Infrastructure

Background

Issue overview: World Bank and energy

26 August 2015 | Issue overview

Credit: Greenpeace

What’s the issue?

Energy is a crucial economic sector which has a disproportionate influence on a developing country’s ability to increase economic growth and reduce poverty. Energy access is crucial to improving people’s livelihoods. Currently around 1.3 billion people in developing countries lack access to electricity. Critics have complained the World Bank’s energy investments have not increased energy access for the poorest in developing countries and have instead resulted in environmental damage and human rights abuses. The Bank has historically allocated the majority of its funding to fossil fuels and continues to invest in new oil, coal and natural gas projects.

Why is this important?

The Bank is amongst the biggest lenders to the energy sector in the world. It has a direct role in shaping energy policies and sources in developing countries. In terms of energy access, instead of prioritising poor households the Bank has often promoted large-scale and export-orientated projects which provide cheap energy for multi-national energy-intensive industries. For example: the Medupi coal power plant in South Africa has been criticised because it will mainly provide energy for a mining company.

A 2014 study by US NGO’s Oil Change International and Sierra Club found that between 2011 and 2013 just 7 per cent of the Bank’s energy portfolio aimed to increase energy access for the poorest. Instead of support for large-scale centralised energy provision, civil society has called for de-centralised off-grid energy networks as the best way to directly increase energy access for poor rural communities. The Bank also influences developing countries energy mix by investing in fossil fuels indirectly through its support for power transmission networks and/or through financial intermediaries. The Bank has been criticised for promoting privatisation of the energy sector. In Nigeria privatisation of the state electricity company did not increase energy access for the poor, while in Albania the privatisation of hydropower plants led to increased public debt. The proposed large-scale Inga 3 hydropower project in the Democratic Republic of Congo is set to receive both public and private financing.

What are the key milestones in World Bank energy policy?

Mid-1990s: Bank reduced funding for large dams after repeated criticism. It has funded an estimated 600 dams since the 1940s at a cost of $100 billion.

2003: Bank began funding large dams again.

2005-2007: The clean energy investment framework launched with focus on meeting developing country energy needs, reducing greenhouse gas emissions and increased funding for climate change adaptation.

2008: Bank committed to stretch targets to make half of its energy investments ‘low carbon’ by 2011.

2010: Review begins of Bank’s energy strategy but the process stalled in 2011.

2012: Bank joined the United Nations Sustainable Energy for All initiative

2013: Bank’s energy directions paper approved. Announced it will only fund coal projects in “rare circumstances”.

Bank funding

Between 2008 and 2013 the World Bank Group [including the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA)] spent $5 billion on fossil fuels, $11.6 billion on renewable energy, $8 billion on distribution and transmission, $7.5 billion on energy efficiency, $8.3 billion on new thermal generation and $8.3 billion on other energy, according to its own figures.

However, according to US-based NGO Oil Change International’s figures the World Bank Group invested around $18 billion in fossil fuels between 2008 and 2012, around $8 billion on renewable energy (e.g. energy efficiency, geothermal, small hydro, solar and wind) and $15 billion on “other” energy projects (e.g. large hydro, nuclear, biofuels, charcoal and incineration). The way the Bank defines renewable energy is contested because it also includes large hydropower, biofuels and biomass which are documented to have significant negative environmental and social impacts that undermine their definition as ‘clean’ energy,

Between July 2012 and June 2013 the Bank provided nearly $7 billion in energy lending. Around $2.7 billion was for fossil fuels, $1.7 billion for clean energy, and $2.6 billion in “other” energy projects, including large hydropower.

What is the history of civil society criticism?

Civil society has consistently highlighted emblematic problematic cases in each energy sector.

Dams have been criticised because they have displaced communities, destroyed biodiversity and been subject to severe corruption. The World Commission on Dams 2000 report found “While dams have delivered many benefits and made a significant contribution to human development, in too many cases the price paid to secure those benefits, especially in social and environmental terms, has been too high and, more importantly, could have been avoided.”

Emblematic cases

1978: Indigenous communities massacred to clear way for the Chixoy dam in Guatemala

1994: Construction of the Sardar Sarovar dam displaced local communities in India. The Bank eventually withdrew funding following heavy criticism.

2003: Chad-Cameroon oil pipeline completed. Criticised for displacing indigenous communities from their lands and causing ecological degradation.

2008: $450 million loan for the 4,000 MW Indian Tata Mundra coal power plant in 2008 is criticised for negative social and health effects for local fishing communities.

2010: $3.75 billion loan to Eskom’s Medupi coal plant in South Africa criticised for affecting air quality, contributing to climate change and for providing energy for a mining company.

What is happening on this issue now?

In 2013 the World Bank released a new energy directions paper saying it will focus on funding for natural gas, large hydroelectric projects, energy efficiency and renewable energy. It also said it will “provide financial support for greenfield coal power generation projects only in rare circumstances” unless there are no feasible alternatives or financing. A sample of current emblematic cases include the Bank’s funding for controversial coal plants in Kosovo, Indonesia and India, investments in natural gas projects in Nigeria, Egypt and Ivory Coast and is returning to large-scale hydropower projects, most clearly through support for the Inga 3 dam in the Democratic Republic of Congo.

More background on this issue

Infrastructure

Background

26 August 2015 | Issue overview

Issue overview: World Bank and energy

IFI governance

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17 April 2015 | Minutes

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Notes from a meeting on energy during the World Bank spring meetings.

Environment

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11 April 2014 | Minutes

Climate risks and the World Bank

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11 April 2014 | Minutes

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9 April 2014

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16 September 2013 | Minutes

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Infrastructure

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23 April 2013 | Minutes

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IFI governance

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22 April 2013 | Minutes

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22 April 2013 | Minutes

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IFI governance

Background

22 April 2013 | Minutes

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IFI governance

Background

19 April 2013 | Minutes

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Minutes of an open roundtable with EDs that occurred during the 2013 spring meetings.

IFI governance

Background

3 November 2012 | Review

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The Bretton Woods Project launched the twice-yearly Climate Investment Funds (CIFs) Monitor in 2010 to track the development of the CIFs and highlight concerns. As it approaches our third year, we would like your input into how we can improve the CIFs Monitor to ensure that it remains a valuable resource for civil society and other interested stakeholders of the CIFs.

Infrastructure

Background

13 October 2012 | Minutes

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Infrastructure

Background

10 October 2012 | Minutes

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This session featured a discussion on the implications of current water policy reforms that have increasingly privatised and commodified water.

IFI governance

Background

23 April 2012 | Minutes

EIR + 10

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Infrastructure

Background

20 April 2012 | Minutes

Kosovo's options for a sustainable energy future

Minutes of presentation and discussion on Kosovo's options to develop a sustainable energy future, Washington DC, 20 April 2012.

Infrastructure

Background

20 April 2012 | Minutes

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Infrastructure

Background

20 April 2012 | Minutes

Climate change, energy access and sustainable development

Minutes of climate change and energy access meeting, Washington DC, 18 April 2012

Infrastructure

Background

26 September 2011 | Minutes

India's energy future: Consequences of India's coal rush and alternative energy scenarios

Notes of a panel discussion, Washington DC, 20 September 2011

Infrastructure

Background

26 September 2011 | Minutes

India's energy future: What role for the Bank?

Notes of meeting, Washington DC, September 21, 2011

Infrastructure

Background

23 September 2011 | Minutes

Scaling up Climate Finance

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IFI governance

Background

15 September 2011 | Minutes

Notes of meeting between UK Executive Director to World Bank and Civil Society Groups

Civil society organisations met UK Executive Director to the World Bank and staff from the Department for International Development to discuss water, the Bank's private sector approach, health and nutrition, safeguards review and energy strategy.

Infrastructure

Background

18 April 2011 | Minutes

World Bank, energy and climate change: Something old, something new?

Notes of 2011 Spring Meetings NGO panel

IFI governance

Background

14 April 2011 | Minutes

Notes of meeting between UK Executive Director to World Bank and Civil Society Groups

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IFI governance

Background

7 March 2011 | Minutes

Notes of meeting between UK Executive Director to World Bank and Civil Society Groups

On February 2nd 2011 civil society organisations held a meeting with the UK Executive Director to the World Bank and staff from the Department for International Development to discuss the formation of the new Green Climate Fund, the World Bank energy startegy review, and the role of the private sector in World Bank lending.

Infrastructure

Background

30 November 2010 | Minutes

Private sector investment in energy lending and climate finance

Meeting notes of 'Private sector investment in energy lending and climate finance'

IFI governance

Background

4 October 2010 | Minutes

Meeting on the World Bank between DFID and UK NGOs

Notes of a meeting between UK civil society and DFID staff.

Infrastructure

Background

28 April 2010 | Minutes

Meeting on the World Bank with DFID

Notes of a meeting between Rachel Turner of DFID and UK NGOs, April 2010

Infrastructure

Background

26 April 2010 | Minutes

Launch of Bank Information Center's (BIC's) model energy strategy

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IFI governance

Background

26 April 2010 | Minutes

A sustainable World Bank energy strategy: perspectives from various stakeholders

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

IFI governance

Background

26 April 2010 | Minutes

Evaluation as a critical tool for accountability

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

Infrastructure

Background

23 April 2010 | Minutes

Governance challenges in financing green and sustainable energy policies

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Infrastructure

Background

23 April 2010 | Minutes

Roundtable on post-crisis economic recovery

World Bank event at the World Bank spring meetings 2010, 22 April

IFI governance

Background

6 April 2010 | Minutes

Meeting between UK civil society and Susanna Moorehead, UK Executive Director to the World Bank

Minutes of a meeting between UK civil society, UK World Bank Executive Director Susanna Moorehead, and DFID staff

Environment

Background

6 October 2009 | Minutes

Consultation meeting on World Bank environmental strategy

Summary of the first consultation on their new environment strategy, which they will develop next year.

Infrastructure

Background

5 October 2009 | Minutes

Climate Change, Finance and the Multilateral Development Banks Panel

At the World Bank's annual meetings, the World Resources Institute hosted a panel on climate finance which culminated in a presentation and comments by Michele DeNevers, senior manager of the World Bank's Environment Department on the World Bank's role in climate change and climate finance.

IFI governance

Background

22 September 2009 | Inside the institutions

Safeguard policies and performance standards

Originally drafted as internal operational policies to guide staff, World Bank safeguard policies evolved after pressure from environmental and social groups in the 1980s and were first officially implemented in 1998. They aim to protect people and the environment from the adverse effects of Bank-financed operations and are based on international agreements, even if these protections are not explicitly provided for in the borrower country's national law.

Environment

Background

31 October 2008 | Minutes

Carbon Finance and the World Bank

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UK

Background

9 October 2008 | Minutes

Highlights: Meeting of UK NGOs with UK Alternate Executive Director to the World Bank

Meeting between UK NGOs and UK Alternate Execituve Director to the World Bank Caroline Sergeant on 5 September 2008.

IFI governance

Background

30 September 2008 | Minutes

UK NGO meeting with the Secretary of State for International Development, on the World Bank

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Environment

Background

25 July 2008 | Minutes

Highlights: Meeting of UK NGOs with UK Alternate Executive Director to the World Bank

Meeting between UK NGOs and UK Alternate Execituve Director to the World Bank -Caroline Sergeant- on July 22, 2008.

Environment

Background

13 April 2008 | Minutes

Dialogue with NGOs and Lars Thunell, Executive Vice President and CEO, IFC

Dialogue with NGOs and Lars Thunell, Executive Vice President and CEO, IFC

Environment

Background

13 April 2008 | Minutes

Towards a World Bank Group Strategic Framework on Climate Change and Development

Towards a World Bank Group Strategic Framework on Climate Change and Development

Environment

Background

18 February 2008 | Minutes

Highlights of BWI-UK network meeting with Caroline Sergeant, 7 February 2008

Highlights of NGO meeting with alternative executive director to the World Bank, Caroline Sergeant

Infrastructure

Background

23 October 2007 | Minutes

Climate change and clean energy challenges and opportunities in addressing Africa's growing energy n

Highlights of a meeting at the World Bank-IMF annual meetings 2007.

Infrastructure

Background

23 October 2007 | Minutes

Low carbon, high hopes: making climate action work for development

Highlights of a 19 October meeting at the World Bank-IMF annual meetings 2007.

Environment

Background

5 October 2007 | Minutes

Highlights of BWI-UK network meeting with Douglas Alexander

Highlights of a 4 October meeting between NGOs in the BWI-UK network and secretary of state for international development, Douglas Alexander, addressing IFI strategic reviews, aid effectiveness, clean energy/climate change and a number of other issues.

Environment

Background

2 July 2007 | Inside the institutions

The World Bank and energy

Information on the objectives, staffing, and volumes of the World Bank's energy portfolio.

Infrastructure

Background

18 April 2007 | Minutes

Highlights of meeting with Tom Scholar and UK NGOs

Highlights of meeting between Tom Scholar and UK NGOs, April 2007

Infrastructure

Background

15 November 2006 | Minutes

Highlights of UK NGO meeting with Paul Wolfowitz

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Infrastructure

Background

27 April 2006 | Minutes

World Bank dialogue on the clean energy investment framework

Highlights of a World Bank-organised dialogue on its new clean energy investment framework at the spring meetings in Washington, 24 April 2006.

Environment

Background

24 September 2005 | Minutes

Climate change after the G8 summit:

Highlights of meeting

Infrastructure

Background

22 April 2005 | Minutes

IFC consultation with civil society on the safeguard review

Highlights of the IFC consultation with civil society on its revision of the WBG environmental and social safeguards

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Issue overview: World Bank and energy

What’s the issue? Energy is a crucial economic sector which has a disproportionate influence on…

26 August 2015 | Issue overview

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