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  PlanetArk 18 Sep 06
Stop Work on Financing Clean Energy, World Bank Told
Story by Alan Wheatley and Yoko Nishikawa

PlanetArk 18 Sep 06
Critics Call World Bank Energy Scheme Misguided
Story by David Fogarty

SINGAPORE - A World Bank scheme to bring electricity to the world's poor is short-sighted and won't curb climate change or help the people it's aimed at, environmental groups said on Sunday.

The Bank released a progress report on Sunday looking at ways to fund cleaner energy projects in some of the world's poorest regions and drive economic growth in those areas. The report, entitled Investment Framework on Clean Energy and Development, says an estimated 1.6 billion people do not have access to electricity.

Environmental groups said the Bank was missing a huge opportunity to promote the use of renewable energy by instead backing conventional fossil-fuel based generation.

"We certainly agree that renewable energy is a very good way to reduce energy poverty," said Peter Bosshard of International Rivers Network. "We just wonder why the World Bank doesn't do more of it," he said in Singapore.

The idea of fresh cash for cleaner energy was first raised in April by British finance minister Gordon Brown, who called for a seed fund of $20 billion for alternative energy.

The World Bank has now prepared a draft of two proposed funds and these are being presented to its members in Singapore during the IMF-World Bank meetings that end on Sept. 20.

The Clean Energy Financing Vehicle proposal consists of low-interest loans and the Clean Energy Support Fund grants. The proposed Clean Energy Financing Vehicle calls for an initial capitalization of $10 billion and both ideas endorse low-carbon technologies and carbon emission reductions. The World Bank says it has invested $1.4 billion, or nearly three times as much as planned, in energy efficiency and renewable energy since 2004.

CLEAN BUT NOT SO GREEN

Green groups said the Bank should do more and issued their own report on Sunday in response to the global body's draft energy framework.

"The Bank continues to invest $2 billion and $3 billion a year in greenhouse gas-producing energy projects, which fuel climate change and fail to help the world's poor," said the report, which is backed by groups such as Friends of the Earth and the Institute for Policy Studies.

"Financing for renewable energy projects makes up less than 5 percent of the Bank's overall energy financing in fiscal year 2005," it added.

That placed the Bank in a confusing position, one activist said. "You can't actively subsidise fossil fuels and effectively fight climate change at the same time. The institution is working at cross purposes with itself," said Graham Saul of Oil Change International.

But Jamal Saghir, the Bank's director of Water and Energy, believes the world will still be heavily reliant on fossil fuels for energy for decades to come and that the Bank's energy framework was practical and the way to cut poverty.

"In South Asia, 670 million people don't have access to electricity," he said on Sunday during a panel discussion. In sub-Saharan Africa, it was more than 500 million. "In Sub-Saharan Africa, basically we see stagnation. The annual rate of connection is less than one percent."

He pointed to the importance of providing reliable electricity supplies to clinics, schools and businesses to reduce poverty and to do this, further funding and attracting private sector cash were crucial.

Even cleaner energy for cooking could improve people's lives he said, adding that indoor air pollution caused by use of wood and other biomass for cooking was responsible for more than 1.5 million deaths a year. (Additional reporting by Gilbert Le Gras in Singapore)

PlanetArk 18 Sep 06
Stop Work on Financing Clean Energy, World Bank Told
Story by Alan Wheatley and Yoko Nishikawa

SINGAPORE - The World Bank should stop exploring options for financing the development of clean energy because it does not have enough strength in the field, South Korea said on Monday.

"The Bank's ideas would seem to be poor value to developing countries," Finance Minister Kwon O-kyu told the Development Committee of the World Bank and the International Monetary Fund.

British finance minister Gordon Brown first raised the idea of fresh cash for cleaner energy in April, calling for a seed fund of US$20 billion for alternative energy. The World Bank has since prepared a draft of two proposed funds: the Clean Energy Financing Vehicle consists of low-interest loans; the Clean Energy Support Fund would be based on grants. Both ideas endorse low-carbon technologies and carbon emission reductions.

The Clean Energy Financing Vehicle proposal calls for an initial capitalisation of US$10 billion, but Kwon said spending so much money on carbon credits would pose large but unquantifiable financial risks.

Work done to date on the two initiatives had revealed sufficient problems that the Bank should just stop, he said.

"The Bank has no comparative advantage in this area...," he said, adding that the bank should focus instead on improving access to clean energy.

Kwon was speaking for a group of Asia-Pacific nations including Australia, a big energy producer that has not signed up for the Kyoto Protocol on curbing greenhouse gases. Japan chimed in and questioned the need for spending much money on proposed mega financing vehicles, adding that it was more important to promote steps to save energy.

"The development of new technology is admittedly one of the key aspects of achieving a low-carbon economy," Kazuyoshi Akaba, Japan's senior vice finance minister, said in a speech to the Bank's development committee. "But as demand for energy is expected to increase and improved energy efficiency is becoming a challenge, it is imperative for the World Bank to focus on the development of existing technology for energy efficiency."

Brown's drive for new cash follows a request by the Group of Eight in July 2005 to the World Bank to develop a new global framework for climate change that would remain effective long beyond the 2012 expiration of the Kyoto Protocol.

Hilary Benn, Britain's international development secretary, backed the bank to keep analysing options for developing new financing instruments "where they are needed to fill gaps".
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