12 August 2010
The U.S. Senate ratchets up the pressure on the World Bank, including language in the 2011 foreign operations funding bill demanding a fossil fuel phase out and a commitment to renewable energy in the Bank's new energy strategy.
Source: E&E News
by Lisa Friedman
Correction appended.
The U.S. Senate is leaning on the World Bank to phase out lending for coal plants and other fossil fuel projects.
As part of the foreign operations funding bill for 2011, lawmakers last week approved $1.2 billion to the World Bank's fund for the neediest countries. But in language tucked into the report, the Senate also sent a warning about how it wants to see U.S. funds spent.
With the World Bank poised to ask Congress for $587 million over five years as part of an approved general capital increase, Democrats led by Sen. Patrick Leahy of Vermont said they expect the institution to develop a new strategy that ramps up support for clean energy and "rapidly phases out Bank support for fossil fuel-related projects," except those specifically to provide energy access to the poor.
"It is intended to send a message," Leahy aide Tim Rieser said of the report. "We know the Treasury Department is going to ask Congress for significant additional funding for the bank's general capital increase. Senator Leahy wants Treasury and the bank to know that Congress' support will depend, in part, on the bank's new energy strategy."
He also noted that Congress is being asked to support a range of World Bank climate programs. This year alone, the Senate approved $370 million for a fund to bring clean technology to developing countries and another $205 million for the bank's Strategic Climate Fund.
"It seems incongruous that at the same time, the World Bank is funding fossil fuel-generating plants and other projects which contribute to global warming and produce significant increases in carbon emissions," Rieser said.
"Senator Leahy recognizes the issue is not black-and-white, and that many developing countries are desperate for energy. But he wants our programs to be effective, and he wants the World Bank to demonstrate that it is, in its other lending activities, making every effort to utilize clean technologies to reduce reliance on fossil fuels and to increase energy efficiencies," he said.
World Bank loans to build coal plants in developing countries have been a major source of friction in the environmental community. Earlier this year, a $3.75 billion lending package to help South Africa build a 4,800-megawatt coal plant provoked worldwide debate over how the institution should resolve its mission to alleviate poverty with its newer goal of helping reduce carbon emissions.
A debate that is far from over
The United States abstained from the South Africa vote, but U.S. Treasury officials made it known that they expect the Eskom Holdings Ltd. plant to be the last of its kind that the World Bank funds in middle-income countries. Meanwhile, South Africa and other developing nations insisted that loans for energy projects -- including coal -- are essential to their economic development.
The World Bank is currently rewriting its energy strategy, where it is reviewing what changes if any to make in its lending portfolio.
Asked for a response to the Senate language, World Bank Vice President for Sustainable Development Inger Anderson avoided the issue.
"As we prepare the first draft of our new energy strategy, we welcome the views of all stakeholders in the US, including the Congress. We look forward to continued dialogue," Anderson said in an e-mailed statement. "The World Bank will also continue to move forward aggressively to advance clean energy technologies in developing countries through programs like the Climate Investment Funds which have investment plans already endorsed to support more than $40 billion in clean technology projects."
World Bank board members from China, India and other developing countries did not return phone calls Tuesday. Sierra Club representative Mark Kresowik praised the Senate language.
"The World Bank should not get a general capital increase until they stop financing fossil fuels and move forward on clean energy opportunities for the poorest communities," he said.
Congressional hearings on the general capital increase, which will be the bank's first in more than 20 years, are expected next year. Altogether, the bank is seeking $86.2 billion more for the International Bank for Reconstruction and Development, which lends to developing countries, and $200 million for the International Finance Corp., the institution's private lending arm.
In addition to language on the World Bank's energy policy, the Senate requested that the World Bank commission an independent evaluation of the impact of the institution's forest policy on poverty alleviation and deforestation as well as the carbon emissions it expects will be reduced from its policies.
Correction: The World Bank plans to ask for $587 million over five years from Congress as part of a general capital increase; an earlier version incorrectly stated that it plans to request $58 billion from the United States for that increase.
© 2010 E&E Publishing, LLC. Reproduced with Permission. www.ClimateWire.com
see also
FY 2011 Appropriations Bill includes language on World Bank Energy Strategy (BIC website)