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World Bank disputes accusation of ‘failing clean energy’

January 27th, 2017

The World Bank has expressed its disagreement with analysis provided by an NGO about its record in facilitating the clean energy transition.

The World Bank’s Climate Action Plan Development Policy Finance initiative is, according to non-governmental organisation Bank Information Center, being primarily used as a vehicle for financing coal and gas-fired power plants instead of its intended use, as a provider to renewable energy sources in developing countries.

World Bank disputes the report's findings, saying it did not reflect the wider work it did with countries.
World Bank
The report by BIC looks at the Bank's Development Policy Finance (DPF) operations in four nations - Indonesia, Peru, Egypt and Mozambique.

DPF is one of the main activities of the bank, accounting for about one-third of its funding (more than US $15bn in 2016). The scheme provides funding for countries in exchange for the implementation of policy agreed by both the national government and World Bank officials.

BIC say that the scheme is also essential in helping these nations meet their national commitments outlined in reducing emissions, which form the backbone of the Paris Climate Agreement.

Their research found that DPF had introduced subsidies for coal in three of the four nations examined in the report (Indonesia, Egypt and Mozambique). They said this had helped Indonesia become one of the world's top coal exporting nations, while turning Mozambique - considered to be among the most at-risk nations from climate change - into a major player in the global coal sector.

"The findings were really shocking for us because in all of the countries, across the board, the Bank actually created new fossil fuel subsidies, which directly goes against what the Bank wants to achieve," Nezir Sinani, BIC's Europe and Central Asia manager, told BBC News.

"The World Bank has pledged to help countries adopt a low-carbon development path specifically by phasing out fossil fuels subsidies and promoting a carbon tax. However, the Bank's policy lending does the opposite by introducing tax breaks for coal power plants and coal exports infrastructure."

A spokesperson for the World Bank said, "We are deeply disappointed that after close cooperation with BIC on this report, their findings grossly misrepresent the World Bank's engagement in these countries."

"The report does not capture the World Bank's broader energy work, which involves not only development policy loans, but a mix of interventions - policy reforms, investments, technical assistance - that work together to promote climate smart growth and increased energy access.

"In each of the countries mentioned in the report, the World Bank's development policy loans do not promote the use of coal, but help support a shift towards a cleaner energy mix and low carbon growth."

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