World Bank Plan Still Favors "Clean" Fossil Fuels

18 August 2006

Washington - A global energy plan to be released by the World Bank next month risks squandering scarce resources on so-called clean coal technologies and misses bigger investments in renewable energy, but does address gaps in the energy needs of the poor, according to a new analysis by an environmental group.

    World Bank officials will discuss the docuмent, called the "Progress Report on the Investment Framework for Clean Energy and Development", later this month before it is placed on the agenda of the joint annual meetings of the World Bank and its sister institution, the International Monetary Fund (IMF), next month in Singapore.

    A similar programme focusing on longer term country-level activities and global research will be completed by the Group of Eight most industrialised countries at their summit in Japan in 2008.

    Rich nations had asked the World Bank, and other international financial institutions, at a summit last year in Gleneagles, Scotland to draft the plan under discussion to combat global warming and help secure future energy supplies.

    The World Bank input comes amid heightened concerns about soaring global energy prices and the connection between high energy consumption and climate change.

    When the first draft of the docuмent came out at the spring meetings of the World Bank and the IMF, many observers said they were shocked by the lack of references to poor people.

    But analysts who have seen a leaked version of the latest report say that it now devotes considerable space to the needs of the 1.6 billion poor people, particularly in Africa and South Asia, who presently lack access to modern energy.

    The strategy's advocates inside the Bank say it goes a long way in dealing with environmental problems and climate change concerns.

    "This paper addresses the need to produce energy in a manner that reduces local and regional air pollution and greenhouse gas emissions," Robert Watson, chief scientist at the World Bank, told IPS.

    While acknowledging the improvements, the California-based watchdog group International Rivers Network (IRN) says that the plan misses "the double dividend of renewable energy" - namely, combating climate change and reducing poverty.

    In a brief analysis of the docuмent, IRN argues that clean technologies like wind, solar, modern biomass, geothermal and small hydropower are available locally, create jobs and have very low environmental impacts, and could better achieve this dividend.

    The group, which presses for wider adoption of renewable energy and fewer environmentally damaging mega-projects, faulted the Bank for prioritising "large regional hydro and thermal generation plants" as the appropriate way to provide energy access.

    "This recommendation mirrors the misguided priorities of the World Bank's energy sector lending, of which in 2005 only 10 percent was allocated to energy efficiency and new renewable energy projects," it said.

    The World Bank counters that the action plan does take a global perspective, and points out that it committed 871 million dollars to renewable energy and energy efficiency programmes in 2006.

    In its most recent figures released this week, the Bank said that investments in renewable energy and energy efficiency were now 20 percent of the Bank's total energy sector commitments in fiscal year 2006, which totaled 4.4 billion dollars for 62 renewable energy projects in 35 countries.

    "Renewable energy and energy efficiency can contribute significantly to achieving the Millennium Development Goals," said Jamal Saghir, who directs the Energy and Water department at the Bank, referring to a United Nations-led plan to cut global poverty in half by 2015.

    "In fact, they offer a 'double dividend' - meeting the essential energy needs of countries for sustained growth and poverty reduction, while at the same time preserving or enhancing the environment," he said.

    Yet IRN argues that the Bank still favours "advanced fossil-fuel technologies" in the docuмent, such as coal- and gas-fired plants, and non-fossil fuel technologies such as hydropower, wind and nuclear.

    This could prove counterproductive since large hydropower projects, especially in tropical regions, emit substantial greenhouse gases that can surpass the emissions of similarly sized thermal power plants.

    The group called on the Bank not to waste money subsidising fossil fuel projects and to use soft loans and other funding to buy down the costs of renewable energy technologies.

    The World Bank docuмent, critics note, also does not address the need for Northern polluters from rich nations to reduce their own greenhouse gas emissions.

    Collectively, the G8 nations, which commissioned the action plan and which represent only 13 percent of the world's population, are responsible for 45 percent of the world's greenhouse gas emissions.

    The group comprises Russia, France, Germany, Italy, Britain, Japan, the United States and Canada.

    The G8 are still promoting fossil fuel extraction in developing nations through international financial institutions such as the World Bank and export credit agencies. Environmental groups have often called on the G8 and the international institutions to phase in public finance for sustainable clean energy.