Heat turned up on World Bank energy strategy

11 February 2011

As the Bank’s energy strategy approaches finalisation in mid 2011 pressure is growing on the institution to incorporate civil society criticism of its current lending practices.

In a January interview the Bank’s special envoy for climate change, Andrew Steer, defended it against accusations of focussing too much on fossil fuel based energy (see Update 73, 72, 71, 70). Speaking to German radio station Deustche Welle, Steer said that “We’ve been massively expanding our support for renewable energy … so no – we’re not going the route of expanding our financing for fossil-based fuel at all.”

Steer’s comments are contradicted by updated figures on the Bank’s energy financing produced by US NGO Bank Information Center (BIC, see Update 72). They show that Bank fossil fuel funding for financial year (FY) 2010 reached a new record high of $6.6 billion, a 116 per cent increase on the previous year. In comparison, investment in renewable energy and energy efficiency rose to $3.35 billion, an annual increase of just 11 per cent. Financing for coal-based power also hit a record high of $4.4 billion, a 356 per cent annual increase.

This continued support for coal forms a central part of a campaign launched in January 2011 by NGO Christian Aid to compel the Bank to start financing clean, renewable energy that benefits people living in poverty. Christian Aid’s Sarah Whittington characterises the Bank’s current approach to energy lending as consisting “mainly of large-scale fossil-fuel projects delivered by the private sector, an approach which has often failed to provide energy to poor communities or reduce poverty. These projects now threaten to worsen the lives of poor people living in a changing climate by emitting more carbon.”

Energy access

Scrutiny of Bank energy lending has also consistently laid bare the lack of focus on energy access in Bank projects (see Update 73). The Bank has often proclaimed the importance of guaranteeing energy access. Steer noted that developing countries “need to expand electricity access even more rapidly, still 70 per cent of Africa doesn’t have access to electricity.” However, an independent study of 26 Bank-funded fossil fuel projects compiled by NGO Oil Change International in October last year found that not a single one had the specific aim of ensuring energy access for the poor.

Civil society critique of the Bank has coincided with recent statements by Jejomar Binay, vice-president of the Philippines, on the merits of investing in renewable energy. The Phillipines, already the world’s second largest producer of geothermal energy and very vulnerable to the effects of climate change, is attempting to avoid fossil fuels and move directly towards using only clean energy. “There’s a way to address energy poverty in a carbon-constrained world. It’s not just about connection, it’s about access. The World Bank needs to rapidly shift away its resources from polluting energy resources and shift to support developing countries harness sustainable energy.”