WORLD BANK: Fossil fuel loans not going to help the poorest — study
10/06/2010
Lisa Friedman, E&E reporter

A new study out today challenges World Bank claims that its lending must include dirty fossil fuel projects in order to help alleviate energy poverty.

In a review of 26 fossil fuel projects the bank funded over the past two years, the environmental group Oil Change International found that not one of them identifies electricity access for the poor as a goal in the original planning
documents. The report also undercuts broad World Bank claims that providing energy in a poor country automatically addresses the needs of the poor.

“The only targeted end-users indicated for fossil fuel projects are industrial or commercial consumers,” the report authors write. “Moreover, there are no provisions to make either connections available to the poor or energy services affordable for the poor.”

Groups plan to release the report today as the World Bank prepares for its annual meeting this weekend in Washington. The bank currently is in the process of revising its strategy for energy lending, and activists said they hope to convince the institution to phase out lending for coal plants and other fossil fuel projects in developing countries.

The World Bank has made serious efforts to green its energy lending in the past few years, and recently brought on a climate change envoy as well as a leading renewable energy expert. But it also has steadfastly maintained that the
agency’s most important mission is poverty alleviation. With 1.5 million people still living in the dark, they say, coal’s cheap and abundant nature make it a necessary part of the World Bank’s lending strategy.

“In the past decade, for the poorest countries we serve, we have built and made more reliable almost 8 GW of electricity. We have also connected 24 million people to energy for the first time by building 27,000 miles of transmission and distribution networks,” World Bank spokesman Roger Morier said in a statement.

“Improving access to energy for the poor is about much more than declarations in a document,” he said. “Millions of people worldwide have benefited from World Bank Group energy financing. They know that they can now keep their medicines cool in a refrigerator, they can read and study at night, they can keep working at a factory that otherwise would be closed, and that they are on a path out of poverty. That is the true measure of the work we do.”

But Stephen Kretzmann, director of Oil Change International, said the documents do matter.

From extending the life of a coal plant in India to oil and gas production in Tunisia to a gas power generation project in Turkey, the vast majority of World Bank fossil fuel projects in 2009 and 2010 did not indicate who the targeted
consumers would be.

Only one project — a $350 million gas power generation and pipeline project in Bangladesh — had the potential to provide access to the poor, and just two projects included as an aim improving electricity reliability for the poor.

The report finds the projects mostly provide benefits to industrial and consumer users, like $18 million to construct and operate a heavy fuel oil power generation plant in Haiti that, the authors contend, is located in an industrial park. The project documents do not mention power distribution outside of the park.

Likewise the Bangladesh project outline says the pipeline will provide 300 megawatts of natural gas-fired power to help close the country’s nearly 2,000 megawatt daily power shortage. But, the authors wrote in the report, since no
new grid connections are planned in the capital city of Dhaka and no specific part of the city is slated to be served, it is unclear how, or whether, the energy will reach the poor.

“If the bank isn’t directly making provisions to make sure the poor, who constantly get left behind, [are] getting connected, then this electricity could just be going to feed the rising middle-class demand. And the poor,
pardon the pun, are left in the dark,” said Heike Mainhardt-Gibbs, a consultant and co-author of the study.

She argued that if the World Bank continues funding fossil fuel projects — something the groups oppose — it needs to more clearly target energy poverty as a specific goal and show how those without access will get it.

“If your entire overall mission and purpose as an institution is to reduce poverty, and then you further that by saying that one of the main objectives of your energy financing is to increase access for the poor, we want to see the poor benefit,” she said. “When you say access for the poor, that’s a direct connection. It’s not just a trickle-down theory that just because industry has energy, some poor person somewhere will get it.”

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