World Bank Increasing Renewable Energy Finance but Reducing Coal Investments

A leaked draft of the World Bank's energy strategy says renewables and hydropower will receive a bigger proportion of financing from the institution, with further restrictions imposed on coal projects.

The leaked report sets a target for clean energy projects to receive 75% of the World Bank's lending to the energy sector by 2015, compared to 67% in the financial years 2008-10.

Coal investments will be cut, meanwhile. The bank will cease financing coal projects, except in the least developed countries - those eligible for support by the International Development Association fund for the poorest countries. In those cases, the World Bank could support coal development if it meets a set of criteria about the poverty-relief benefits and lack of alternatives.

It will however support "brownfield" coal projects which increase the efficiency of existing power stations, as well as natural gas and oil projects in some circumstances.

The leaked document is addressed to the bank's committee on development effectiveness, which it says is due to meet to discuss the proposal on 11 April. The strategy would then be released for public consultation, with the intention to adopt it later in the year.

The report also calls for the bank to finance more and larger hydropower projects, drawing criticism from campaign groups.

Peter Bosshard, policy director at International Rivers, took issue with language in the strategy calling for larger projects, which would reinforce the World Bank's "operational efficiency". Decentralised renewables and small hydro projects should be used to expand electricity access, he said: "The World Bank should support such a win-win approach rather than to promote outdated large dams, which primarily serve the interests of the bank and the hydropower lobby, in big, expensive, centralised projects."

Tongo-based Sena Alouka, director of NGO Jeunes Volontaires pour L'Environnement, added: "It's clear that in the current situation of economic crisis and climate uncertainty, pushing for hydropower can be disastrous for Africa and can lure the continent in a no-return, debt-prone and miserable situation. Africa has abundant alternatives and needs to thoroughly assess all options."

An analysis of the greenhouse gas emissions of every power generation project financed by the bank will be undertaken by 2012, the leaked report says, with carbon footprinting introduced for all other energy sector projects "in two years".

By. Jess McCabe

Source: Environmental-Finance