Co-authored by Rebecca Harris
On Saturday, April 24th, the Bank Information Center, with the input and endorsement of a coalition of several international NGOs, presented the World Bank with a "Model Energy Strategy" as an alternative to the Bank's current approach to energy lending. An expert panel including Bishop Geoff Davies of the Anglican Church, Ikal Angelei of Friends of Lake Turkana and Dr. Amory Lovins, co-founder and chief scientist of the Rocky Mountain Institute discussed the World Bank's current and future roll in energy investments.
The World Bank Group initiated a review of their energy strategy this year, which will guide their substantial energy investments (over $8 billion in FY 2009 alone) over the coming decade. In an attempt to elicit dialogue with civil society, industry and government, the Bank is convening several in-country multi-stakeholder consultations around the world in tandem with an ongoing online consultation process and is expected to finalize the policy in April 2011.
The Bank was presented with the civil society-authored alternative energy strategy during last week's spring meetings of the World Bank and International Monetary Fund held in Washington, DC. The strategy is meant to serve as a contribution as the World Bank moves forward with its energy strategy review process and provides alternatives to the "business-as-usual" fossil fuel-intensive lending pattern that the World Bank has followed in recent years.
Recognizing that sometimes the easiest bank energy investments are the large-scale, costly projects that are tied into the grid and are projects that are quite often designed to provide energy either for sale or for industry, many civil society organizations believe that that the bank's focus must be the provision of environmentally sustainable energy for the poorest in low-income countries. Ikal Angelei from Friends of Lake Turkana highlighted the Bank's problematic approach to energy with the example of the Gibe III hydropower project. She explained that "with Gibe, it's a hydropower project to produce 1,870 megawatts, most of it for export. Ethiopia is a very poor country, we agree, [and] the argument is that they want to produce this power and export it to get foreign exchange to help the poor, but the project does not consider the impacts it has downstream."
As such, the Model Energy Strategy is structured upon two key objectives: provision of clean, reliable and sustainable energy for the poor and promotion of low-carbon development. The policy promotes the finance of renewable, off-grid, efficient energy solutions as well as capacity-building and technology sharing measures. As an institution tasked with the mandate of poverty alleviation, the Bank must be mindful of the interrelated challenges of energy poverty and climate change.
Civil society constructed the Model Energy Strategy around six priority areas: provision of affordable, off-grid renewable energy options to the rural poor; facilitation the productive use of energy services; assisting in the development of local energy markets and rural entrepreneurship; assisting in improving energy efficiency and conservation measures; diversification of energy supply through the deployment of renewable energy technologies and a phase out of fossil fuel lending.
Dr. Lovins of the Rocky Mountain Institute supported the energy approach outlined in the Model Policy stating that it represents "a huge macroeconomic lever for accelerating economic growth and development" and that "efficiency-oriented strategies, especially aiming at delivering electricity to the poorest would have [a] huge multiplier effect that I doubt finance ministers are even aware of because most of them don't understand yet what efficiency can do." Dr. Lovins also voiced his support for the Model Policy's insights on distributed and decentralized sources of energy.
Aside from the bank's own ongoing review of its energy strategy, the timing of this presentation was particularly salient as on April 8th, the World Bank's Board of Directors approved the highly contested $3.75 billion loan to South African power utility Eskom for the construction of a 4800 megawatt coal-fired power plant. Seen as a particularly schizophrenic move from an institution both yearning to take on the mantle of "Climate Bank" in order to become the repository for the international community's billions in climate funds, and yet, on the other hand, consistently finances fossil fuel projects as sizeable component of its energy portfolio. Consensus among several civil society organizations is that if this is the type of loan that can slip through with the Bank's current energy policy, reform is essential. Bishop Geoff Davies of South Africa echoed this sentiment in stating that "Eskom is an example of what we should not be doing. I hope the World Bank never ever does such a loan again."
Reform is on the mind of many with the World Bank's recapitalization ask on the table: On Sunday, April 25th, World Bank President Robert Zoellick announced the Bank's $86.2 billion request for a general capital increase (GCI). Several civil society organizations view this an opportune time to push for improved implementation of environmental and social safeguards in the Bank's lending operations and other various reforms, such as the adoption of a moratorium on coal lending at the institution through a revised energy lending policy. Before finalization of the GCI, civil society should have, at the very least, a draft of the energy strategy that demonstrates that the Bank will not continue to fund coal. Barring such a commitment, civil society groups stated that they feel strongly that it will be an impossibility to support the Bank's recapitalization request. The message that coal is not an option for Bank funds must be voiced, loud and clear.