World Bank called on energy lending policy
Web posted at: 4:30 PM EST
(ENN) -- The World Bank, the public financial institution charged with the task of poverty alleviation and sustainable development, is under pressure to reform its lending policy when it comes to energy projects in developing nations.
"The bank currently lends 25 times as much money for fossil-fuel energy projects as it does for renewables," said Daphne Wysham, lead author of a study on the World Bank's compromised role in mitigation of the climate change treaty.
The report, put out by the Institute for Policy Studies, a Washington, D.C., based think tank, has helped generate enough of a stir that the World Bank last week decided to delay its approval of the Prototype Carbon Fund until further consultation with non-governmental organizations and others.
Details of the carbon fund made headlines at last month's climate talks in Buenos Aires, Argentina, when a document surfaced detailing the World Bank's plans to take control of the multi-billion dollar carbon trading market being set up under the Climate Change Convention.
According to the Institute for Policy Studies, the World Bank would fund fossil fuel projects in poor countries on one hand, then reap financial benefits from the resulting pollution on the other hand through a controlling interest in the $150 billion a year carbon-trading market.
The institute sees this as a conflict of interest on the bank's part because instead of working toward its mandate of poverty alleviation and sustainable development, it is working out lending schemes which benefit wealthy oil, gas and coal corporations headquartered in one of the wealthy Group of 7 nations.
The new plants bring very little, if any, energy to the 2 billion poor people in the world who currently live without it because the plants are constructed for the benefit of the urban middle-class and energy-intensive industries who move in to take advantage of the cheap power, said Wysham.
It turns out, according to the Institute for Policy Studies' report, that many of the same corporations that benefit from the World Bank's lending policy are also members of the Global Climate Coalition, a United States lobbying group that works to prevent any action by the United States to reduce its share of greenhouse gas emissions.
The biggest problem, according to Wysham, is that this lending policy is focused on the fossil fuel industry even though the World Bank's own reports conclude that renewable energy projects are the most effective means of meeting the needs of those without power.
Besides, fossil fuel energy sources lead to greater climate change and, according to Wysham, the World Bank has acknowledged that climate change has the greatest impact on the world's poor.
"The World Bank's energy lending portfolio is dominated by fossil fuels. More than three-fourths of all its energy lending is spent on oil, gas and coal or power projects that use these fuels, making it the largest multilateral financier of climate-changing fossil fuels in developing countries," the institute's report says.
This rhetoric from the Institute for Policy Studies was echoed in a letter to President Bill Clinton from Congressman Dennis Kucinich, D-Ohio, and Henry Waxman, D-Calif., on June 18.
"The World Bank has helped finance 87 fossil fuel based projects. These projects are expected to produce one and a half times more CO2 emissions than today's annual global total. Has there been a comprehensive review of these projects undertaken to determine whether renewable or clean energy technologies could be substituted as energy sources?"
Energy experts familiar with the controversy surrounding the World Bank's lending policy say the bank has acknowledged the concern of non-governmental organizations and others and is trying to figure out a way to reckon with those forces rather than heed their advice.
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