World Bank and coal

From Global Energy Monitor

The World Bank Group, founded in 1944, is "one of the world's largest sources of development assistance. The Bank, which provided US$19.5 billion in loans to its client countries in fiscal year 2002, is now working in more than 100 developing economies, bringing a mix of finance and ideas to improve living standards and eliminate the worst forms of poverty. For each of its clients, the Bank works with government agencies, nongovernmental organizations, and the private sector to formulate assistance strategies. Its country offices worldwide deliver the Bank's program in countries, liaise with government and civil society, and work to increase understanding of development issues.

"The World Bank is owned by more than 184 member countries whose views and interests are represented by a Board of Governors and a Washington-based Board of Directors. Member countries are shareholders who carry ultimate decision-making power in the World Bank.

"The Bank uses its financial resources, its highly trained staff, and its extensive knowledge base to individually help each developing country onto a path of stable, sustainable, and equitable growth. The main focus is on helping the poorest people and the poorest countries...."

From web site for the World Bank Group:

Coal Project Plans

In 2007, World Bank President Robert Zoellick committed the lending institution to "significantly step up our assistance" to fight climate change through its loans. Instead, the World Bank increased its financing of fossil-fuel projects worldwide. One example is the coal-powered Tata Ultra Mega power plant in western India, a $4.14 billion project scheduled to go online in 2012. When it is fully operational, it will become one of the world's 50 largest greenhouse-gas emitters and "will emit more carbon dioxide annually than the nation of Tunisia," according to the U.S. Department of Energy. The World Bank decided to provide "$450 million in loans and guarantees for the project and also will buy a $50 million stake in it." At the same time the U.S. insisted that developing countries cut greenhouse gas emissions, the World Bank -- over which it has tremendous influence -- supported projects that do the opposite. "The World Bank's lending record does not match up to Zoellick's rhetoric," says Heike Mainhardt-Gibbsof the Bank Information Center, a World Bank watchdog group. "The institution is simply not slowing down its significant funding to fossil-fuel projects that will emit greenhouse gases for 20 to 40 years."[1]

In September 2010, the World Bank reported that US $3.4 billion ($3.6 billion) - or a quarter of all funding for energy projects - was spent from January to June 2010 helping build new coal-fired power stations, including the controversial Medupi Coal Plant in South Africa. This was record sums into coal by the World Bank, despite international commitments to slash the carbon emissions causing climate change. Over the same period the bank also spent US $1 billion on looking and drilling for oil and gas. The Bank Information Centre, which examined the spending, said the figure invested in coal was actually US $4.4 billion, due to the World Bank not including in its figure a US $1 billion project in India which is funding power transmission networks for coal-fired power stations rather than the stations themselves. Environmental campaign groups said spending on coal in that period was 40 times more than five years ago, and said there was an incoherence at the heart of the World Bank's thinking about energy that would damage long-term attempts to cut emissions of carbon.[2]

2010 report finds WB oil/coal projects do not help poor

A 2010 report by Oil Change International, World Bank Group Energy Financing: Energy for the Poor? released on the eve of the World Bank's Annual Meetings, found that World Bank support for coal and oil projects does not increase access to energy for the world's poorest, a finding that stands in contrast to government, Bank, and industry claims that ongoing taxpayer support for these large coal and oil projects is necessary to alleviate energy poverty. The World Bank has used arguments around increasing energy access – providing energy to the 1.4 billion people who lack access to electricity or the 2.7 billion still using wood or biomass for cooking and heating – to justify the approval of massive new coal-fired power plants like the Eskom Plant in South Africa, as well as the continued funding of oil projects. But both Oil Change International's original research and the Bank's own analysis show that none of the Bank's coal or oil lending for the last two years have prioritized increasing energy access.[3]

Elizabeth Bast of Oil Change International said: "Our analysis and the World Bank's are remarkably similar. Energy from the World Bank's coal and oil plants go to support big industry, not the world's poorest.... Not only do the poor suffer the climate impacts of increased fossil fuel emissions and impacts from local pollution, but they are also not receiving the energy from the same projects that damage their livelihoods. With so many in the world without energy, the World Bank must prioritize investments that ensure increased energy access for the poor instead of prioritizing fossil fuel projects for industrial use."[3]

Some key findings from the report include:[3]

  • None of the 26 fossil fuel projects reviewed clearly identify access for the poor as a direct target of the project.
  • The World Bank Group and the report authors agree that no coal or oil projects can be classified as improving energy access for the poor.
  • In FY2009 and FY2010, funding for upstream fossil fuel projects and fossil fuel power plants dwarfed World Bank spending on access projects by 225 percent, or $7.2 billion compared to $3.2 billion for access (according to the Bank's own assessment, which Oil Change International notes includes two questionable gas projects).

World Bank plans to ban future loans to more than 80 nations for coal-fired power plants

In March 2011 it was reported that a new World Bank energy strategy was being developed with called for eliminating loans to build new coal-fired power plants in middle-income developing countries such India and South Africa over the next 10 years. A draft of the strategy obtained called for the bank to help nations identify alternatives to coal. It commits the bank to stop lending money for new coal projects in more than 80 countries with higher gross national incomes, or about half the world's population.

Under the proposed policy, the world's poorest countries could still receive loans for coal plants that meet certain criteria. The bank would also reserve the ability to support "brownfield" or existing coal plant sites in order to increase efficiency and after considering the greenhouse gas emissions over the ife of the plant.[4]

Report finds World Bank did not consider externalities of Eskom Plant

A March 2011 report by the Center for International Environmental Law (CIEL), “Fossilized Thinking: The World Bank, Eskom, and the Real Cost of Coal” examined the economics underlying the World Bank’s $3 billion loan for the Eskom plant, evaluating whether the Bank adequately considered the project's impacts on human health and the environment and the likely economic costs of these impacts. The Bank’s operational policies require that such externalities be taken into account to determine whether a project’s long-term economic benefits outweigh its costs.

CIEL’s analysis concluded that the Bank failed to adequately address and quantify important negative environmental effects, such as water scarcity and quality, air quality, and transboundary impacts. Nor did the Bank fully address the public health impacts associated with the environmental consequences of coal-based power. Steve Porter, Climate Program Director at CIEL, said: “This project highlights a broader problem in World Bank funding. Because all of the costs have not been accounted for, coal projects like Eskom have been unfairly favored, which means that there has never been a real consideration of alternatives, such as wind, solar and other alternative energy sources.”

The report was released as the World Bank conducts an Energy Strategy Review process, as well as a review of the Eskom project by the Bank’s Inspection Panel. CIEL’s report calls on The World Bank to consider the social and environmental impacts of Eskom, but the Inspection Panel is unlikely to issue its report before the conclusion of the Energy Strategy Review.


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