30 June 2009
The World Bank approves loans for renewable energy in southern countries while making sure Europe meets its energy goals.
The World Bank announced last month that Mexico, Egypt and Turkey are the first three countries to tap the new $5.2 billion Clean Technology Fund managed by the Bank- $250 million for Turkey, $300 million for Egypt and $500 million for Mexico. The three countries will combine the soft loans from the Fund with loans from other sources in order to implement low carbon projects in the sectors of renewable energy and transportation.
Earlier in May, officials from both Egypt and Turkey participated in a European Union (EU) summit in Prague, which was also attended by the World Bank, to discuss ways to transport renewable energy resources to Europe. This high level meeting is the culmination of a four-year dialogue between the EU and countries from Central Asia, the Southern Caucasus, and the Middle East. At the end of the meeting, the participants signed a joint declaration (the Prague Declaration) to support the realization of the Southern Corridor- also called the New Silk Road- to strengthen the cooperation between those countries in the field of energy.
It is a priority for Europe to secure renewable energy from the Southern Corridor in order to diversify its energy sources and not solely rely on Russia as it had done up until a few years ago. Europe’s Energy Policy, set in 2007, “[puts] more abundant energy at a cheaper price at the disposal of the European economies” (Energy Policy Document) and calls for more cooperation, especially with Turkey and Egypt among other neighboring countries. The Prague Declaration falls within the implementation framework of this Energy Policy. Moreover, in the case of Egypt, the Declaration complements the “Memorandum of Understanding (MOU) on Strategic Partnership on Energy” that the EU signed in December 2008 with the Egyptian government, as part of the implementation plan for its Energy Policy.
The World Bank’s energy portfolio in Egypt, including this new loan from the Clean Technology Fund, reflects the strategies set out in the three aforementioned agreements; the Prague Declaration, the MOU with the Egyptian government, and Europe’s Energy Policy. The World Bank finances Egypt’s energy sector reform program that aims at gradually changing the legal and regulatory principles of the Egyptian energy market to make them more compatible with European ones, and meanwhile the Bank is also investing in renewable energy in Egypt. The Bank can argue that their energy strategy in Egypt is a win-win strategy and that while benefiting impoverished Egyptians, directly, by providing them with jobs and electricity, and indirectly, through export revenues, it will also help Europe satisfy its needs for new renewable energy sources. This fits nicely within the World Bank’s mandate of “working for a world free from poverty”. However, one can also ask how the World Bank energy strategy for Egypt would be different if it were mandated to benefit the rich and not the poor? Will the World Bank always be able to maintain a balance of satisfying the interests of both the rich and the poor? Is there a point at which the two strategies - of satisfying the needs of all classes - could contradict one another? And if this happens, which one would prevail in the World Bank strategy? In other words, whose interests would the World Bank serve if it were faced with this choice?
Resources
Middle East and North Africa - Egypt: Renewable Energy and Clean Transport Are Cornerstones of Low Carbon Growth (World Bank website)
EU explores energy supply alternatives with Central Asia, Middle East - People's Daily Online (May 9, 2009)
Prague Declaration
The Memorandum of Understanding on Strategic Partnership on Energy – EU & Egypt Dec.09
Europe Energy Policy 07