World Bank Charts New Energy Course

The World Bank’s executive board debated yesterday a new policy on investments in the energy sector. The future of coal projects was a particular focus of the policy paper the board members considered: The paper addresses the use of fossil fuels. It affirms that the World Bank Group will “only in rare circumstances” provide financial ...

By , a professor at Indiana University’s Hamilton Lugar School of Global and International Studies.

The World Bank's executive board debated yesterday a new policy on investments in the energy sector. The future of coal projects was a particular focus of the policy paper the board members considered:

The paper addresses the use of fossil fuels. It affirms that the World Bank Group will “only in rare circumstances” provide financial support for new greenfield coal power generation projects, such as “meeting basic energy needs in countries with no feasible alternatives.” It says the Bank Group will scale up its work helping countries develop national and regional markets for natural gas, the fossil fuel with the lowest carbon intensity.  The paper also confirms the Bank Group’s intention to increase support for hydropower projects.

As Brad Plumer noted here, a project in the Balkans will provide an early test of just how rare support for coal projects will be:

The World Bank’s executive board debated yesterday a new policy on investments in the energy sector. The future of coal projects was a particular focus of the policy paper the board members considered:

The paper addresses the use of fossil fuels. It affirms that the World Bank Group will “only in rare circumstances” provide financial support for new greenfield coal power generation projects, such as “meeting basic energy needs in countries with no feasible alternatives.” It says the Bank Group will scale up its work helping countries develop national and regional markets for natural gas, the fossil fuel with the lowest carbon intensity.  The paper also confirms the Bank Group’s intention to increase support for hydropower projects.

As Brad Plumer noted here, a project in the Balkans will provide an early test of just how rare support for coal projects will be:

A big early test case for both the White House and the World Bank will come in Kosovo, which is planning to build a new 600-megawatt plant fired by lignite coal, a particularly carbon-intensive fuel. The U.S. Agency for International Development has provided technical assistance to Kosovo over the years, and the World Bank is deciding whether to provide loan guarantees for the project.

Michael Brune of the Sierra Club is cautiously optimistic that the strategy document may mark a real shift in Bank policy. "This is an important first step for helping developing countries around the world avoid the health and environmental costs of coal pollution," he wrote in the Guardian. "Jim Yong Kim showed he was up to the test, but we’ll be watching closely to make sure this policy is backed up by real action."

As was discussed yesterday, however, the hydropower projects that the Bank may shift toward as it eschews coal have their own environmental critics.

David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist

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