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Report details World Bank's fossil fuel binge

Posted Apr. 14, 2011 / Posted by: Nick Berning

Bank’s pattern of harmful lending disqualifies it from role in climate finance

WASHINGTON, D.C. -- The World Bank continues its fossil fuel financing binge, evading environmental standards and worsening poverty and pollution -- that’s the conclusion of a new report released today, just before the start of the World Bank’s spring meetings in Washington, D.C.

The report, World Bank, Climate Change and Energy Financing: Something Old. Something New?, was authored by experts at seven non-governmental organizations and examines World Bank Group energy financing in a climate-constrained world. Through a series of seven case studies, the report shows how the Bank’s surge in direct and indirect fossil fuel financing and its support for large-scale energy infrastructure projects have poor poverty alleviation outcomes and call into question the institution’s claim that it is providing leadership on climate change in the developing world.

Such considerations are especially pertinent as the World Bank revamps its Energy Sector Strategy for the first time in more than a decade, as President Obama requests more than $117 million in new money for the institution, and as the Bank seeks an influential role in the UN’s new Green Climate Fund.

“The World Bank’s legacy of environmental and social harm, evasion of safeguards and accountability, and questionable track record on reducing poverty continue to cause serious problems. Regrettably, the World Bank’s draft Energy Sector Strategy looks set to maintain the polluting practices we document in this report: carbon-intensive, large-scale financing, with trickle-down benefits for the poor that are hoped for, but not often achieved,” said Sunita Dubey of groundWork/Friends of the Earth South Africa, co-editor of the report.

“In an era of poverty and climate change, clean energy leadership is called for instead of dirty business as usual. The Bank needs to clean up its act before aiming to put itself at the center of efforts to respond to climate change. It must not play any role in designing or managing the new UN green climate fund,” said Karen Orenstein of Friends of the Earth U.S., co-editor of the report.  “At a time of fiscal austerity and limited resources for international development finance, the World Bank is making a poor case for why Congress should hand it more than $117 million in 2012.”

The report’s conclusions include:

  • Environmental and social safeguards apply to an ever decreasing proportion of the World Bank Group’s financing portfolio;
  • Even for projects where safeguards do apply, the Bank has not incorporated the lessons of past project failings;
  • Deep questions remain about the World Bank’s ability to meet its own sustainable development and poverty alleviation goals;
  • The Bank’s rapidly expanding fossil fuel financing is not alleviating energy poverty for poor communities.

The seven case studies profiled in World Bank, Climate Change, and Energy Financing: Something Old. Something New? examine:

  • World Bank support for fossil fuels through infrastructure lending and financial intermediaries;
  • the Bank’s Carbon Finance Unit (which facilitates international offsetting and carbon trading) and support for the UN Clean Development Mechanism’s Plantar project in Brazil;
  • the role of the Bank in Nigeria’s energy sector;
  • the International Finance Corporation’s loan for a coal plant in India;
  • the World Bank’s loan for the controversial Eskom coal project in South Africa;
  • the legacy of Bank support for large hydropower and the Nam Theun 2 Hydropower Project in Laos; and
  • development policy loans in Brazil and the Belo Monte Dam Complex.

The report is published by by Campagna per la Riforma della Banca Mondiale (CRBM, Italy), CDM Watch (Belgium), Environmental Rights Action/Friends of the Earth Nigeria, International Rivers (US), Friends of the Earth U.S., groundWork/Friends of the Earth South Africa, and Legal Initiative for Forest and Environment (LIFE, India).

Download the report.

Contact: Nick Berning, 202-222-0748, nberning@foe.org; Sunita Dubey, 703-732-2559

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