No US Money for World Bank Coal Technology Fund

Thursday, February 12, 2009

The letter below, initiated by Friends of the Earth, US, and endorsed by numerous other organizations, was sent to relevant Congressional leaders.

We are writing to urge you to ensure that no funds are appropriated for the World Bank’s Clean Technology Fund (CTF) for FY09. The World Bank launched the CTF in July 2008, ostensibly to fund transformational, low carbon development in developing countries, targeting major greenhouse gas emitting nations. Global climate destabilization disproportionately harms the poor worldwide. Despite this, the World Bank has increased funding for fossil fuels and, as made abundantly clear at CTF Trust Fund Committee meetings in late January, is even seeking to underwrite more coal power through its Clean Technology Fund. By allowing coal financing, the CTF would further lock countries in high emissions pathways for decades to come. As the outlook for the climate crisis grows increasingly grim and as public funding to address this crisis internationally remains extremely limited, the U.S. cannot afford to fund fossil fuels in developing countries in the name of fighting climate change.

To ease Congressional concerns about using scarce international climate funds for coal, the World Bank and the U.S. Treasury have argued that the CTF would not fund new power plants that are less efficient than a category of plants known as ultra-supercrticial. However, it is possible for supercritical plants, supposedly excluded from CTF eligibility, to meet the criteria for CTF funding set out in the Bank’s proposed criteria for coal and gas financing.  Moreover, such a distinction among coal plants is disingenuous. As an MIT study quoted by the Bank itself asserts, “there is no clear dividing line between supercritical and ultra-supercritical.” Furthermore, the CTF may also fund incremental improvements in existing coal plants.

Regardless of the technical window-dressing, CTF coal financing is in no way transformational, and it is laughable that such financing would be possible in a fund intended to fight climate change. Scarce public clean energy funding should be used to drive down the price of renewable energy to make it cost-competitive with artificially cheap coal and to provide clean energy - without the devastating environmental and health consequences of coal - to the 1.6 billion impoverished people in the world who still lack access to electricity.  Supercritical coal plants, as the Bank notes, are the “system of choice for new commercial coal-fired plants in many countries,” and thus do not represent any deviation from business as usual. Modern coal technologies do not need public assistance – they are already fundable through private investment, with improved energy efficiencies paying for themselves in short time periods.

To address concerns about emissions from coal, the CTF’s proposed criteria would require new coal plants that receive CTF funds to be “carbon, capture and storage (CCS)-ready” but would not finance CCS technology and would not require “CCS-ready” coal plants to, at some future date, commit to implementation of CCS. “CCS-readiness” is very unlikely to lead to actual implementation of CCS technology in the developing world. If it becomes commercially viable, perhaps in more than a decade from now, CCS is expected to reduce plant efficiency by up to 30 percent and be extremely expensive. In the meantime, a “CCS-ready” coal plant emits just as many greenhouse gases as a non-“CCS-ready” plant.

The Bank’s proposed criteria for coal and gas investment do not require that alternative end-use efficiency improvements be evaluated and treated as the preferred option to coal, even though the Bank acknowledges that the International Energy Agency views such improvements as the “largest and least costly” means of emissions savings. Thus, it is possible that coal will be funded even when less carbon-intensive, cheaper alternatives are possible.

Furthermore, at UNFCCC climate negotiations, the G77 and China, representing 132 developing countries, have been clear that they do not see the CTF as a good faith effort or as a show of international good will. Rather, it is seen as a donor-driven initiative that undermines climate negotiations and competes for funding with already established UNFCCC adaptation and technology funds.

If the World Bank were to seriously address global warming, it would do well to look at its own carbon footprint, where it has increased fossil fuel lending by 94% from 2007 to 2008, including a 256% increase for coal lending.  

Thank you for your serious consideration of our request that the World Bank’s Clean Technology Fund receive no U.S. funds in FY09.


ActionAid USA
Amazon Watch
Center of Concern
Columban Justice, Peace and Integrity of Creation Office
EcoEquity, USA
Friends of the Earth
Gender Action
Global Alliance for Incinerator Alternatives
Global Exchange
Global Response
International Accountability Project
International Forum on Globalization
International Rivers
Maryknoll Office for Global Concerns
Oil Change International
Public Citizen
Rainforest Action Network
Sierra Club