Wednesday, September 9, 2026
News and Views from the Global South
FINANCE: Invest in Clean Energy, Auditor Urges World Bank
Emad Mekay
- The head of a World Bank effort to assess the institution’s heavily criticised support for mining and energy projects appealed to the bank Friday to re-channel its energy investments into clean and renewable energy sources.
"The World Bank needs to change from the conventional type of development to sustainable development in the extractive industries," said Emil Salim, a former Indonesian environment minister who now heads the bank’s Extractive Industries Review (EIR).
"No-one is taking care of the renewable energy," Salim told IPS in an interview. "The World Bank has the duty to move now into renewable energy instead of fossil fuel development."
Unlike fossil fuel sources, like oil and coal, renewable sources are never-ending. They include conventional hydroelectric power, wood, waste, geothermal (the Earth’s heat), wind and solar thermal energy.
World Bank President James Wolfensohn proposed the EIR in 2000, responding to environmental and development groups that for years had clamoured for a comprehensive assessment of the World Bank Group’s support for extractive industries, including oil, gas, coal and lumber.
The Bank group is made up of the International Bank for Reconstruction and Development, usually referred to as the World Bank; its soft-loan window, the International Development Association; its private-sector affiliate, the International Finance Corporation; and the Multilateral Investment Guarantee Agency, which provides political risk insurance.
The group is considered to have significant influence on potential oil and gas projects worldwide, with its approval often seen as a signal to private companies that projects are safe investments.
The EIR submitted its final report to the World Bank on Jan. 16, recommending the Washington-based body adopt significant reforms, which include an end to investments in controversial extractive industries projects.
The six-volume final report also recommended the World Bank focus more on improving the lives of the world’s poor and promoting corporate governance, institute much more effective social and environmental policies and make respect for human rights a key part of those policies.
Salim, who met Wolfensohn on Friday, told IPS that the bank, as the world’s largest public development agency, whose mandate is to help developing countries and promote policies that fight poverty, should invest in areas the private sector does not find attractive, rather than follow the lead of corporations.
The bank "would do better to invest and concentrate on activities where the private sector is not interested and that is renewable energy", said Salim, who was a director of Indonesia’s largest coal company, PT Kaltim Prima Coal.
He argued that large private investors like Shell, ExxonMobil and BP, play a far more dominant role in extractive industries than the World Bank, which as a public institution has limited investments in the area.
"When the World Bank wants to have an impact on global development, it should find new venues and new fields where the private sector is not interested," he said.
Salim suggested the bank begins its transformation by pushing Asian developing countries like India and China – where there is growing consumption of oil, natural gas and other products of extractive industries – towards renewable energy sources, while phasing out its investment in fossil fuel projects by 2008.
Activists in borrowing and wealthy countries alike have become increasingly vocal in demanding restrictions on multilateral financing for extractive industries because of their negative impacts on poor communities and the environment.
Groups say lending for oil and mining projects has failed to end impoverishment and often entrenched corrupt and dictatorial governments.
The bank itself classifies 12 of the world’s 25 most mineral-dependent states and six of the world’s 25 most oil-dependent states as highly indebted poor countries, or HIPCs.
Many bank critics have also argued that the world’s climate pays a price for investment in extractive industries.
Most scientists believe that global warming is caused primarily by the increased presence of greenhouse gases, especially carbon dioxide, in the earth’s atmosphere. These gases are produced when oil, gas and coal are burned.
Unless abated, atmospheric warming could result in large-scale heat waves, desertification, floods and the spread of tropical diseases to temperate zones.
The bank, which has invested some two billion dollars annually in oil, gas and mining and other non-renewable energy projects in developing countries over the past decade, has publicly said it, too, is increasingly concerned about the environmental risks created by these projects.
But it has defended support for small-scale mining, saying the sector provides support for some 13 million workers and their families worldwide, mostly in Brazil, Burkina Faso, China, Ghana, India, Indonesia and Tanzania.
On Wednesday, several groups urged Wolfensohn to adopt the recommendations in the final report of the EIR.
The groups, which include Friends of the Earth, World Wildlife Fund, Washington-based Institute for Policy Studies and Environmental Defence, urged the bank to adopt the review in its entirety, including a recommendation to show greater respect for the rights of indigenous peoples.
Salim said he was optimistic the World Bank would heed the EIR advice, "because changes are truly needed and because we now live in the 21st century".
A veteran politician, Salim said he could sense that Wolfensohn, who took over the bank’s presidency in 1995, wants to make an impact on the bank before he finishes his term in June 2005.
"I think he has the obligation in his remaining period to make changes in the World Bank," Salim said. "I am appealing to him as the president of the World Bank to make the necessary changes".
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