World Bank, energy and climate change: Something old, something new?

Panel discussion

18 April 2011 | Minutes

Sunita Dubey, Groundwork/FoE South Africa

Missed first part of presentation

Tata Mundra plant, India – 10,000 people will lose livelihoods

Lessons learned

  • Repeating past mistakes of World Bank
  • Installed power doesn’t translate to energy access
  • So much money being invested through financial intermediaries – many of them funding hydro and coal
  • Use of country systems sometimes means weaker national standards for their projects

Elizabeth Bast, oil change international

Energy access for the poor

  • 20 per cent of the world’s population don’t have access to electricity – 85 per cent in rural areas
  • UN SG advisory group on energy and climate change sets goals of universal access by 2030 and reduce global intensity by 40 per cent by 2030

What is clean energy

  • Consensus on very very low emissions (or zero)
  • Include lifecycle impacts not just end of pipe emissions
  • Do not include coal-fired power

Can clean energy increase energy access?

  • Decentralised renewable often most suitable for rural areas – IEA agrees
  • Coal becomes increasingly expensive the further you go from the grid – cost of grid extension is very high
  • Mustn’t forget the huge climate impacts of fossil fuels, plus the direct environmental, health and social impacts of fossil fuels.
  • Resource curse well documented – correlation between dependence on oil or extractives and negative development outcomes

Barriers to clean energy access

  • Overturn assumption that conventional technologies cheaper
  • Include health, environmental and development costs of fossil fuels policies, subsidies etc at national level
  • Financing – Bank, ECAs, MDBs, RDBs = $30-35 billion annually for energy – most to fossil fuels.

World bank – clean energy access?

  • $21 billion 09-10 (not including that through financial intermediaries) – $9.5 billion for fossil fuels
  • Forthcoming analysis finds that only 9 er cent of Bank projects are targeting energy access
  • Bank says about 30 per cent of portfolio to new renewables and energy efficiency
  • None of Bank’s fossil fuel projects in past 2 years for energy access. Bank doesn’t include Eskom as energy access project – despite using this to justify the project

WB draft energy strategy

  • Emphasises larger projects – likely to mean centralised projects not decentralised renewables
  • Poorly defines clean energy – includes large hydro, policy loans, transmission and distribution regardless of source
  • Does not end fossil fuel lending – only a partial phase out of coal. Supportive of natural gas and suggests upstream oil investment can promote development
  • Heavily promotes large hydropower lending without strong safeguards

Titi Soentoro – NGO Forum on the ADB: gender perspective in climate financing

  • Financing in areas where there are already a lot of problems – human rights violations etc. Because there are problems between the government and people
  • Power relations also mean oppression for women
  • Indonesia – a lot of funds for pilot project in area where already a lot of problems from illegal logging, palm oil plantations etc
  • Question is how to involve communities in climate financing? Where are people in decision making process? Where are women?
  • Danger of reinforcing existing power relations
  • Also financing a country that is already indebted – will climate finance help the country out of this? Very uncertain. Will it get them out of power relations regarding the IFIs? Unlikely.
  • World Bank gets a commission to manage trust funds, gives them an incentive to get as many trust funds as possible
  • There are many violations of safeguards – these provide no guarantee
  • ADB – not putting FI relations into their policies – will hide it in procedures
  • Women – does the bank provide protection for women in safeguards policy? Gender and development policy is about mainstreaming – putting it into safeguards means there is protection of women from project and risk: these are two different issues.
  • Bank does not provide protection for women across its activities – concern for climate financing, therefore need not only safeguards that protect principles, but also prepare and empower people who are affected.
  • Without empowerment of women, climate financing will only strengthen oppression of women

Lidy Nacpil, Jubilee South – Bank and UN climate negotiations and GCF

  • International campaign – world bank out of climate finance
  • Bank is already at the centre of climate finance – through climate investment funds (which also involve the RDBs)
  • Presentation focuses instead on the climate finance flows that are under the purview of the UNFCCC
  • Cancun decided to set up the Green Climate Fund (GCF). An important advance – to set up a fund – but there is alarm about how it has been done, particularly that the Bank is the interim trustee of the GCF
  • Parameters of trusteeship not clear. Interim in nature with a review after 3 years fund has been operationalised – no clear end point. Involves administering and managing the fund – keep records, prepare financial reports and implies that they will undertake disbursement.
  • GCF is supposed to have an independent secretariat, but WB will play a major role. Potentially similar to the GEF which has become seen as a World Bank fund.
  • Transition committee tasked with designing the GCF. This will have first meeting in Mexico in 2 weeks (April 28-29). Decisions on design of the GCF due by COP in December in Durban
  • World Bank energy policy is one of the main reasons why we oppose its role in climate finance – it has a long history of financing dirty energy, projects that reduce access to energy, extraction and flow of resources from south to north, energy projects focused on big business, not people, and privatisation.
  • Other reasons for opposition to Bank – undemocratic institution controlled by rich countries – GCF should have a democratic structure including strong representation of countries from the South. Can you have a democratic GCF run and managed by undemocratic Bank?
  • Reservations about nature of Bank as a lending institutions. CSOs and developing country governments have said that funds should be grants not loans. UN language recognises that rich countries – responsible for the problem of climate change – should pay (not lend!)
  • Learn from GEF – the GCF may provide grants, but can be attached to loans from the Bank – hence becoming a debt creating instrument.