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Acknowledgments -- Glossary -- Executive summary -- 1. Inroduction and overview -- 2. Evolution of energy efficiency -- 3. Forces driving increased energy efficiency -- 4. Why is energy efficiency performance in developing countries so poor? -- 5. What can be done: country policy priorities -- 6. What can be done: sector priorities -- 7. Strategy for the World Bank -- Boxes -- Figures -- Endnotes -- Appendix: Guidelines for identifying Bank projects with energy efficiency components -- Appendix table: World Bank activities in support of energy efficiency and conservation -- Bibliography

There is a congruence of several forces in the developing world that makes very timely the formulation of a strategy to address energy efficiency and conservation issues better. Many countries are becoming receptive to reforming the way energy is produced and consumed as they experience (a) rapidly growing demand for energy; (b) major constraints on available energy financing; (c) increased pressures to sustain the environment; (d) poor energy sector performance and unsatisfied customers; and (e) a reappraisal of the roles of government and of the public and private sectors in development. These factors are forcing developing countries to address long-neglected issues of energy wastage in production and end use. The World Bank now has an enhanced opportunity to further assist developing countries to improve their energy efficiency and conservation policies and practices. The paper provides a background on the evolution of developed versus developing-country energy efficiency and summarizes World Bank experience. It outlines the growing energy demand in developing countries and the accompanying financial and environmental problems that bring energy-efficiency issues to the forefront. The paper then sets out the potential for improved energy efficiency and the main reasons that efficiency has been so poor. Finally, it summarizes the priority actions for achieving energy efficiency in developing countries and sets out a four-point program for the World Bank.