Global Policy Forum

World Bank Spends Billions on Coal-Fired Power Stations


By Ben Webster

September 16, 2009

The World Bank is spending billions of pounds subsidizing new coal-fired power stations in developing countries despite claiming that burning fossil fuels exposes the poor to catastrophic climate change. The bank, which has a goal of reducing poverty and is funded by Britain and other developed countries, calls on all nations in a report today to "act differently on climate change".

It says that the world must reduce its dependence on fossil fuels, but it is funding several giant coal-burning plants that will each emit millions of tons of carbon dioxide a year for the next 40 to 50 years.

Britain is contributing £400million to a World Bank fund that claims to support "clean technology" but is financing coal power plants.

The bank's World Development Report says: "Developing countries are disproportionately affected by climate change - a crisis that is not of their making and for which they are the least prepared. Increasing access to energy and other services using high-carbon technologies will produce more greenhouse gases, hence more climate change."

The report says that between 75 and 80 per cent of the damage caused by climate change through drought, floods and rising sea levels will happen in developing countries. It calls on richer nations, including Britain, to increase the amount that they spend on helping developing countries to adapt to climate change.

The bank also wants global spending on research and development on sustainable sources of energy to be increased from the present $70billion (£40billion) a year to $700billion.

The report says that unless the world acts now to cut carbon dioxide emissions it faces a 5C (9F) rise in global temperatures by the end of the century. "Such a drastic temperature shift would cause the possible dieback of the Amazon rainforest, complete loss of glaciers in the Andes and Himalayas, and rapid ocean acidification leading to death of coral reefs," it says.

"The speed and magnitude of change could wipe out more than 50 per cent of species. Sea levels could rise by one meter this century, threatening 60 million people. Agricultural productivity would likely decline throughout the world and over three million additional people could die from malnutrition each year."

The 260-page report advises against "locking the world into high-carbon infrastructure" but makes no mention of the bank's plans to subsidize coal power plants in India, South Africa, Botswana and other developing countries.

Last year the bank and its partner, the Asian Development Bank, approved $850million in loans to finance a coal-fired plant in Gujarat, western India.

The Environmental Defense Fund, a US lobby group, said that the plant, the first of nine planned in India, would be one of the biggest new sources of greenhouse gases on Earth, emitting 26.7million tones of CO2 a year for the next 50 years.

The bank is also contributing $5billion towards South Africa's power generation expansion plan, which includes six coal plants.

Marianne Fay, the bank's chief economist for sustainable development, said that coal was the cheapest and most secure way to deliver electricity to the 1.6billion people without it. She said: "There are a lot of poor countries which have coal reserves and for them it's the only option. The [bank's] policy is to continue funding coal to the extent that there is no alternative and to push for the most efficient coal plants possible. Frankly, it would be immoral at this stage to say, 'We want to have clean hands, therefore we are not going to touch coal'."

Tim Jones, policy officer of the World Development Movement, which campaigns to reduce poverty, said: "The World Bank is acting in the interests of Western countries and companies and not in the long-term interests of the world's poor.

"It is an absolute disgrace that money meant for clean technologies will actually be used for building new coal power stations. Every pound of green aid that will be spent on funding coal power through the World Bank is money that should be spent on supporting renewable energy in developing countries."

The bank said that it had lent $5billion for fossil fuel projects in the past three years and $11billion for "low-carbon" alternatives.

A spokesman for the Department for International Development in Whitehall said: "We have informed the World Bank that we will be scrutinizing future coal-fired power plant proposals to ensure that they have explored all other options (including accessing the additional finance needed for cleaner alternatives), and we would expect any future coal plants to reach the highest international standards."




FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.