Greens Furious With World Bank Over Renewable Energy

9 June 2004 by Jim Lobe

WASHINGTON - International environmental and development groups have denounced as completely inadequate a new World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

commitment to increase its lending to renewable energy projects in developing countries by 20 percent annually over the next five years.

A statement signed by nine global green groups and
released Thursday said the proposed increase was "marginal
at best" and ignored the recommendations of its own
studies for much greater investment in renewables, such as
wind and solar power, and energy efficiency.

"Marginally increasing the funding for renewables is not
enough because the World Bank’s own numbers show that
lending for polluting fuels is growing even faster,"
Stephan Singer of World Wildlife Fund International (WWF).

"The US$200 million that the Bank is pledging for
renewables is roughly the cost of their contribution to
just one of the many fossil fuel projects they support
said Petr Hlobil of CEE Bankwatch, which is
based in Prague.

The Bank made its announcement Tuesday in advance of the
International Conference on Renewable Energies which is
taking place this week in Bonn, Germany.

Peter Woicke, the Bank’s managing director and the head of
its private sector arm, the International Finance
Corporation (IFC), said that the increased lending would
effectively double the Bank Group’s current pace of
lending for renewable projects of roughly $200 million a
year by 2010.

"Our strategy — through programs and policies — will aim
to ensure that renewable energy and energy efficiency are
seen as economically viable and essential ingredients in
the energy choices of our member nations, not marginal
he said.

Since 1990, the Bank Group, which also includes the Bank’s
soft-loan facility, the International Development
Association (IDA), has been the largest lender for energy
efficiency and renewable energy projects in poor
countries, investing more than $6 billion in its own
resources and mobilizing another $10 billion from other
public agencies and private sources.

That figure, however, includes lending for hydroelectric
dams which most green groups oppose as environmentally
destructive. As a result of a number of high-profile
campaigns, the Bank has steadily diminished its lending
for hydroelectric projects.

The targets announced by Woicke marked the first public
Bank response to its Extractive Industries Review (EIR),
which was created three years ago to evaluate whether or
not the Bank, in light of its mandate to reduce poverty,
should continue lending for fossil-fuel projects,
particularly coal production.

Headed by a former Indonesian environment minister, Emil
Salim, the EIR commission concluded that the Bank should
immediately halt its support for coal projects and phase
out lending oil projects by 2008. It also called for the
Bank Group to increase overall lending for renewable
projects by 20 percent of its total energy portfolio each

While its renewable portfolio is currently running about
$200 million a year, the Bank Group provides about $2.5
billion a year in support of other energy-related
projects, the vast majority of them based on fossil fuels.

Thus, under Woicke’s plan, which must still be approved by
the Bank’s board of directors, lending for renewables
would increase by only about $40 million next year instead
of the roughly $500 million recommended by the EIR.

“They’re not even close to the EIR recommendation,” said
Steve Kretzmann of the Institute for Policy Studies here.
"They’re pledging 20 percent of a cent when they were
asked to give 20 percent of a dollar,"
he said, adding
that the Bank Group has preferred fossil-fuel-related
lending over renewables by a 23:1 ration since 1994.

"At this rate, it will take the Bank Group nearly 20 years
before their renewables portfolio reaches current levels
of funding for fossil fuels,"
said Janneke Bruil of
Friends of the Earth International (FoEI) in Amsterdam.
“It’s absurd.”

But Woicke stressed in his announcement that the EIR
recommendations were too ambitious, particularly for poor
countries, and suggested that the green and development
groups who supported them were being unrealistic, if not

"Rich nations — however well-intentioned — cannot
prescribe difficult, sweeping changes in technology for
poor nations while remaining idle, silent or reluctant on
the issue of their own energy efficiency,"
he said.

" Environmental advocates who favor new, expensive
technology cannot ignore the millions of people who are
consigned to clear-cutting forests for lack of low-cost
energy options,"
he added.

But the group insisted that the Bank is not being nearly
ambitious enough, particularly given rising concern over
the hidden costs of encouraging the use of fossil fuels,
particularly with respect to global warming, not to
mention the environmental and social impact of such
projects on local communities.

"While we welcome the Bank at least setting a target, the
money is not enough to be credible,"
said Daniel Mittler
of Greenpeace International. "The Bank must phase out
support for fossil fuels by 2008."

While embraced by the environmental community, the EIR’s
recommendations have come under strong attack by big oil
and gas companies and by private banks that underwrite
their projects. The representatives of some
energy-producing governments have also assailed the
recommendations, noting that for all the destruction
associated with big mining and energy projects, their
economies depend on exports of those resources.

This week’s conference in Bonn is designed to promote the
use of renewables which a growing number of experts say
have become commercially viable in ways that were not
foreseen even a decade ago.

In a report released last month by WorldWatch Institute,
researchers noted that wind and solar power have become
the fastest growing energy sources over the past ten
years, and their attractiveness has only increased as a
result of soaring oil and gas prices and growing
instability in the Middle East.

Altogether, renewables — including wind, solar,
geothermal, and modern bio-energy — supply enough
electricity for more than 300 million homes worldwide, and
last year, an estimated $20.3 billion — or about
one-sixth of total global investment in power generation
equipment — was invested in such sources.

While their greatest advances have been in Japan and
Europe, developing country giants Brazil, China and India
are also making significant investments and are considered
major markets for renewables in the coming decade,
according to the report’s author, Janet Swain.




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