Tamar Hallerman
GHG Monitor
7/19/13
The World Bank Group announced this week that it would sharply limit its financing of coal-fired power plants in the developing world in a landmark decision that hands an early victory to the Obama Administration and its recently-announced climate plan. The World Bank’s board of directors approved a new strategy for its lending policies July 16 that would sharply restrict the development group’s investments in greenfield coal-fired power plants only to “rare circumstances” where developing countries have “no feasible alternatives to coal” in meeting their basic energy needs. The World Bank “acknowledges the global challenge of balancing energy for development with its impact on climate change and will help client countries realize affordable alternatives to coal power,” the bank said in its 10-year strategy paper. The World Bank, though, said it would “consider support” for new and existing coal plants that install carbon capture and storage systems.
The decision could have a massive impact on the energy investment climate in the developing world, since the World Bank last year financed almost $53 billion in energy infrastructure projects there. Instead of coal, the World Bank vowed to focus its financing efforts on renewable energy and energy efficiency projects, as well as natural gas plants. The group also made a notable decision this week when it promised new investment in hydropower. The World Bank had decided not to finance any new hydro projects beginning in the 1990s after some groups had warned how large dams could displace poor populations. “We need affordable energy to help end poverty and to build shared prosperity,” World Bank Group President Jim Yong Kim said in a statement. The last coal project the Bank helped support was in 2009, when it provided a controversial $3 billion loan to South Africa’s state owned utility Eskom to build a 4,800 MW greenfield plant.
The announcement was an early win for the Obama Administration’s climate plan, which was handed another victory later this week when the U.S. Export-Import Bank dropped plans to consider funding a proposed coal plant in Vietnam. During a speech last month, President Obama said his Administration would end public financing of new coal plants abroad unless they deploy CCS or if there is “no other viable way” for the world’s poorest countries to generate power.
