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ENERGY: World Bank Looks for the Cleaner Way

Niclas Rolander

STOCKHOLM, Oct 25 2009 (IPS) - With new energy and environment strategies in the pipeline, the World Bank and its critics are going head to head on issues of fossil fuel funding and clean energy. The Bank will now call in outside experts to ensure that its coal power financing is justifiable, but critics would prefer it to go for truly clean energy.

Kathy Sierra, World Bank vice-president for sustainable development, speaks of the new criteria for the bank to fund coal projects. “Because this is new I have decided to bring in some outside experts before we start every project to help us evaluate if we are meeting those criteria,” Sierra told IPS at the European Development Days in Stockholm that the bank instituted this week to widen consultation on its policies. “In that way we’re ensuring that we are both attending to the growth needs of countries and that we are doing it as clean as possible.”

The World Bank argues that a certain amount of fossil fuel investment is necessary to give people in developing counties access to energy.

“We believe you have to work at the grassroots level as well as base level,” said Sierra. “On a grassroots level it’s easier to do renewable energy projects. But for most large countries you need a base level, from hydro power, fossil fuels or nuclear technology. You can get some of it from wind and solar but not all of it, because of the limitations in the technology that is available.”

Many critics, however, argue that the World Bank’s investments in coal power exacerbates climate change, and locks developing countries into outdated fossil fuel technologies instead of giving them an opportunity to develop a cleaner energy infrastructure.

“The Bank’s continued lending focus on fossil fuels commits many developing countries to fossil fuel based energy for the next 20 to 40 years,” Heike Mainhardt-Gibbs, consultant with the Bank Information Centre, a U.S.-based World Bank watchdog, said in a report on the World Bank’s energy financing.

The UK government recently urged the World Bank to increase its share of investment in energy-efficient and clean energy projects to 60 percent over the next three years. Estimates vary how much of World Bank energy investments are clean today. Statistics from the Bank put the figure at more than 40 percent, but how much of this really can be considered clean is disputed.

Sierra says there should be common definitions, so that the Bank and its critics can at least agree on what to debate. “Our ambition is to say: let’s grow up, both sides, and figure out how were going to measure this, so that people can know what we’re doing.”

The new environment strategy will be finalised in 2010, and preparations include worldwide consultations with civil society organisations and other stakeholders. An earlier such meeting, in Istanbul was reported to be lively, but the consultation in Stockholm was no blockbuster, and the local NGO community was conspicuously absent.

Some local leaders said the consultation process is more a public relations exercise than a genuine attempt by the World Bank to gather input and act on it. This reflects long-standing suspicions within sections of the NGO community that the Bank focuses on GDP growth as the sole tool for alleviation of poverty, and that this ideology inevitably means that environmental issues will not be a priority.

“The environment strategy cannot really be separated from the Bank’s overall strategy, which relies on the assumption that economic growth will inevitably trickle down to the poor,” said Göran Ek from the Swedish Society for Nature Conservation. “The basic assumption is that traditional growth, rather than sustaining ecosystem services, is the major tool to fight poverty, and in that view the environment is not a priority.”

Sierra said the Bank has come a long way from those positions, and that the current environment strategy since 2001 has been largely successful in incorporating environmental concerns in all areas of the bank’s activities.

“I am happy to say that the World Bank today is not the one that I joined in terms of these issues,” Sierra said. “We have done a good job of ensuring that we have no negative impacts of our projects. What we haven’t achieved yet is to improve the environment in a big way. There is a sense that we can do more, and that we haven’t captured all the opportunities.”