The World Bank Energy Strategy: Facts and Recommendations

The World Bank Group is revising its Energy Strategy, which once approved will serve as a guide for the institution’s energy investments. Bank public financing, in the form of loans, grants, credits and guarantees, represents the actual development pathway the Bank Group is pursuing and currently these investments are not aligned with the Bank’s mission. Bank leaders and member countries have an opportunity to shift this lending to accomplish real benefits for developing countries.

The Banks states that its mission is to “help developing countries and their people reach the goals of poverty alleviation and sustainable development” by concentrating on “building the climate for investment and creation of jobs, and on empowering poor people to participate in development.” The Bank also says that “addressing global climate change through market development is an important component of our overall mission.”

Comparing the Bank Group’s lending against its mission demonstrate that despite its pro-poor, pro-climate rhetoric, the Bank’s fossil fuel lending has increased 400 percent since 2006. Furthermore, Oil Change International’s independent analysis found that NONE of these projects were funded specifically to provide energy access to the poor.

Here are the facts:

  • The World Bank spent $6 billion on fossil fuel projects last year, including a record $4 billion on coal power plants.
  • Only one quarter of the World Bank’s energy lending went to new renewables energy and energy efficiency projects.
  • Over the past five years, fossil fuel lending at the World Bank has increased 400 percent.
  • Of 26 independently reviewed World Bank fossil fuel projects in 2009 and 2010, not a single project had the specific aim of ensuring energy access for the poor.
  • According to the International Energy Agency, in order to achieve universal energy access 70 percent the un-electrified population—roughly 1.4 billion people—will rely on decentralized renewable energy systems.

To go green, the World Bank’s energy strategy must:

  • Support energy services for the poor that are clean, reliable and sustainable by providing the rural poor with affordable off-grid renewable energy options, facilitating productive use of energy services by the poor, and assisting in the development of local energy markets and rural entrepreneurship.
  • Commit to a transition toward clean development by stopping fossil fuel lending unless it is solely for energy access for the poor, assisting in improving energy efficiency and conservation, and diversifying energy supply by increasing deployment of renewable energy and technologies.
  • Only support large hydro-power projects if they have been selected through a comprehensive options assessment process and comply with the recommendations of the World Commission on Dams.