IFI governance

Background

A sustainable World Bank energy strategy: perspectives from various stakeholders

Civil society event at the World Bank spring meetings 2010, 23 April

26 April 2010 | Minutes

Jake Schmidt (International Climate Policy Director, NRDC) Richard Caperton (Policy Analyst, CAP) Shannon Lawrence, (International Rivers)

The World Bank is a huge player in economic development. Is it being done sustainably? Can it be done more sustainably?

Taking a snap-shot of Bank energy financing was more difficult than thought. The US treasury guidelines for all Multilateral Development Banks are especially important in the light of the GTI requests.

Transparency, the Bank needs to make more available what financing decisions are. More transparency on decision making and process side. How is energy access measured and energy poverty measured.

Planning – what the Bank can do develop capacity for countries to address gaps in planning, this was the failure of Eskom.

Richard Caperton (Policy Analyst, CAP)

In the Bank’s Energy strategy approach paper, it recognises that energy and climate change are interrelated.

Welcome the Bank’s integrated approach to clean energy. Have become uncomfortable with the language of trade-offs so would like to think about synergies. The first step is to build the demand for clean energy from client countries, developing countries tend to ask for coal.

Need to learn from the feed-in tariff policy in Spain where feed in-tariffs led to expansion of solar power, but it became clear that very few would be able to survive without subsidies.

Need for capacity building: part of creating the demand. If you look closely at South Africa’s department of energy there was little appreciation of how to assess risks, and how to incorporate clean energy. There was a lack of policy co-ordination.

Another set of actors that need capacity building are the regulators, who are tasked with setting caps, emission reductions. If civil society is going to push for regulators to be empowered, the Bank needs to look at training opportunities and curriculums.

AGI is trying to fill this vacuum by creating a fora for developing country regulators, to exchange lessons about clean energy regulation.

WRI launching latest policy piece based on sustainable energy reform and regulatory investment.

Shannon Lawrence, International Rivers

Hydropower. Why has the Bank’s role in the energy sector been controversial? Chad-Cameroon pipeline and Eskom are examples of large, centralised, high impact on local communities and environment projects.

Focus on the poor – the Bank should not try to do everything in the energy sector. The approach paper doesn’t categorise the area it should focus on. Large hydropower is likely not to supply power to the poor.

The Bank should take on the incremental costs of new renewables.

The Bank should work with government to choose the best project. Need to look at the full range of feasible supply and demand side options, should factor in the social and environmental costs as well as the GHG emissions. With hydropower, should consider the methane and CO2 emissions of the reservoir areas, the lost flooded agricultural land, lost livelihoods.

The World Commission on Dams reviewed the development effectiveness of large dams. This year is the 10th anniversary of the commission. The WCD included rules that hydropower projects should ensure safeguarding of human rights, ensuring the free prior and informed consent of indigenous peoples. The WB has failed to adopt the recommendations of the WCD, which it actually set up. More upstream engagement is needed, if the WB is going to support large dams going forward, it must do a better job of managing the risks.

Bishop Geoff Davies, Faith communities and environment institute of South Africa

Eskom began building Medupi in 2007, and have signed a contract for another coal fired power station. Our present direction is not going to bring energy access to the poor. We need a paradigm shift. The impacts of Medupi on water supplies will be disastrous. Need to bring energy to the poor through decentralised off grid technologies. What’s the obstacle? Finance. The Bank wants to keep the control that it has when it deals with big projects.

A groundWork report recommends that sustainable access to energy is possible if we put power in the hands of the people.

When we discuss this issue at the Bank, we are told this is a demand driven issue. How to build capacity in developing countries to drive low carbon energy policy?

The Bank sets conditions, it has dialogue with countries and provides expertise. There is a huge disconnect between the environment ministries and finance ministries, and the Bank tends to work with the finance ministries. Countries need to develop a plan to grow as an economy and generate energy in a low carbon way. Any plan will be changing all the time, because the cost of renewables is changing every year. The money to help countries start that dialogue, and do integrated assessments should be forthcoming from countries like the US and the UK. 170 countries have said that they want to do this at the highest level.

Carbon Finance Unit at the World Bank, do the panellists have concerns over how off-setting will be part of climate work at the Bank?

Carbon Finance shouldn’t be a unit. Climate should be integrated into everything that you do. Every project at the World Bank should look at the opportunities for carbon finance and the impacts on climate change.

Green jobs – Global Climate Network has done some work on job creation in developing countries. Demand doesn’t happen in a vacuum, it comes from constituencies in the country that are asking for something. There should be a job constituency with people recognising the scope for jobs within a low carbon economy; in mechanics, engineering as well as in regulation and monitoring country emission reduction targets.

System security – There are additional costs associated with renewables because of the intermittent nature of them. Looking at regional markets where there is demand variation.

We’re not talking about one power source, with a combination of renewable sources then it is possible to provide constant supply.

With regional integration, there are balancing acts that need to take place. There is a danger that centralised sources of supply get the most attention, and the markets are not rural but urban from other countries. Possibly baseload needs are prioritised over the needs of rural or urban poor. Would encourage the Bank to think about distributive energy supply.

Energy efficiency – Analysis in China of wasted energy shows that simple energy efficiency measures would reduce the energy need by the equivalent of 50 coal fired power plants. A better approach to energy policy is to work out what the energy needs of a particular country are, then work through what the energy options there are, starting with energy efficiency, then renewable sources and lastly fossil fuel supply.

There is a clear role for the Bank to finance things that are expensive therefore it has a role to play in financing renewables. The approach paper says the Bank will be financing the costs of climate change. Industrialised countries need to come up with the money to cover the incremental costs.

Larger developing countries have more of a say in what they ask for. However the Bank is not passive, there are all sorts of projects that the Bank turns down for environmental reasons.