $1 billion turnover per year by 2005. 

And many developing countries and emerging markets are beginning to make modest 

commitments to including renewable resources in their energy mix as well. India has a 

Ministry of Non-Conventional Energy Sources and has developed several policies to 

promote renewables, including tax incentives, automatic environmental clearances and soft 

loans for certain renewable energy projects. Brazil has committed to invest substantial 

sums to increase the number of its non-hydro renewable energy installations. Several 

African countries have implemented policies to promote renewable energy technologies. 

In addition, there are specialized, off-grid applications where renewables may be more 

competitive because the costs associated with transmissions lines and other requirements 

increase the cost of conventional fossil fuel-fired power projects. These types of policies 

and projects demonstrate the opportunity for national and international efforts that support 

investment in these countries that contributes to meeting the climate challenge ahead. 

It is in the interest of the U.S. to continue to encourage and assist developing countries in 

making these commitments to renewables. As an agency whose sole focus is on the 

developing world, OPIC has the opportunity to play a unique role facilitating the 

participation of countries whose involvement is critical to the resolution of the climate 

problem. OPIC routinely is involved in the investment process, working with both host 

governments and U.S. and foreign investors. However, there is a need to understand more 

fully both the needs of renewable energy developers and how developing countries 

determine their energy requirements and establish bid specifications for power projects. 

 

1

 International Energy Outlook 2000 (Washington, D.C.: Energy Information Administration, 2000) 93. 
11 

Therefore, to further explore the potential to support renewable energy projects, OPIC will 

organize or co-sponsor a workshop focused on the renewable energy industry in FY2001 to 

explore and evaluate the impact of innovative financing mechanisms. OPIC’s goal will be 

to determine whether its finance and insurance programs can be more effectively utilized to 

support renewable energy projects.
12 

II. Greenhouse Gas Emissions 

from OPIC-Supported Power Projects 

Summary: In order to evaluate the cumulative GHG emission and climate 

implications of its programs, OPIC evaluated every project that received either finance 

or political risk insurance support since 1990. The results of this evaluation 

demonstrated that power sector projects produce the bulk of OPIC-related GHG 

emissions. Since 1990, OPIC has support 52 projects totaling 16,775 MW capacity. 

Annual CO2 emissions from these projects are approximately 56.4 million metric tons 

per year and represent approximately 0.24% of global CO2 emissions. In addition, 

OPIC supports a power portfolio that is dominated by less carbon-intensive natural gas 

(44%) and carbon-free renewable energy (28%) resources, while carbon-intensive coal 

(21%) and oil (7%) make up a smaller portion of the portfolio. In all, approximately 

72% of OPIC’s power portfolio is either less carbon-intensive natural gas or zerocarbon renewable, and 43% incorporates combined cycle technology – the most 

efficient fossil-based electricity generating technology. Even in 2015, when OPIC’s 

portfolio is likely to peak in size and emissions, it will only contribute 0.43% to global 

CO2 emissions. As a result, OPIC activities are not a substantial contributor to global 

CO2 emissions 

In order to assess the cumulative GHG and climate implications of its investment activities, 

OPIC evaluated the number and types of projects that have received finance or political 

risk insurance support since 1990. OPIC supports a wide variety of projects; as seen in 

Figure 2.1 the power and financial services sectors each account for approximately 30% of 

the OPIC portfolio. While the oil & gas sector makes up 10% of the OPIC portfolio, 

including production, processing and transportation activities, these projects generally 

result in only relatively minor GHG emissions. For example, OPIC has supported two new 

gas pipeline projects and two investments in large, pre-existing gas pipeline systems since 

1990. While estimates of methane leakage from gas pipelines range from 0.5% to over 5% 

of throughput, the high quality flanges, valves and compressors incorporated into new 

pipeline projects and upgrades to existing pipeline systems can reduce these emissions by 

as much as 60% - 80%. As a result, GHG emissions from OPIC-supported gas pipeline 

projects are expected to be very small, especially when compared to power sector 

emissions. In addition, while hydrocarbon stocks are commodities that may be seen in 

terms of potential future emissions, IPCC guidance clearly indicates that GHG inventories 

are to include emissions – not potential future emissions. Therefore oil & gas projects 

were not included in the OPIC assessment. OPIC’s portfolio contains no significant 

transportation projects and, for the most part, OPIC-supported industrial projects are only 

minor GHG emitters compared to a single large power plant. As a result, the bulk of 

OPIC-related GHG emissions are derived from its power sector projects. 
13 

Figure 2.1: OPIC Global Portfolio by Sector 

Source: OPIC Annual Report, 1999 

Methodology 

Estimates of power plant CO2 emissions involve a fairly simple mass balance equation 

based primarily on the quantity and type of fuel consumed and the heat rate (efficiency) of 

the generating technology. The World Bank, IPCC, and other organizations have 

published various methodologies to assess GHG emissions from power generation 

facilities. The methodology used in this assessment is adapted from the World Bank’s 

Greenhouse Gas Assessment Handbook: A Practical Guidance Document for the 

Assessment of Project-Level Greenhouse Gas Emissions2

. 

The equation used to calculate CO2 emissions for each power project is presented in Table 

2.1 below. The variables in the equation are: plant size (A), plant heat rate (B), and a fuelrelated emission factor (C). The constant (D) incorporates a plant capacity factor and 

converts the emissions into units of tonnes of CO2 per year. 

 

2

 World Bank, Global Environment Division, Greenhouse Gas Assessment Handbook: A Practical 

Guidance Document for the Assessment of Project-Level Greenhouse Gas Emissions (Washington, D.C.: 

The World Bank, September 1998) 19. 

OPIC Global Portfolio by Sector

Communications

9%

Oil & Gas 

10%

Manufacturing 

12%

Financial Services

30%

Power 

30%

Construction 

1%

Tourism/Hotels

1% Services

3% Mining

4%
14 

Table 2.1: Equation Used to Calculate Power Sector CO2 Emissions 

CO2 emissions (tonnes/year) = 

 A (MW) * B (Btu/Kwh) * C (g/GJ) * D (tonnes/g * GJ/Btu * kW/MW * hrs/yr)

Plant-specific fuel consumption data was not used in this assessment. Conservative fuel 

consumption is built into the equation based on the plant size (A), heat rate and an assumed 

plant capacity factor of 85%. The capacity factor is simply the ratio of the amount of 

electricity a plant produces to the maximum amount of electricity a plant could produce if 

it were operated at full capacity for the entire 8,760 hours of the year. For this report, it 

was assumed that all plants operate at full capacity 85% of the year. 

Each type of plant (generating technology) was assigned a heat rate (B). Plant heat rate is 

the total fuel heat input expressed in Btu divided by the net power leaving the power plant 

expressed in kWh. Heat rate is a measure of the generating technology’s efficiency at 

converting chemical energy in the fuel into electrical energy and typically varies with plant 

load. The heat rates used in this report are presented in Table 2.2 below. The lower heat 

rate (higher efficiency) of combined cycle technology means that less fuel is required to 

produce a unit of electrical output and therefore less CO2 emissions are produced. 

Table 2.2: Heat Rates by Generating Technology 

Generation Technology Efficiency, (%) Heat Rate, (Btu/KWh) 

Combined-Cycle 0.47 7,266 

Simple-Cycle 0.35 9,757 

Engine 0.45 7,588 

Steam Turbine 0.33 10,348 

Each type of fuel was assigned an emission factor (C). The emission factor determines the 

amount of CO2 that is produced per unit of energy content of the fuel consumed. The 

emission factors used in this assessment are presented in the Table 2.3 below. The factors 

demonstrate that natural gas combustion releases significantly less CO2 than other fossil 

fuels and hydro and geothermal do not directly release CO2. 

Table 2.3: Emission Factors by Fuel Type 

Fuel Type Emission Factor, (g CO2/G. Joule) 

Coal 94,600 

Residual Fuel Oil 77,350 

Diesel Oil 74,050 

Natural Gas 56,100 

Hydro 0 

Geothermal 0 
15 

In accordance with the Greenhouse Gas Assessment Handbook methodology, plant size 

and the appropriate emission factor and heat rate were inserted into the above equation to 

calculate CO2 emissions from each plant. Because quantities of other GHGs emitted by 

power plants (e.g. NO2 and CO) are significantly less in comparison to CO2, their 

contributions were not factored into the analysis. This methodology was used to calculate 

CO2 emissions from each power project that has received OPIC support since 1990. Here, 

“OPIC support” refers to the making of a loan or the issuance of an insurance contract. 

Projects for which a commitment did not result in a loan or an insurance contract were not 

included in this assessment. (For a complete list of OPIC-supported power projects, see 

Appendix I: OPIC-Supported Power Projects.)

OPIC Power Portfolio 

OPIC supported 52 power projects with a total capacity of 16,775 MW between 1990 and 

2000. As seen in the Figure 2.2, 19 gas projects with a total capacity of 7,363 MW account 

for 44% of OPIC’s power portfolio based on capacity. Renewable energy projects, 

including 11 hydroelectric (4,080 MW) (for the most part all preexisting or run-of-river 

facilities) and 4 geothermal projects (585 MW), make up the second largest group at 4,665 

MW, accounting for 28% of the power portfolio. Thus, the preponderance of OPICsupported power projects, 72% by capacity, are fueled either by natural gas or renewable 

energy sources. The remainder of the portfolio consists of 4 coal-fired (3,534 MW) and 9 

oil-fueled power plants (1,214 MW), representing 21% and 7% of capacity, respectively. 

In addition, approximately 43% (by capacity) of OPIC-supported fossil fuel-fired plants 

utilize combined-cycle technology, the most energy efficient type of fossil fuel-based 

power plant. Prior to 1990, OPIC supported only one power project involving the upgrade 

of a powerhouse at a preexisting hydroelectric facility. 
16 

Figure 2.2: OPIC Power Portfolio by Fuel Type 

OPIC Power Portfolio CO2 Emissions 

Cumulative annual CO2 emissions from these projects are approximately 56.4 million 

tonnes. Gas- and coal-fired plants release the bulk of these CO2 emissions, with emissions 

of approximately 24.8 and 26.1 million tonnes, respectively. The remaining emissions are 

from oil-fired plants and total approximately 5.5 million tonnes per year. As percentages, 

CO2 emissions from the OPIC portfolio are as follows: 56.2% coal-derived, 43.9% gasderived and 9.7% oil-derived. 

Carbon dioxide emissions from OPIC-supported power projects contribute relatively small 

amounts to existing CO2 emissions in the developing countries where these projects are 

located or to global CO2 emissions. As can be seen in Figure 2.3, annual CO2 emissions 

from these projects represent only 0.63% of annual CO2 emissions from developing 

countries, which total 9.0 billion tonnes, and less than 0.24% of annual global CO2

emissions which total 23.7 billion tonnes3

. 

 

3

 Pia Hartman at the U.S. Department of Energy's Energy Information Administration, correspondence 

with author, July 21, 2000. 

OPIC Portfolio by Fuel Type

Gas

45%

Diesel oil

5% Residual oil

2%

Coal

21%

Hydroelectric

24%

Geothermal

3%
17 

Figure 2.3: CO2 Emissions from OPIC-Supported Power Projects vs CO2

Emissions from Developing Countries and the World 

In addition to relatively minor CO2 emissions, the fuel mix of the OPIC power portfolio is 

largely weighted toward gas and renewable projects. As seen in the Figure 2.4, OPIC’s 

fuel mix consists of significantly more gas (43% vs. 13.6% and 17%) and renewables (28% 

vs. 26% and 21%), and less coal (21% vs. 43.1% and 36%) and oil (7% vs. 13.6% and 

9.3%) than the prevailing fuel mix of the developing world or the global electricity sector. 

As a result, when compared with the current power sector fuel mix in these regions, 

OPIC’s power portfolio may be seen as driving investment in gas and renewable 

projects - investments that are critical to reducing GHG emissions in these regions. In 

fact, in “Natural Gas: Bridge to a Renewable Energy Future”, the Renewable Energy Policy 

Project argues that natural gas can serve as a bridge to a renewable energy future4

. 

 

4

 Serchuk, Adam and Means, Robert, Natural Gas: “Bridge to a Renewable Energy Future,” (Washington, 

D.C.: Renewable Energy Policy Project, May 1997.) 

FY 2000 CO2 Emissions

56.4

8983

23720

0

5000

10000

15000

20000

25000

OPIC Developing World Total World

OPIC vs Global Regions in FY 2000

CO2 Emissions in Million Tonnes
18 

Figure 2.4: OPIC Portfolio by Fuel Type Compared with the Power 

Sector Fuel Mix in Developing Countries and the World 

Future OPIC Portfolio Emissions 

Predicting future growth rates and fuel mix trends of OPIC’s portfolio is somewhat 

difficult. Increased electricity demand in the developing world might increase the growth 

rate of OPIC’s power portfolio. On the other hand, economic upheaval or the 

implementation of international actions to mitigate climate change might significantly slow 

the growth of the portfolio. With respect to fuel mix trends, the enactment of international 

efforts to limit CO2 emissions could significantly affect fuel mix away from carbonintensive fuels and towards renewable projects. 

If we assume that the growth rate and fuel mix of the portfolio remains constant and that 

each power plant will operate for 25 years, the size of OPIC’s portfolio would peak at 

42,000 MW by 2015. After 2015, for each unit of power capacity added to the portfolio, a 

25-year old unit of capacity would be taken out of commission. CO2 emissions would peak 

in 2015 at approximately 141 million tonnes per year. By that time, CO2 emissions from 

developing regions and globally are expected to have increased to about 15 and 32.6 billion 

tonnes per year, respectively. Therefore, as presented in Figure 2.5, peak future emissions 

from OPIC’s power portfolio would account for approximately 0.94% and 0.43% of CO2

emissions from these regions. 

Electric Capacity by Fuel Type

7.32

43.2

21.3

0

28.1

13.6 13.6

43.1

4

26

9.3

17

36

16.7

21

0

5

10

15

20

25

30

35

40

45

50

Oil Gas Coal Nuclear Renewable

Fuel Type

Percent of Electric Capacity

OPIC Developing World Total World
19 

Figure 2.5: Anticipated CO2 Emissions from OPIC-Supported Power 

Projects vs. Total CO2 Emissions from Developing Countries and the 

World in 2015 

Given the size of the contribution of CO2 emissions from OPIC’s power portfolio to global 

CO2 emissions both now (0.24%) and in the future (0.43%) and the implications of the 

portfolio fuel mix, OPIC’s power sector activity is not a substantial contributor to global 

GHG emissions and global climate change. In addition, because the power sector is 

responsible for the vast majority of OPIC-related GHG emissions, it can be concluded that 

OPIC programs in general are not a substantial contributor to global climate change. 

In many respects, this GHG assessment involves assumptions that tend to make its results 

conservative. For example, in providing project financing, OPIC typically participates in 

only up to 50% of the total costs of a new power project, while a somewhat higher 

participation may be considered in the case of the privatization or expansion of an existing 

plant. In addition, the term of OPIC involvement in the power sector is typically limited to 

loan terms of 12-15 years and insurance contracts of up to 20 years. And finally, OPIC 

often supports the privatization of power projects - and the privatization of existing power 

projects does not generally result in net incremental increases in emissions and often 

involve efficiency improvements or fuel-switching that result in net emissions reductions. 

Yet in this assessment, OPIC takes full responsibility for the projects’ 25-year lifetime CO2

emissions. 

FY 2015 CO2 Emissions 

141

15008

32637

0

5000

10000

15000

20000

25000

30000

35000

OPIC Developing World Total World

OPIC vs Global Regions in FY 2015

CO2 Emissions in Million Tonnes
20 

It is also important to consider that OPIC power sector activities generally achieve 

significant supplementary benefits for the environment when compared to other sources of 

finance or insurance. OPIC projects are required to meet high environmental performance 

standards that generally exceed host country environmental requirements. OPIC requires 

annual monitoring reports and third party independent compliance audits and conducts site 

visits to ensure ongoing compliance with all its environmental requirements. In addition, 

OPIC often is involved in the privatization of existing power plants. Such projects 

typically involve significant environmental performance improvements – often through the 

installation of expensive environmental control technologies like electrostatic precipitators 

or flue gas desulfurization units. As a result, OPIC-supported power projects are 

generally among the cleanest, most efficient projects in the developing world. 

Although OPIC activities are not in themselves a substantial contributor to climate change, 

OPIC understands the serious implications of GHG emissions and climate change. OPIC 

recognizes that renewables, such as wind and solar power, have a potentially important role 

to play in reducing global reliance on fossil fuels and their associated GHG emissions. 

Renewable energy projects generally offer compelling environmental advantages when 

compared to conventional fossil fuel-based power generation, including little or no 

conventional pollutant and GHG emissions. However, renewable energy projects face 

serious challenges competing with conventional fossil fuel-fired power projects and have 

achieved only limited success in the marketplace. OPIC will seek to support these 

emerging power sources through better outreach to the renewable energy industry and 

innovative financing mechanisms. 
21 

III. An Introduction to Climate Change 

Summary: Atmospheric greenhouse gases have long been known to absorb infrared 

radiation and warm the Earth. The natural greenhouse warming of the atmosphere 

keeps the Earth 60°F warmer than it otherwise would be. However, humans have been 

emitting increasing quantities of these greenhouse gases since the advent of the fossil 

fuel-driven industrial age and now annually emit 25 billion tons of CO2, the most 

important anthropogenic GHG. As a result, atmospheric CO2 concentrations are now 

at their highest levels in more than 160,000 years. Ice core records and other data 

demonstrate a strong correlation between atmospheric CO2 concentrations and global 

mean temperatures. During the past century, global mean temperatures have increased 

approximately 1°F degree. However, precisely how much of the recent warming is due 

to human influences and how much is due to natural climate variations is the focus of 

much current research. In addition, while recent studies indicate that human activities 

have begun to impact our climate and may be the dominant force driving recent 

warming trends, the extent and rate of future temperature changes and their potential 

impacts remains unclear. Current models suggest that forecast growth in GHG 

emissions could double atmospheric concentrations of CO2 by 2060 with a resulting 

temperature increase of as much as 2° to 6.5°F over the next century. Even the low end 

of this estimate would be an unprecedented rate of warming and may alter patterns of 

precipitation and evaporation and lead to more severe weather, rising sea levels, and 

potentially adverse economic, ecological and human health impacts. 

The Earth is constantly heated by incoming shortwave radiation from the sun. This heating 

is offset by reflected infrared radiation leaving the planet. A portion of this reflected 

terrestrial radiation, though, is itself absorbed by gases in the atmosphere. As illustrated in 

Figure 3.1, the energy from this absorbed terrestrial radiation warms the Earth’s surface 

and atmosphere creating what is known as the natural Greenhouse Effect. This strong 

infrared absorptivity is extremely robust and can be readily measured in the laboratory and 

from Earth orbiting satellites. Simply put, the atmosphere is like a “blanket” around the 

planet. The Earth is 60°F warmer than it would be without an atmosphere. 
22 

Figure 3.1: The Greenhouse Effect Naturally Warms the Earth’s Surface 

Source: Climate Change - State of Knowledge, OSTP 1997 

Greenhouse Gases 

The gases responsible for the strong atmospheric absorption of infrared radiation are called 

greenhouse gases (GHGs). Water vapor and CO2 are the most important GHGs and are 

responsible for the bulk of greenhouse warming. Both water vapor and CO2 are naturally 

occurring as are other greenhouse gases including methane, nitrous oxide, and ozone. 

Human activities, however, add to the levels of most of these naturally occurring gases, and 

are the sole source of other powerful classes of GHGs, including chlorofluorocarbons 

(CFCs), hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs), among others. 

Greenhouse gases generally persist for long periods in the atmosphere. While many 

conventional air pollutants may persist in the atmosphere for only a matter of hours or 

days, many important GHGs persist for decades or even hundreds of years. For example, 

CO2 has an estimated atmospheric persistence of 120 years and some CFCs may persist for 

as long as 400 years. As a result, these gases accumulate, become very well mixed in the 

atmosphere and have a global impact that is mostly independent of where they were 

emitted. GHG persistence has significant policy implications because the gases we emit 

today may impact the climate system for hundreds of years. 
23 

GHGs differ in their ability to absorb infrared radiation. Among the most infrared 

radiation-absorbent are the CFCs, HFCs and PFCs. Other powerful GHGs include nitrous 

oxide and methane. For example, a molecule of CFC-12 is 15,800 times, CFC-11 is 

12,400 times, nitrous oxide is 270 times and methane is 21 times as effective in absorbing 

infrared radiation as a molecule of CO2

5

. However, because atmospheric concentrations of 

these compounds are much less than concentrations of CO2, they play a lesser role in 

greenhouse warming and climate change. Figure 3.2 depicts the relative contribution to 

greenhouse warming of various GHGs when both their radiation absorbing characteristics 

and their relative concentration are considered. As illustrated, CO2 is the largest 

contributor to climate change, or radiative forcing, followed by methane and nitrous oxide, 

which together account for over 90% of total radiative forcing. Water vapor is not 

included because it is a feedback gas - meaning its concentration is mainly a function of 

other climate parameters, not emissions. 

Figure 3.2: The Contribution of Selected Greenhouse Gases to 

Greenhouse Warming 

Source: Greenhouse Gas Assessment Handbook, World Bank 1998 

 

5

 Robert G. Watts, ed., Engineering Response to Global Climate Change: Planning a Research and 

Development Agenda, (New York: Lewis Publishers, 1997) 6. 

Greenhouse Gas Emissions by Relative Contribution to Global Radiative Forcing (1991)

Carbon Dioxide

67%

Methane

18%

Nitrous Oxides

7%

Other CFCs

8%
24 

Increasing Atmospheric GHG Concentrations 

The basic story of human-induced greenhouse warming remains simple. With 

industrialization and population growth, GHG emissions from human activities have 

continuously increased. These steady additions of GHGs now include more than 23 billion 

tonnes of CO2 per year and have begun to tip a delicate balance, significantly increasing 

atmospheric GHG concentrations and creating an “enhanced” greenhouse effect6

. 

Accurate measurements of atmospheric CO2 concentration began in 1958 at the Mauna Loa 

Observatory in Hawaii. Information on atmospheric CO2 concentrations prior to 1958 can 

be derived from the analysis of ice, and the bubbles of air within it, from various depths in 

Antarctica. Ice cores have been drilled through the Antarctic ice cap as deep as 3 km, 

indicating conditions over the past 160,000 years. Figure 3.3 presents results of an analysis 

of ice core data and more recent data from Mauna Loa and demonstrates that atmospheric 

concentrations of CO2 have increased from approximately 280 to 350 parts per million by 

volume (ppmv), an increase of nearly 30%, since the beginning of the industrial 

revolution7. As a result, atmospheric CO2 concentrations are now at their highest levels in 

more than 160,000 years. Other GHGs have increased as well, methane concentrations 

have more than doubled, and nitrous oxide concentrations have risen by about 15%. 

 

6

 International Energy Outlook 2000 (Washington, D.C.: Energy Information Administration, 2000) 179. 7

 Executive Office of the President, Office of Science and Technology Policy, Climate Change: State of 

Knowledge (Washington, D.C.: Office of Science and Technology Policy 1997) 4. 
25 

Figure 3.3: Concentration of CO2 in the Atmosphere Since the Beginning 

of the Industrial Revolution 

Source: Climate Change - State of Knowledge, OSTP 1997 

Carbon Dioxide – Global Temperature Relationship 

Information on remotely past climates is obtained by means of considerable ingenuity. 

Figure 3.4 illustrates the changes in the CO2 concentration in air bubbles within ice from 

various depths (i.e., since 160,000 years ago) beneath Vostok, Antarctica along with the 

temperature during bubble formation. The temperature is estimated from the ratio of the 

amount of ‘heavy’ oxygen (with a molecular weight of 18) to that of normal oxygen, with a 

molecular weight of 16. The ratio depends on the global sea-surface temperature at the 

time the bubbles were trapped. The figure illustrates how fluctuations in CO2

concentrations and global average temperatures have roughly mirrored each other over the 

last 160,000 years. 
26 

Figure 3.4: Atmospheric Carbon Dioxide Concentrations and 

Corresponding Global Surface Temperature Data from Remote Times 

Source: Climate Change - State of Knowledge, OSTP 1997 

Figure 3.5 illustrates more recent warming trends and demonstrates that global mean 

surface temperature has increased by as much as 0.6° -1.2°F since the late 19th century. 

These figures strongly suggest that increasing CO2 concentrations provide a measurable 

direct addition to the atmospheric trapping of infrared radiation leaving the surface of our 
27 

planet and an “enhanced” greenhouse warming. In effect, adding CO2 and other GHGs to 

the atmosphere is like adding another “blanket” to the planet. 

Figure 3.5: Global Average Temperature Since the Beginning of the 

Industrial Revolution 

Source: Climate Change - State of Knowledge, OSTP 1997 

Climate Feedback Mechanisms 

The global climate system is complex and involves many positive feedback mechanisms 

that tend to amplify the warming caused by increasing CO2 concentrations. As mentioned 

above, water vapor is by far the most dominant greenhouse gas. However, water vapor 

enters the climate system mostly as a “feedback” gas. In other words, atmospheric water 

vapor concentration is largely a function of global temperature and atmospheric holding 

capacity for water vapor increases exponentially with temperature. As a result, CO2
28 

induced warming is augmented by increased water vapor concentrations, creating a 

powerful positive feedback mechanism. 

A smaller positive feedback involves the relationship between ice at the Earth’s surface 

and its reflectivity (albedo) of solar radiation. In essence, if ice or snow cover melts, the 

surface left exposed (ground, vegetation, or water) is generally less reflective of incoming 

solar radiation. This leads to more absorption of the solar radiation, thus more warming, 

less ice, and so on. This “ice-albedo” feedback process further amplifies the calculated 

warming response of the climate caused by increased concentrations of CO2 and infrared 

absorbing gases. 

Natural vs. Anthropogenic Effects 

While the greenhouse effect and global warming are generally accepted by most of the 

scientific community, the cause of global warming remains the subject of some debate. 

Many scientists attribute the current global warming to an “enhanced” greenhouse effect 

caused by the build up of atmospheric GHG concentrations caused by human activities. 

Other scientists suggest that natural factors are responsible, including primarily changes in 

the radiation flowing from the sun, which is thought to follow many complex cycles, and 

volcanoes, which temporarily cool the Earth by lofting a veil of fine sulfate droplets that 

reflect sunlight. 

Resolving this puzzle – the balance between human and natural influences – has been 

something of a holy grail in atmospheric science, particularly because the answer could 

determine whether countries enact plans in coming years to reduce GHG emissions. Few 

contest the idea that some of the recent climate changes are likely due to natural processes - 

after all, significant climate changes have occurred since long before human activity is 

thought to have begun to play a role a century ago. The last two millenia, for example, 

were marked by relative warmth between 900 –1200 AD (the Medieval Warm Period) and 

worldwide cooling between about 1450 and 1850 (the Little Ice Age)8

. 

However, recent studies have begun to clarify the magnitude of anthrogenic influences on 

the climate system. A new analysis of the climate of the last 1,000 years suggests that 

human activity is the dominant force behind the sharp global warming trend seen in the 

20th century9

. The study found that natural factors, like fluctuations in sunshine or volcanic 

activity, were powerful influences on temperatures in past centuries and when fed into a 

computer model simulating the flow of energy to and from the Earth, produced 

temperatures that match most of the ups and downs of the actual climate from the year 

1000 to the mid 1800’s. But the relationship among sunlight, eruptions and temperature 

broke down completely in the 20th century, when the study found that natural factors could 

account for only 25% of the warming since 1900. The only “radiative forcing” that 

 

8

 Linacre, Edward and Geerts, Bart, Climate and Weather Explained: An Introduction From A Southern 

Perspective (New York: Routledge, 1997) 338-339. 9

 Crowley, Thomas J., “Causes of Climate Change over the Past 1000 Years, ” (Science, July 14, 2000) 

270-277. 
29 

remotely matched the jump in temperatures seen in the latter half of the century was the 

rise in GHG emissions. Although these results will continue to be refined, they 

demonstrate the significance of human impact on climate change and imply that future 

actions to address the issue may be required. 

Anticipated Impacts 

Current forecasts indicate that, unless effective international efforts to reduce CO2

emissions are adopted, atmospheric CO2 concentrations could reach twice the preindustrial 

level by 2060, with an associated average global temperature increase of 2° to 6.5°F by 

2100. Even the low end of this range represents an unprecedented rate of change compared 

to the past 10,000 years. In fact, the difference in temperature from the last ice age to now 

is about 9°F10. By increasing the energy of the climate system, such a temperature increase 

may lead to more intense rainfall, and thus flooding, in some areas, but more frequent 

drought-like condition in other areas. Current rates of sea-level rise are expected to 

increase by a factor of two to five due to both the thermal expansion of the oceans and the 

partial melting of mountain glaciers and polar ice caps. Changes in precipitation and croppest relationships could adversely impact agricultural production. Increased temperatures 

may extend the range of insect-borne diseases, including malaria and dengue fever and 

adversely impact human health. And finally, changes in temperature and precipitation can 

disrupt natural ecosystems, such as forests, rivers, and wetlands. 

 

10 Executive Office of the President, Office of Science and Technology Policy, Climate Change: State of 

Knowledge (Office of Science and Technology Policy 1997) 1. 
30 

IV. Global Production of Greenhouse Gases 

Summary: Carbon Dioxide is the most important anthropogenic GHG and its 

production can be used as an indicator for other GHGs. CO2 results primarily from 

fossil fuel consumption and land use changes. Industrialized countries are responsible 

for the bulk of past CO2 emissions. However, rapid economic and population growth in 

developing countries is expected to substantially increase demand for energy and 

significantly increase CO2 emissions from these countries. As a result, as much as 70% 

of the growth in global CO2 emissions over the next two decades will come from the 

developing world. Electricity generation is the largest source of CO2 emissions. Fuel 

and technology choices have a significant impact on the level of CO2 emissions 

produced by power generation facilities, with natural gas and high efficiency combined 

cycle plants producing significantly lower CO2 emissions than other fossil-based plants 

and renewable energy projects generally producing little or no CO2. International 

efforts to reduce GHG emissions and stabilize atmospheric GHG concentrations 

culminated in the Kyoto Protocol to the UNFCCC, which calls on industrialized 

countries to reduce GHG emissions in order to stabilize atmospheric concentrations of 

these gases. However, even if industrialized countries are able to achieve their 

reduction targets, future GHG emissions will still grow substantially due to rapidly 

increasing emissions from the developing world. Therefore, any success in stabilizing 

GHG concentrations will likely require the participation of developing countries and a 

major commitment to natural gas, renewable energy, energy efficiency and improved 

land-use management. 

The major anthropogenic sources of GHG emissions worldwide are fossil fuel 

consumption, non-fossil methane emissions and land-use changes11. The consumption of 

fossil fuels, which provides electricity, heat and steam to the industrial, commercial and 

residential sectors, and fuel to the transportation sector, is by far the largest contributor to 

GHG emissions and accounts for approximately 73% of global GHG emissions. In fact, 

fossil-based electric power generation alone accounts for approximately 32% of global CO2

production12. Non-fossil based methane (CH4) from solid waste, rice production, 

agriculture and livestock account for approximately 14% of GHG production. And land 

use changes, principally deforestation, which release the CO2 stored in forest organic 

matter and soils, account for approximately 11% of total GHG production. As seen in 

Figure 4.1, these three sources make up the bulk of GHG emissions and are believed to be 

largely responsible for the rapid rise in atmospheric concentrations of CO2 and other GHGs 

since pre-industrial times. 

 

11 World Bank, Global Environment Division, Greenhouse Gas Assessment Handbook: A Practical 

Guidance Document for the Assessment of Project-Level Greenhouse Gas Emissions (Washington, D.C.: 

The World Bank, September 1998) 7. 12 Pia Hartman at the U.S. Department of Energy’s Energy Information Administration, correspondence 

with author, July 7, 2000. 
31 

Figure 4.1: Sources of the Greenhouse Gases Covered Under the 

UNFCCC 

Source: Greenhouse Gas Assessment Handbook, World Bank 1998 

GHG Emissions and Development 

Energy demand is closely associated with both population and economic growth. Because 

energy supply in most countries is largely based on fossil fuels, carbon emissions tend to 

grow rapidly with development, particularly among countries with relatively low levels of 

per capita income. For example, among low-income economies (excluding China), GDP 

grew at a rate of 2.8% per year between 1980 and 1994, while commercial energy 

consumption grew at a much higher rate of 4.7% per year13. The reasons for this are 

straightforward - the energy demands of industrial economies are far greater than those of 

agricultural economies. As developing countries transition from agricultural to industrial 

economies, fossil fuel consumption tends to increase rapidly. Moreover, with increasing 

per capita income household energy use grows because of the increased number of 

 

13 United Nations Development Programme and the World Resources Institute, Promoting Development 

While Limiting Greenhouse Gas Emissions: Trends & Baselines (New York: United Nations, 1999) 3. 

Sources of Greenhouse Gas Emissions Covered Under the UNFCCC, 1991a

Fossil Fuel Consumption

73%

Non-Fossil Based Methane

14%

Land Use Canges

11%

Cement Manfacturing

2%
32 

appliances. Energy consumption for transportation grows as the per capita ownership of 

private vehicles increases. 

Among high-income countries, however, growth in energy consumption becomes 

increasingly “decoupled” from growth in GDP for a number of reasons. These economies 

often experience a shift from energy-intensive industrial sectors to less intensive service 

sectors. Moreover, the levels of energy use in certain sectors, such as households, become 

saturated as most consumers reach income levels at which further growth in consumption 

of energy-intensive appliances slows. Finally, technological advances regularly increase 

energy efficiency, holding down growth in energy demand even with growing economic 

activity. As a result of these factors, some OECD countries have exhibited stable or 

declining levels of CO2 emissions in recent years. 

Global CO2 Emissions 

Carbon Dioxide is the most important anthropogenic GHG, and its production can be used 

as an indicator for the other GHGs. Global CO2 emissions have grown from 14.0 billion 

metric tons in 1970 to more than 22.6 billion metric tons in 1997; an increase of nearly 

60%. Because fossil fuel consumption, and hence CO2 emissions, are closely linked to 

economic output, past emissions of CO2 and other GHGs were largely from developed 

economies. In 1990, 72% of the total CO2 emissions from human activities came from 

industrialized countries14. The United States, with just 4% of the world’s population, 

accounts for 22% of current global emissions. 

In the coming decades, economic and population growth rates in developing countries are 

expected to significantly outpace those in the industrialized world. Over the next two 

decades, per capita incomes in the developing world are expected to more than double, and 

the regions’ total population is projected to increase by 35%, accounting for 90% of the 

world’s population growth15. As a result, per capita energy use for electricity generation 

and transportation in the developing countries, which is currently only 1/10 to 1/20 of the 

U.S. level, will increase rapidly16. 

The International Energy Outlook 2000 (IEO2000) presents an assessment by the Energy 

Information Administration (EIA) of the outlook for international energy markets through 

2020. Its projections anticipate various economic scenarios and are displayed according to 

three basic country groupings: industrialized regions, the developing countries and Eastern 

European/former Soviet Union (EE/FSU) countries, with additional details provided for 

each of these three regions. The report includes a “best estimate” reference projection 

along with high and low economic growth projections that represent possible alternative 

growth paths for the energy forecast. The EIA projections are generally consistent with 

other projections, including those by the International Energy Agency, Standard & Poor’s 

 

14 International Energy Outlook 2000 (Washington, D.C.: Energy Information Administration, 2000) 179. 15 International Energy Outlook 2000 (Washington, D.C.: Energy Information Administration, 2000) 160. 16 Executive Office of the President, Office of Science and Technology Policy, Climate Change: State of 

Knowledge (Office of Science and Technology Policy 1997) page 6. 
33 

Platt’s, Petroleum Industry Research Associates, and Petroleum Economics, Ltd. The 

following discussion is based on EIA2000 reference case projections. 

Based on expectations of regional economic growth and energy demand, global CO2

emissions are projected to increase from 22.6 billion metric tons in 1997 to 29.9 billion 

metric tons in 2010 and 36.7 billion metric tons in 2020 (not taking into account the 

potential impact of the Kyoto Protocol). Developing countries as a group are expected to 

account for approximately 70% of this increase. Emissions from these countries, which 

accounted for about 28% of the total global emissions in 1990, are projected to make up 

44% of the total by 2010 and nearly 50% by 2020. Figure 4.2 illustrates the increasing 

contribution of carbon emissions from developing countries to global carbon emissions. 

Emissions from China, which are expected to rise from 2.9 billion metric tons in 1997 to 

7.7 billion metric tons in 2020, constitute about 33% of the projected global increase. 

Emissions from the industrialized world are expected to rise by 3.3 billion metric tons 

between 1997 and 2020, led by an increase of 2.2 billion metric tons in emission from 

North America. In total, the industrialized nations account for just 23% of the projected 

increase in global CO2 emissions over the two decades, with EE/FSU accounting for the 

remaining 7%. 
34 

Figure 4.2: World Carbon Emissions by Region, 1970 – 2020 

Source: International Energy Outlook 2000, IEA 2000 

By 2020, developing countries are expected to surpass the industrialized countries in both 

energy demand and CO2 emissions. On a per capita basis, however, CO2 emissions from 

the industrialized nations are expected to remain far higher than those from most of the 

developing countries. Figure 4.3 compares per capita CO2 emissions of the top ten 

emitting countries and illustrates that, despite the rapid growth in CO2 emissions from 

developing countries, the significant gap between per capita CO2 emissions in developed 

and developing countries will persist well beyond 2020. 

CO2 Emissions by Region, 1970 - 2020

Industrialized Countries

EE/FSU

Developing Countries

0

5000

10000

15000

20000

25000

30000

35000

40000

1970

1980

1990

2000

2010

2020

Year

CO2 Emissions in Million Tonnes
35 

Figure 4.3: Per Capita CO2 Emissions of the Top Ten Emitting Countries 

Source: Stopping the Hot Air, NRDC 2000 

There are, of course, forecasts that anticipate significantly different development scenarios 

and that, as a result, do not predict the same growth rates for fossil fuel consumption and 

GHG emissions. Forecasts that anticipate a coordinated international effort to reduce GHG 

emissions generally predict considerably lower fossil consumption and GHG emission 

growth rates as a result of the rapid deployment of renewable energy technologies, demand 

side management and energy efficiency improvements. 

Electricity Generation 

As mentioned above, electric power generation is the largest source of CO2 emissions. 

Approximately 38% of total energy consumption goes to supply power plants17, which 

account for nearly 32% of total CO2 production. Power plants produce electricity by 

converting chemical energy stored in fossil fuels into electrical energy. During the energy 

conversion process, fuel-bound carbon is oxidized to CO2 and released to the atmosphere. 

As a result, fossil fuels like natural gas, that have relatively high chemical energy contents 

and low carbon contents, produce the lowest emissions of CO2. While fuels like lignite 

coal, that have relatively low chemical energy contents and high carbon contents, produce 

the highest emissions of CO2. 

 

17 Pia Hartman at the U.S. Department of Energy's Energy Information Administration, correspondence 

with the author, July 7, 2000. 

0

4

8

12

16

20

Tons CO2/Capita

United

States

Canada Russia Germany Japan United

Kingdom

Ukraine Italy China India

Country

Per Capita CO2 Emissions
36 

In addition, some power generation technologies are more efficient at converting chemical 

energy into electrical energy. Conventional boiler-based thermal power plants are 

generally around 33% efficient, while combined-cycle plants are generally around 45-50% 

efficient. As a result, fuel and technology choices have a significant impact on power plant 

CO2 emissions. For example, CO2 emissions from a gas-fired combined-cycle power plant 

may be as much as 60% less than emissions from a conventional coal-based power plant. 

Renewable energy technologies, which generally rely on solar or geothermal energy, 

produce little or no CO2. 

With worldwide electricity consumption expected to increase by 76% by 2020 compared to 

1997 levels, fuel and technology choices will have a major impact on future CO2

emissions. In the industrialized world, where natural gas is increasingly seen as the fuel of 

choice for new power plants, nearly 50% of the increase in CO2 emissions between 1990 

and 2020 will be attributed to an increase in natural gas use, while coal use will remain 

essentially flat. In the developing world, which will account for 61% of the growth in 

electricity production over the next 20 years, growth in gas consumption will be slower and 

heavy reliance on coal will continue, particularly in developing Asia. Coal accounts for 

41% of the projected increase in CO2 emissions in the developing world between 1990 and 

2020, while oil accounts for 35%, and gas accounts for only 22%. The largest increases in 

CO2 emissions are projected for China and India, where coal supplies are plentiful. As 

seen in Figure 4.4, those two countries alone will account for more than 90% of the 

projected rise in coal use worldwide over the next two decades. 
37 

Figure 4.4: World Coal Consumption by Region, 1970 – 2020 

Source: International Energy Outlook 2000, IEA 2000 

Implications for the Kyoto Protocol 

The projected growth in CO2 emissions described above has serious implications for 

implementation of the Kyoto Protocol. Under the Kyoto Protocol, which is intended to 

stabilize atmospheric GHG concentrations, developed countries (Annex I countries) would 

be required to limit GHG emissions to approximately 5% below 1990 levels by 2012. 

Assuming no coordinated Kyoto-like international actions are taken to reduce global CO2

emissions, as seen in Figure 4.5 below, global CO2 emissions are expected to exceed their 

1990 levels by 40% in 2010 and by 72% in 2020. Given the significant CO2 emissions 

increases anticipated from developing countries, even if Annex I countries were able to 

meet the emission limits or reductions prescribed in the Kyoto Protocol, worldwide CO2

emissions still would grow by more than 31% and 55%, by 2010 and 2020, respectively. 

Therefore, the participation of developing nations and a shift to climate-friendly gas and 

renewable energy, along with major energy efficiency and agricultural and forest 

management improvements, will be needed to effectively reduce CO2 and other GHG 

emissions and stabilize atmospheric concentrations of these gases. 

World Coal Consumption by Region, 1970 - 2020

0

1000

2000

3000

4000

5000

1970

1980

1990

2000

2010

2020

Year

Coal Consumption in Billion Short Tons

India and China Other 
38 

Figure 4.5:World Carbon Emissions in the IEO2000 Reference Case and 

under the Kyoto Protocol 

Source: International Energy Outlook 2000, EIA 2000 

Emissions in IEO Reference Case and Under the Kyoto Protocol

14

16.6

13.7

17.3

13.6

7.3

14.1

14.1

19.4

19.4

0

8

16

24

32

40

1990 2010 IEO Reference Case 2010 Under Kyoto Protocol 2020 IEO Reference Case 2020 Under Kyoto Protocol

Year/Scenario

CO2 Emissions in Billion Tonnes

Annex 1 Non-Annex 1
39 

V. International Response to Climate Change 

Summary: International efforts to reduce GHG emissions and stabilize atmospheric 

GHG concentrations culminated in 1997 with the Kyoto Protocol to the UN Framework 

Convention on Climate Change, which commits industrialized countries to legallybinding GHG emission reduction targets. Many governments (85) have signaled their 

commitment to addressing climate change by signing the Protocol (although only 16 

countries have ratified it to date) and are working with key international institutions to 

evaluating complex policy options that have potentially significant economic and 

environmental implications for their countries. Given the critical role of energy in 

improving and maintaining living standards, the goal of these efforts is not to limit 

access to energy, but to provide energy that is less carbon intensive. As different 

approaches to achieve this goal are carefully evaluated and international negotiations 

continue, most countries have implemented programs similar to those in the U.S. that 

promote research, tracking and reporting on carbon emissions, voluntary mitigation 

measures, energy efficiency and renewable energy technologies. However, with the 

exception of a handful of European countries that have implemented some form of 

carbon/energy tax, governments have not banned or placed restrictions on fossil fuels 

or CO2 emissions. OPIC’s actions with respect to climate change appear to be 

consistent with the international response to climate change but clearly ahead of its 

foreign bilateral counterparts. 

Many governments have signaled their commitment to addressing climate change by 

signing the UN Framework Convention on Climate Change (UNFCCC) and the Kyoto 

Protocol and are now working with key international institutions to evaluate complex 

policy options with potentially significant economic and environmental implications for 

their countries. Access to modern forms of energy is fundamental to development and the 

eradication of poverty in the developing world, but energy is also responsible for much of 

the GHG emissions that threaten the stability of the climate system. Therefore the goal of 

GHG reduction efforts is not to deny people access to energy, but to reduce the carbon 

intensity of development - which means a less carbon-intensive energy supply, reduced 

energy demand and improved carbon sinks. 

Efforts to reduce the carbon-intensity of the energy supply generally focus on increasing 

the efficiency of power plants and promoting low-carbon fuels and renewable energy 

(wind, solar, hydro, geothermal, etc.). Efforts to reduce energy demand typically promote 

energy efficiency and conservation in the industrial, transport and residential sectors or 

demand side management. Efforts to encourage improved management of agricultural and 

forest lands and the protection of forests tend to enhance the Earth’s natural capacity to 

assimilate carbon and mitigate the impact of CO2 emissions. The Kyoto Protocol includes 

emissions trading, joint implementation and the clean development mechanisms that are 

designed to allow countries to work together across their borders to facilitate these 
40 

outcomes. The most effective, economic approach to achieving these outcomes is the 

focus of the climate debate.

United Nations Framework Convention on Climate Change 

The United Nations Framework Convention on Climate Change (UNFCCC) was adopted 

in 1992 with the goal of stabilizing greenhouse gas concentrations “at a level that would 

prevent dangerous anthropogenic interference with the climate system.” Approximately 

180 governments, including the U.S. and the European Community, have ratified the 

Convention, which entered into force in March 1994. The Convention contains the 

principle of “common but differentiated responsibilities,” which designates that those 

nations contributing most to global warming take the lead in combating its effects. In 

keeping with this principle, the industrialized countries (“Annex I Parties”) agreed to the 

voluntary aim of returning their emissions to 1990 levels by the year 2000. It also 

obligated Annex I countries, particularly OECD countries, to provide financial resources 

and to facilitate technology transfers for climate change initiatives in developing countries 

and “economies in transition” and established requirements for reporting on climate change 

policies, programs, and national emissions inventories. 

 

Kyoto Protocol 

The Kyoto Protocol to the UNFCCC was adopted in December 1997 after two years of 

debate and negotiation about the inadequacies of the UNFCCC and its voluntary 

mechanisms and the need for more meaningful requirements. Much of the inspiration for 

the Protocol came from the Intergovernmental Panel on Climate Change’s Second 

Assessment Report, which concluded that, “the balance of evidence suggests a discernible 

human influence on global climate change.” The Kyoto Protocol commits developed 

countries to legally-binding emission reduction targets for six greenhouse gases -- carbon 

dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur 

hexafluoride -- to be reached by the period 2008-2012. (CFCs are controlled under the 

Montreal Protocol.) These targets, which range by country from –5% to +10%, provide for 

a 5% emissions reduction from 1990 levels in aggregate. 

The Protocol is noted for its three flexible, innovate mechanisms – joint implementation, 

emissions trading, and the clean development mechanism. The primary goal of these 

mechanisms is to encourage the least costly emissions reduction to be made wherever they 

are possible. For example, the CDM is intended to promote “win-win” actions in 

developing countries - that is, actions that enhance development prospects while reducing 

growth in GHG emissions. The Clean Development Mechanism would allow 

industrialized countries to finance emissions reduction or avoidance projects in developing 

countries and credit some or all of the reductions achieved against their own emission 

limitation targets. The rules governing the CDM have not yet been determined. 

Depending on how the rules are structured the CDM could be a cost-effective way for 

industrialized Annex I countries to meet their Kyoto Protocol goals and at the same time 

aid development prospects of developing countries by stimulating technological 

“leapfrogging” and generating new investments. 
41 

Although 83 countries have signed the Protocol, only 16 countries have ratified it to date. 

Fifty-five countries, including Annex I Parties accounting for at least 55% of developed 

country emissions, must ratify the Protocol in order for it to enter into force. Many 

countries are delaying ratification of the Protocol until operational details are finalized. 

Others, including the U.S., are upholding ratification until the “meaningful participation” 

of developing countries is achieved, a prerequisite for U.S. Senate approval as pronounced 

in the Byrd-Hagel Resolution18. The importance of meaningful participation of developing 

countries was highlighted in the previous section of this report. 

Global Environment Facility 

The Global Environment Facility (GEF) was launched in 1991 as an experimental facility 

and restructured after the Earth Summit in Rio de Janeiro, Brazil to provide funds on a 

grant or concessional loan basis to support projects that address biodiversity loss, climate 

change, degradation of international waters, and ozone depletion. The GEF is 

implemented jointly by the United Nations Development Programme (UNDP), the United 

Nations Environment Programme (UNEP), and the World Bank. UNDP provides technical 

support and is responsible for the development and management of capacity-building 

programs and manages the GEF Small Grants Program. UNEP is responsible for scientific 

and technical analysis, manages the Scientific and Technical Advisory Panel, and catalyses 

global, regional, and national environmental assessment and policy frameworks. The 

World Bank, the repository of the Trust Fund, manages investment activities, mobilizes 

private sector resources, and manages its own GEF project portfolio. 

As the financial mechanism for the UNFCCC, the GEF helps developing countries 

implement the Convention. Specifically, the GEF supports projects that: (i) remove 

barriers to energy efficiency and energy conservation; (ii) promote the adoption of 

renewable energy by removing barriers and reducing transaction costs; (iii) reduce the 

long-term costs of low greenhouse gas emitting energy technologies; and (iv) support the 

development of sustainable transport. Since its inception in 1991, the GEF has provided 

access to over $2 billion in funding and has attracted additional funding for projects by 

helping them to overcome initial investment costs and reducing risks for investors. Around 

40% of GEF funds have supported climate change activities. 

World Bank Group 

The World Bank Group (WBG) is a development institution whose goal is to reduce 

poverty by promoting sustainable economic growth in its client countries. WBG consists 

of five closely associated institutions: the International Bank for Reconstruction and 

Development (IBRD); International Development Association (IDA); International Finance 

Corporation (IFC); Multilateral Investment Guarantee Agency (MIGA); and the 

International Centre for Settlement of Investment Disputes (ICSID). The World Bank 

supports the implementation of the UNFCCC and the Kyoto Protocol through various 

policies and programs and through their role as an implementing agency of the GEF. 

 

18 Senate Resolution 98. U.S. Senate, June 12, 1997. 
42 

The energy sector has always been an important area of the World Bank’s activities. Loan 

commitments in this sector totaled $2.54 billion in FY 1998 (IDA, IBRD, and IFC) and 

typically represent between 18 - 20% of total annual commitments of the WBG. Bank 

renewable energy and energy efficiency loans are often supported by GEF grants. To date 

WBG loans for renewable energy total $547 million and energy efficiently initiatives, once 

only component parts of power sector loans, are now addressed in their own right in 

lending operations. In addition, as an implementing partner of the GEF, the WBG also 

manages its own portfolio of GEF projects, including over $500 million in support of 

climate change projects. 

In addition to lending and GEF activities, the WBG has a number of programs and 

initiatives addressing climate change and promoting renewable energy, energy efficiency 

and providing technical assistance. The longest established program is the Energy Sector 

Management Assistance Program, which provides technical assistance for the energy sector 

in six priority areas: energy and the environment; rural and household energy; renewable 

energy technologies; energy sector reform; energy efficiency; and international energy 

trade. Other programs include: the Prototype Carbon Fund; the Activities Implemented 

Jointly Program; the Solar Development Corporation; the Renewable Energy and Energy 

Efficiency Fund; the Small and Medium Scale Enterprise Program; the Asia Alternative 

Energy Group; and the Global Carbon Initiative, among many others. 

Organization for Economic Co-operation and Development 

The Organization for Economic Co-operation and Development (OECD) comprises 29 

member countries, including the U.S., that work together to improve economic and social 

policy. The OECD considers global climate change to be a major challenge, with serious 

economic and environmental implications. The OECD is working to integrate climate 

policy objectives into transport, energy, and agriculture sector policies. Key contributions 

of the OECD include the Climate Technology Initiative, coordination of an annual Forum 

on Climate Change, analysis of the Kyoto Protocol, and inputs to the Conferences of the 

Parties. By helping member countries assess domestic and international policies to reduce 

greenhouse gas emissions, the OECD contributes to the effective implementation of the 

UN Framework Convention on Climate Change and the Kyoto Protocol. 

The OECD has reported that, for the most part, current domestic policies in member 

countries are inadequate for meeting the targets of the Kyoto Protocol.19 Several countries 

(Germany, Italy, Austria, Norway, Sweden, Finland, Denmark, and the Netherlands) have 

introduced some form of energy/carbon tax, while others are planning or considering such 

as tax. Although there is talk of domestic tradeable permit systems for CO2, no such 

system is currently in use. Other measures employed or considered by member countries 

include voluntary agreements to reduce emissions, regulatory policies for materials, 

 

19 Organization for Economic Co-operation and Development, “OECD Perspectives on Climate Change 

Policies, ” (OECD, October 26, 1999.) 
43 

buildings and products, green government procurement approaches, research, information 

and public awareness programs. 

U.S. Government 

The Climate Change Action Plan (CCAP) was launched in 1993 and was intended to 

satisfy U.S. commitments under the UNFCCC. The CCAP involves nearly 50 programs 

and initiatives aimed at reducing GHG emissions. These programs and initiatives generally 

involve win-win voluntary partnerships, are non-regulatory and address all sectors of the 

economy, from energy production to forestry initiatives. 

Examples of the voluntary programs established by the U.S. government under the CCAP20

include the DOE’s Climate Challenge, which encourages major electric utilities to pledge 

to reduce their greenhouse gas emissions. The joint DOE/EPA Climate Wise program 

encourages firms to respond to the challenge of reducing greenhouse gas emissions by 

setting bottom-line emission targets that they can attain using the most cost-effective 

means available. The DOE Motor Challenge encourages motor system manufacturers, 

industrial motor users, and utilities to begin an aggressive program to install the most 

energy-efficient motor systems in industrial applications. Although the CCAP has 

achieved considerable success, “these voluntary programs alone are not capable of 

producing the reductions necessary to return U.S. emissions to 1990 levels.”21

In anticipation of the December 1997 approval of the Kyoto Protocol, the U.S. announced a 

renewed effort to address climate change. The plan sets timetables and targets for reaching 

the 1990 emission levels by the period of 2008 to 2012, anticipates a review of U.S. 

progress and an evaluation of next steps beginning around 2004 and the implementation of 

a domestic emissions trading program beginning in 2008. The highlight of the plan is the 

5-year, $6.3 billion Climate Change Technology Initiative (CCTI). The CCTI is a package 

of tax incentives and R&D investments designed to encourage energy efficiency and to 

help develop low-carbon energy sources and to reduce greenhouse gas emissions. 

Complementing its domestic efforts, The United States Agency for International 

Development (USAID) is responsible for the management of U.S. overseas development 

assistance. USAID’s energy sector strategy addresses climate concerns by promoting the 

use of renewables, energy efficiency, and clean energy technologies. Activities in the 

energy sector have been supported by around $180 million annually. 

 

20 Nordhaus, Robert R. and Fotis, Stephen, “U.S. Implementation of Voluntary Actions and Programs, ” 

Analysis of Early Action Crediting Proposals (Pew Center on Global Climate Change, October 1, 1998.) 21 Nordhaus, Robert R. and Fotis, Stephen, 14. 
44 

VI. OPIC and the Environment 

Summary: OPIC’s environmental policies and procedures have long been among 

the most stringent of any bilateral finance, investment insurance or export credit 

agency. All OPIC-supported projects are subject to thorough environmental 

assessment and post-completion environmental compliance monitoring. The release of 

the new OPIC Environmental Handbook last year demonstrates a continued 

commitment to improve environmental policies and procedures, strengthen 

environmental performance and expand public participation. World Resources Institute 

has rated OPIC public consultation and disclosure policies the best among our foreign 

bilateral counterparts. OPIC has taken a lead role in efforts to promote common 

environmental standards among our counterpart agencies overseas and has created 

partnerships with other U.S. government agencies and non-governmental organizations 

(NGOs) to promote environmentally sound development. In response to the threat of 

climate change, OPIC was the first bilateral agency to commit to tracking and 

reporting CO2 emissions from its power sector projects and to pledge support to 

projects that reduce or offset GHG emissions, particularly those certified by the U.S. 

Initiative for Joint Implementation. 

OPIC has a long standing commitment to the environment. Since 1985, OPIC has been 

required by statute to assess the environmental impacts of prospective projects and to 

decline assistance to projects posing a “major or unreasonable hazard to the environment, 

health or safety” or resulting in the “significant degradation of a national park or similar 

protected area.” OPIC is required to operate its programs in accordance with the intent of 

sections 117, 118 and 119 of the Foreign Assistance Act relating to environmental impact 

assessment, tropical forests, biological diversity and endangered species. 

 

OPIC strongly supports these principles and is committed to ensuring that the projects it 

supports meet the highest level of environmental performance. All prospective projects 

receive a thorough environmental assessment and OPIC declines support to projects 

involving infrastructure or raw material extraction in primary tropical forests and other 

protected or ecologically fragile areas. In determining whether a project will pose an 

unreasonable or major environmental, health or safety hazard, OPIC generally relies on 

guidelines and standards adopted by international organizations such as the World Bank. 

All prospective projects having potentially significant environmental impacts must submit 

an EIA, undergo a 60-day public comment period, submit annual environmental 

monitoring reports and undergo at least one independent compliance audit within the first 

three years of project operation. And finally, OPIC monitors project compliance with 

contractual conditions throughout the term of the OPIC loan agreement or insurance 

contract. (For a complete description of OPIC’s environmental assessment procedures, 

please see the OPIC Environmental Handbook, at www.opic.gov.) 
45 

Environmental Handbook 

While OPIC’s environmental policies and procedures have long been among the most 

stringent of any bilateral finance, investment insurance or export credit agency, in April 

1999, following intensive discussions with its stakeholders, including U.S. businesses and 

environmental NGOs, OPIC adopted and issued in final form its Environmental Handbook. 

The handbook codifies OPIC’s environmental standards and procedures as they have 

evolved since 1985, including strengthened environmental requirements, particularly with 

respect to transparency and public participation. 

Public Consultation and Disclosure

OPIC is unique among its foreign bilateral counterparts in its comprehensive procedures 

for environmental information disclosure. In fact, according to a recent report of the World 

Resources Institute22, OPIC is one of only two “leading ECAs” (the U.S. Export Import 

Bank is the other) to satisfy seven key environmental disclosure criteria. That is, OPIC 

publishes environmental guidelines, discloses screening criteria, publishes environmental 

assessment rules, releases project environmental assessments, solicits public comments, 

discloses projects approved, and reports on CO2 emissions. 

OPIC’s public consultation and disclosure process involves posting on OPIC’s web site a 

60-day notice of environmentally sensitive projects for which OPIC is considering 

providing support. A list of such postings is maintained on the OPIC web site and 

members of the public may subscribe to OPIC’s Environmental List Server to be 

automatically notified when OPIC posts a new prospective project. Members of the public 

may request copies of EIAs and submit comments for any posted projects. All public 

comments received by OPIC are considered in the assessment of posted projects. OPIC 

also strongly encourages investors to consult with locally affected people in the host 

country through the entire duration of their investment projects, and particularly in the 

preparation of environmental impact assessments and other planning documents. 

In addition, OPIC reports annually to Congress and the public regarding its implementation 

of and compliance with internal, national, and international environmental policies, laws, 

treaties, and agreements to which its programs are subject. OPIC’s Annual Environmental 

Report (AER) is a voluntary report, and is part of a package of OPIC environmental 

initiatives proposed by President Clinton at the United Nations General Assembly Special 

Session (UNGASS) on Sustainable Development in June 1997. The first part of the report 

summarizes the implementation of the policy changes that OPIC made to fulfill the 

initiatives announced at UNGASS. The second part reports on the environmental 

implications of the projects to which OPIC committed its support during the fiscal year, 

including CO2 emissions from power projects. The third part describes OPIC’s efforts to 

promote the development of common environmental standards among its counterpart 

organizations overseas and among private political risk insurers. 

 

22 Maurer, Crescencia and Bhandariu, Ruchi, “The Climate of Export Credit Agencies, ” Climate Notes

(Washington, D.C.: World Resources Institute, 2000) 1-16. 
46 

Common Environmental Standards 

OPIC has taken a lead role in efforts to harmonize environmental standards among bilateral 

finance, investment insurance and export credit agencies. OPIC has encouraged its foreign 

bilateral agency counterparts, as well as its private sector partners, to recognize the 

importance of the environment to the long-term viability of the projects they support and to 

integrate environmental considerations into their investment decision-making. Over the 

last year, OPIC continued its ongoing efforts to promote harmonization of environmental 

standards through meetings with our foreign bilateral counterparts in Germany, The 

German Investment and Development Company (DEG) and Kreditanstalt fur 

Wiederaufbau (KfW), as well as with representatives of the Japanese Export Import Bank 

(JEXIM) and the Export Development Corporation of Canada. 

OPIC also took a leading role in the International Finance Corporation’s review of 

environmental and social requirements among international financial institutions (IFIs) in 

private sector development projects. This effort entails collection of data on 

environmental, occupational health and safety, and social matters, public consultation and 

disclosure practices and their implementation by about 50 IFIs. This process will provide a 

baseline for further effective dialogue with OECD counterparts. The benefits of common 

environmental standards are widely recognized among OPIC’s various stakeholders. OPIC 

looks forward to continuing its close collaboration with U.S. business, NGOs, Congress 

and the Administration, as it continues to address these and other environmental 

challenges. 

Partnerships for the Environment 

As part of its continuing efforts to promote environmentally friendly private investment in 

projects in developing countries, OPIC has established partnerships with U.S. government 

agencies and NGOs to enhance its ability to support environmentally friendly projects, 

including eco-tourism, low cost housing, and renewable energy. 

As part of this effort, OPIC entered into a partnership with U.S. AID to complete OPIC’s 

first loan commitment to a non-governmental organization, Washington, D.C.-based 

Counterpart International, Inc. and World Women in Defense of the Environment. 

Counterpart International, Inc. will use the $1 million in financing to establish a facility to 

on-lend OPIC funds to environmentally friendly projects and existing businesses to 

promote environmentally focused small-and medium-sized enterprises in the Philippines. 

The facility will be comprised of up to $750,000 in a direct loan from OPIC and up to 

$250,000 in grant monies from USAID that will be administered by OPIC. Proceeds of the 

OPIC loan will be used for investments in business ventures in the Philippines that meet 

OPIC’s environmental and other policy criteria. Up to five investments are anticipated, 

involving activities such as organic fertilizer manufacturing, eco-tourism, and low cost 

housing using recycled materials. 

OPIC also signed a Memorandum of Cooperation with the Department of Energy 

“affirming their intent to facilitate financing that will promote the development of 
47 

sustainable energy projects in Africa.” Accordingly, OPIC and DOE will design the “U.S.-

Africa Sustainable Energy Program” to provide assistance to U.S. not-for-profit entities, 

NGOs, and U.S. small business entities or cooperatives interested in developing 

sustainable energy projects in Africa. The program will target projects that (i) support 

community-based sustainable energy development, (ii) increase energy access and bring 

clean energy systems to underserved/unserved areas using renewable technologies and 

natural gas-fired systems, (iii) reduce greenhouse gases through programs that promote 

enhanced supply, renewable sources, or demand-side management, and/or (iv) promote the 

application of clean energy technologies. 

OPIC Climate Change Initiatives

As discussed earlier in this report, any effective international effort to reduce greenhouse 

gas emissions will require the participation of the developing world. The Senate’s Byrd–

Hagel Resolution therefore predicates U.S. Senate ratification of the Kyoto Protocol on 

meaningful participation of developing countries. The joint implementation, emissions 

trading and clean development mechanisms of the Kyoto Protocol are designed to 

encourage the participation of developing countries and achieve the most cost-effective 

emission reductions. As described in its Environmental Handbook, OPIC seeks to support 

the Byrd-Hagel Resolution and the Kyoto mechanisms by encouraging investment in 

projects involving Joint Implementation and by tracking and reporting CO2 emissions from 

its power sector projects. 

To encourage U.S. companies, particularly small business, to participate in efforts to 

reduce global greenhouse gas emissions, OPIC will provide customized pricing for small 

business projects intended to reduce such emissions, in particular those projects certified 

by the U.S. Initiative for Joint Implementation. These projects involve the sharing of 

technology and resources, particularly transfers from Developed to Developing nations, to 

limit and reduce GHG emissions. In addition, OPIC will continually strive to make its 

portfolio more climate friendly by proactively seeking renewable energy projects and by 

seeking to harmonize its approach to climate change issues with that of other U.S. 

Government entities. 

In a effort to support the management of global greenhouse gas emissions, in February 

1998 OPIC became the first bilateral finance, investment insurance or export credit agency 

to commit to tracking and reporting GHG emissions from its power sector projects. 

Tracking results are made available to the public and reported annually to Congress in 

OPIC’s Annual Environmental Report (AER). OPIC’s most recent tracking and reporting 

efforts are contained in the OPIC’s 1999 AER 
48 

In 1999 OPIC-supported six new projects, with a combined 2,367 MW of power capacity. 

As in prior years, the power sector projects supported by OPIC in FY 1999 were largely 

weighted toward natural gas, the cleanest and most climate-friendly fossil fuel. These 

projects, measured in terms of MW capacity, were approximately 92% gas-fired and 8% 

oil-fired. Annual CO2 emissions from these projects represent less than 0.03% of annual 

global CO2 emissions. The results demonstrate that OPIC continues to maintain a 

responsible power portfolio.
49 

VII. Conclusion

_________________________________________________________________________ 

Climate change represents a serious global environmental challenge. Since the dawn of the 

industrial age, man has been emitting increasing quantities of heat-absorbing GHGs 

primarily through the consumption of fossil fuels. As a result, atmospheric concentrations 

of CO2 - the most important GHG - are now at their highest levels in more than 160,000 

years and global temperatures are rising. With emissions of CO2 and other GHGs expected 

to increase - especially in developing regions - current forecasts suggest that atmospheric 

concentrations of CO2 could double by 2060 with a resulting global average temperature 

increase of as much as 2° to 6.5° F over the next century. Such a rapid temperature increase 

could have potentially grave economic and environmental impacts. 

This report demonstrates that OPIC-supported projects are not major contributors to global 

GHG emissions or climate change. Contrary to some assumptions, the OPIC power 

portfolio is predominately driven by clean burning low-carbon natural gas (45%) and 

carbon-free hydro and geothermal energy (27%). Current annual CO2 emissions from 

OPIC-supported power projects represent approximately 0.24% of global CO2 emissions. 

In addition, OPIC projects tend to use highly efficient advanced technologies, with more 

than 43% of OPIC fossil fuel-fired power projects using combined cycle technology - the 

most efficient electricity generating technology. 

However, despite this good news about its own portfolio, OPIC understands that it has an 

important role to play in helping the developing world make the transition to less carbon 

intensive development. After all, reducing GHG emissions in developing regions - where 

as much as 70% of the increase in CO2 emission over the next two decades will occur - 

will be critical to successfully stabilizing global atmospheric GHG concentrations. 

In the near term, OPIC’s commitment to natural gas will be an important part of that 

transition process. In the longer term, OPIC recognizes that renewables, such as wind and 

solar power, will have an important role to play in reducing global reliance on fossil fuels 

and their associated GHG emissions. As an agency whose sole focus is on the developing 

world, OPIC has the opportunity to play a unique role facilitating the participation of 

countries whose involvement is critical to the resolution of the climate problem. OPIC 

therefore looks forward to exploring more fully both the needs of renewable energy 

developers and how developing countries determine their energy requirements and 

establish bid specifications for power projects in order to more effectively utilize its 

programs to support renewable energy projects. 
50 

Appendix I 

OPIC-Supported Power Projects 

_________________________________________________________________________

 
 51

Year Project Name U.S. S

ponsor Countr

y Fuel E. Factor Plant Type 

1990 Ho

pewell Energy Co. Citicor

p Scrimgeour Vickers Philippines gas 56100 sim

ple-c

ycle 

1992 Puerto 

Quetzal Power Cor

poration Enron Power Cor

p. Guatemala diesel 74050 engine-driven 

1992 Inter-American Energy Leasing K&M Engineering Cor

p. Columbia gas 56100 combined-c

ycle 

1992 Belize Electric Co. Ltd. Dominion Energy Inc. Belize h

ydro 0 h

ydroelectric 

1993 Dominion Generating, S.A. Dominion Energy, Inc. Argentina h

ydro 0 h

ydroelectric 

1993 Central Termica San Nicholas, S.A. AES Americas Inc. Argentina gas 56100 steam boiler 

coal 94600 steam boiler 

1993 Batangas Power Cor

poration Enron Power Cor

p. Philippines resid. 77350 engine-driven 

1994 Trak

ya Elektrik Uretim ve Ticaret Enron Cor

p./Wing Int'l. Turke

y gas 56100 combined-c

ycle 

1994 P. T. Paiton Energy Co. Mission Energy Company Indonesia coal 94600 steam boiler 1994 Grenada Electricit

y Services WRB Enter

prises Inc. Grenada diesel 74050 engine-driven 

1994 Generacion de Va

por GENEVAP LG&E Energy S

ystems, Inc. Venezuela gas 56100 sim

ple-c

ycle 

1994 Dabhol Power Cor

poration Enron Cor

p./Bechtel/GE India gas 56100 combined-c

ycle 

1994 CMS Generation, S.A. CMS Generation Co. Argentina h

ydro 0 h

ydroelectric 

1994 Ce Luzon Geothermal Power Cal Energy/Kiewit Energy Philippines geo 0 geothermal 

1994 CE Cebu Geothermal Power California Energy Co. Philippines geo 0 geothermal 1995 Visa

yas Geothermal Power Com

p Magma Power Co/ Visa

yas Philippines geo 0 geothermal 

1995 Termobarran

quilla, S.A. Energy Initiatives, Inc. Columbia gas 56100 combined-c

ycle 

1995 Tam

po Centro Americana TECO Power Services Cor

p. Guatemala diesel 74050 sim

ple-c

ycle 

1995

Quezon Power Ogden Projects Inc. Philippines coal 94600 steam boiler 

1995 P.H. Don Pedro, S.A. Energia Global, Inc. Costa Rica h

ydro 0 h

ydroelectric 

1995 Doga Enerji Uretim Sana

yi ve Ticaret Edison Mission Energy Turke

y gas 56100 combined-c

ycle 

1996 Termovalle S.C.A. E.S.P. KMR Cor

poration Colombia diesel 74050 combined-c

ycle 

1996 TermoCandelaria S.C.A. E.S.P. KMR Cor

p./NationsBank Colombia gas 56100 sim

ple-c

ycle 

1996 P.T. Energi Sengkang Tenneco Inc. Indonesia gas 56100 sim

ple-c

ycle 

1996 P.H. Rio Volcan S.A. Energia Global, Inc./EFI Costa Rica h

ydro 0 h

ydroelectric 

1996

Nejapa Power Com

pan

y Coastal Cor

poration El Salvador resid. 77350 engine-driven 

1996 Light Servicos de Eletricidade AES Cor

p/Houston Brazil h

ydro 0 h

ydroelectric 

1996 Jorf Lasfar Energy Co CMS Generation Morocco coal 94600 steam boiler 

1996 Him

purna California Energy Cal Energy/Kiewit Energy Indonesia geo 0 geothermal 
 52

Year Project Name U.S. S

ponsor Countr

y Fuel E. Factor Plant Type 

1996 Em

presa Guaracachi S.A. EI Power Bolivia gas 56100 sim

ple-c

ycle 

diesel 74050 engine-driven 

1996 Em

presa Electrica Valle Hermoso Constellation Energy Int'l Bolivia gas 56100 sim

ple-c

ycle 

1996 Em

presa Electrica Corani S.A. Dominion Energy, Inc. Bolivia h

ydro 0 h

ydroelectric 

1996 CMS Ensenada S.A. CMS Generation Co. Argentina gas 56100 combined-c

ycle 

1996 Central Termica San Miguel LG&E International Inc. Argentina gas 56100 sim

ple-c

ycle 

1996 CE Casecnan Water & Energy Calif. Energy/Kiewit Energy Philippines h

ydro 0 h

ydroelectric 

1996 Ave Fenix Energia, S.A.

NationsBank, N.A. Argentina gas 56100 sim

ple-c

ycle 

1996 Agua

ytia Energy del Peru Agua

ytia EnergyLLC/ TCW Peru gas 56100 sim

ple-c

ycle 

1997 EMA-Power Kft. EPEC Cogeneration Co. Hungar

y resid. 77350 steam boiler 

gas 56100 steam boiler 

1997 EGENOR, S.A. Dominion Energy, Inc. Peru h

ydro 74050 h

ydroelectric 

diesel 74050 engine-driven 

diesel 74050 sim

ple-c

ycle 

1997 EAL/ERI Cogeneration Partners Teachers Insurance Assoc. Jamaica resid. 77350 engine-driven 1997 Central Generadora Electrica San Jose TECO Power Services/Coast. Guatemala coal 94600 steam boiler 1998 TRI Energy Com

pan

y Limited Texaco/Citibank/Edison Thailand gas 56100 combined-c

ycle 

1998 Tecnoguat S.A. Energia Global Int'l Ltd. Guatemala h

ydro 0 h

ydroelectric 

1998 Subic Power Cor

poration Enron Cor

p. Philippines resid. 77350 engine-driven 

1998

NEPC Consortium Power Ogden Energy/El Paso Bangladesh gas 56100 engine-driven 

1998 Elektro Electricit

y Dist. S

ystem Enron Cor

p. Brazil h

ydro 0 h

ydroelectric 

1998 Dodson-Lindblom H

ydro Power Dodson-Lindblom Int'l. India h

ydro 0 h

ydroelectric 

1999 Turboven Maraca

y Com

pan

y PSEG Americas Venezuela gas 56100 sim

ple-c

ycle 

1999 Turboven Cagua Com

pan

y PSEG Americas Venezuela gas 56100 sim

ple-c

ycle 

1999 Ti

pita

pa Power Com

pan

y Coastal Power Nicaragua 

Nicaragua diesel 74050 engine-driven 

1999 EPSA/EDC US Ca

pital Markets Invest. Venezuela h

ydro 0 h

ydroelectric 

1999 coal 94600 steam boiler 

1999 Em

presa Produtora de Energia Enron Cor

p. Brazil gas 56100 combined-c

ycle 

Total 
 53

Overseas Private Investment Corporation 

An Agency of the United States Government 

1100 New York Avenue, N.W., Washington, D.C. 20527 

InfoLine: (202) 336-8799 (for program information) 

Internet: www.opic.gov