World Bank turns from coal to RE
The World Bank has set a new strategy that limits the financing of new coal-fired power plants, while “scaling up” efforts to increase renewable generation and improve energy efficiency.
The Bank has agreed to amend its lending policies for new coal-fired power projects, restricting financial support to countries that have “no feasible alternatives” to coal, as it seeks to balance environmental efforts with the energy needs of poor countries.
In its new Energy Sector Directions Paper, updated every ten years, the Bank also voices increased support for hydro electric power, reversing its decision to abandon these projects in the 1990s under pressure from aid groups.
Some environmental groups warn that while the new strategy may have improved its coal policy, the Bank has taken a backward step by agreeing to fund hydropower.
Multilateral institutions such as the World Bank have been criticised for urging global action to cut carbon dioxide emissions while simultaneously funding coal-fired power plants. Last week EU climate commissioner Connie Hedegaard urged development banks to stop supporting fossil fuels, and to focus lending on renewables and energy efficiency.
Under World Bank president Jim Yong Kim – the first scientist to head the institution – the bank has launched a more aggressive stance to spur action on climate change. He had said it is impossible to tackle poverty without dealing with the effects of a warmer world.
“We need affordable energy to help end poverty and to build shared prosperity. We will also scale-up efforts to increase renewable energy and improve energy efficiency – according to countries’ needs and opportunities,” says Kim.
The Bank has provided seed finance to support the construction of concentrating solar plants in Africa; the installation of off-grid household solar power systems across Bangladesh and Mongolia; the development of wind farms in Turkey; hydro power projects in Africa and Asia; and geothermal exploration in Kenya.