World Bank "New Investment Framework" A Great Leap Backwards for Sustainable Energy

International Rivers Network, Friends of the Earth International
Tuesday, December 6, 2005

The World Bank is failing to live up to its clean energy mandate, agreed at the 2005 G8 Summit, figures in a new report from the bank reveal. The revelation comes as the World Bank is taking an increasingly high profile and controversial role at the UN climate talks currently underway in Montreal. The Bank hopes to control several global funds and initiatives supposed to help solve the climate crisis.

But the World Bank’s own energy report exposes the institution’s failure to act on its mandate from G8’s Gleneagles summit to "take a leadership role in creating a new framework for clean energy and development." The bank’s report shows that 60 per cent of its supposed support for renewable energy and energy efficiency (RE & EE) is in fact for big hydro projects.

"Calling this a new vision for energy investment is like the saying the Bush Administration has come to Montreal to push for climate action. This is the World Bank’s same old unsustainable vision for the world dressed up as concern for our climate," says Elizabeth Bast of Friends of the Earth US.

"Instead of pushing the much needed rapid scale–up of investment in new sustainable energy technologies, the World Bank is returning to its bad old ways of pushing big dams. This will neither help the climate nor deliver the affordable decentralized power systems needed to reach the 1.6 billion people without electricity," says Patrick McCully of International Rivers.

The World Bank claims in a November 30 press release that it more than doubled its investment in RE & EE from fiscal year 2004 to FY 2005. The press release compares 2005 lending with its commitment to increase RE & EE support by an average of 20 per cent per year from 2005 to 2009. The Bank made this commitment at the June 2004 international conference on renewable energy held in Bonn, Germany.

The Bonn target excluded large hydro (greater than 10MW) and loans and guarantees from the Bank’s private sector and insurance arms (IFC and MIGA). These are included in the Bank’s figures for 2005 RE & EE financing, greatly inflating the apparent increase.

The Bonn target has been widely criticized for being unacceptably low. The target uses as its baseline a level of investment that is far short of lending in several past years.

If the same criteria are used in calculating 2005 RE & EE lending as used in the Bonn target, the Bank only narrowly met its already inadequate commitment ($269m against a target of $251m). These calculations use the Bank’s own project list which includes $19m for two projects that Friends of the Earth US analysis shows should not be considered as RE & EE projects. A more accurate calculation of the bank’s RE & EE lending would therefore be $250 million, less than the Bonn target.

"The Bank set an unambitious target and then proceeded to distort the figures and declare a major victory," says Graham Saul of Friends of the Earth Canada.

The World Bank has historically been the single largest funder of large dams worldwide, providing an average of around $1.25 billion (1998 dollars) a year for big dams over the past 60 years – five times more than current lending for clean renewables and efficiency.

World Bank–supported dams have led to the evictions of over 10 million people, caused huge damage to rivers and associated ecosystems and often failed to meet economic targets. In the late 1990s the World Bank responded to the growing evidence of failure by sharply reducing its lending for big dams. However in 2003 it announced that it would return to large–scale support for high–risk dams.

The Bank financed large hydro to the tune of $449 million in 2005. The largest hydro project financed was Nam Theun 2 dam in Laos, which will harm the livelihoods of more than 100,000 people. Furthermore, comparisons with studies on Brazilian reservoirs indicate that methane from rotting biomass in the Nam Theun 2 reservoir could contribute as much to global warming as a natural gas plant generating the same amount of power.