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World Bank: Leap Backwards for Sustainable Energy

New "progress" report on renewable energy

The World Bank is failing to live up to its clean energy mandate, agreed at the 2005 G8 Summit. According to Friends of the Earth International and the International Rivers Network (IRN) this is shown by figures in the new progress report from the bank on renewable energy and energy efficiency. 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, World Economy & Development in brief reports.

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 (under the title Progress on Renewable Energy and Energy Efficiency Fiscal Year 2005) 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.

* Returning to bad old ways
"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 Network.

The World Bank claims that it more than doubled its investment in RE & EE from fiscal year 2004 to FY 2005. A press release from the Bank 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 Friend 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 Bank's big dams legacy
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 as many as 156,00 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.

* World Bank Group, Progress on Renewable Energy and Energy Efficiency: Fiscal Yeat 2005, 74 pp., Washington D.C., December 2005 (PDF download >>> here).

More on the subject:
* Power Failure: How the World Bank is Failing to Adequately Finance
Renewable Energy for Development >>> here.
* World Bank dam legacy >>> here.
* 12 Reasons to Exclude Large Hydro from Renewables Initiatives >>> here.

(Posted: 6 December 2005)

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