World Bank Steers Clear of Coal

It looks like Big Coal is becoming the latest incarnation of Rodney Dangerfield, the man who famously said, “I don’t get no respect.” After being blamed for global warming, then having war declared upon it by the president, now the embattled industry has suffered the further insult of being shunned by the World Bank.

In a recent policy directive, entitled, “Toward a Sustainable Energy Future for All,” the mega-financial institution said that they would focus on the poor, offering financial solutions or guarantees, while helping “client countries realize affordable alternatives to coal power.”

Coal projects will only receive support in those “rare cases” where there is “no feasible alternative.”

One of those rare cases is apparently Kosovo, where the bank is considering a loan guarantee for a coal plant to help meet that country’s 600 MW shortfall.

Jigar Shah, founder of SunEdison disagrees. “European investors have already proposed over 200 megawatts of privately funded wind energy investments in Kosovo. This shows that industry is ready to move at the scale needed to put clean energy to work in Kosovo today.”

Progress on renewables has moved so quickly, with prices dropping fast, it’s easy for officials to underestimate the potential for renewables, even in very poor countries.

As an example, the World Bank's estimated in 1996 that China would have 9 gigawatts of wind and 0.5 gigawatts of solar PV by 2020, when, in fact, by 2011 the country had already achieved 62 gigawatts of wind and 3 gigawatts of PV.

Still, the World Bank appears to be moving more aggressively towards greener options. World Bank president Dr. Jim Yong Kim has been calling for action on climate change since taking office last year. To help countries manage trade-offs between financial and environmental costs, the World Bank is offering to support more expensive energy options with a smaller global environmental footprints if there is strong client ownership. This must be balanced with “supporting the lowest-cost -- and hence the most affordable -- option to meet critical needs in the near term is particularly strong when extending access to those without modern energy.”

Indeed cost is an issue for many poor people in sub-Saharan African who might be paying as much as 20 to 50 cents per kilowatt-hour, far more than what is being paid in developed countries.

The need is daunting. The bank estimates that over $800 billion is ultimately required to meet the goals of the UN’s Sustainable Energy for All initiative, which aims to double the share of renewables globally, double the rate of energy efficiency and ensure universal access to sustainable energy to all by 2030.

The investment accompanying this year's directive constitutes less than one per cent of that amount. To try and stretch that money, the bank will concentrate heavily on energy efficiency, which generally achieves the highest return on investment.

“The critical importance of shifting the global energy sector to a more environmentally sustainable development path has never been greater,” said the directive.

The World Bank cannot, it argues, meet its “twin goals” of ending poverty and “building shared prosperity in a sustainable manner,” without “reliable modern energy services.”

Among renewables, the bank will support, “run-of-river, pumped storage, and reservoir hydropower projects,” some of which could be large, provided that they “meet environmental and social safeguard standards.”

This runs counter to some environmental groups who have issues with hydro projects that are not small scale.

Other renewables sources supported include solar, wind, geothermal and biofuels.

President Obama’s recently announced Power Africa program, which aims to bring an additional 10 GW of electricity to sub-Saharan countries, will also pursue an all-of-the above strategy in which coal is conspicuously absent.

 

 

RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining romp that is currently being adapted for the big screen. Now available on Kindle.

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