‘World Bank indirectly fuelling Asia coal boom’
> ‘Dirty’ power plants received financing from intermediaries backed by global lender, says group
WASHINGTON: The World Bank is indirectly financing a boom in some of Asia’s dirtiest coal-fired power generation despite commitments to end most funding for the sector, a development advocacy group charged yesterday.
The power plants, which contribute to climate change and deforestation as well as premature deaths due to illness, are cropping up from Bangladesh to the Philippines, all with financing provided by financial intermediaries supported by the Bank, said a report produced by organisation Inclusive Development International (IDI).
In a policy shift in 2013, the Bank said it would end virtually all support for the creation of coal-burning power plants, supporting them only in “rare circumstances” where there are no viable alternatives.
However, since that pledge, 41 coal projects have received funding from banks and investment funds supported by the World Bank’s private-sector arm, the International Finance Corporation (IFC), according to the report.
In response to questions from AFP, Frederick Jones, an IFC spokesman, said the global lender took the report seriously.
“It raises important long-term questions about how we need to create stronger markets for clean energy and create incentives for countries and the private sector not to invest in coal, but rather in renewable energy,” he said.
Jones added that since 2005 the IFC had already invested more than US$15 billion (RM62 billion) in renewable energy, energy efficiency and other areas, and had mobilised US$10 billion more.
However, Jones conceded that IFC policy did not prohibit equity clients from funding coal plants, meaning the institution might be indirectly exposed to the industry.
This is despite the fact that IFC loans to financial services industry players are not intended to finance coal-related projects and targeted lending is “ringfenced” to prevent this, Jones said.
The report’s release coincided with the start of this week’s high-profile annual meetings of the World Bank and the International Monetary Fund, as the world’s finance chiefs gather to discuss efforts at poverty reduction.
Campaigners in recent years have been sharply critical of the IFC’s support for third parties in the financial services sector, such as banks and investment funds, saying they can represent an endrun around environmental and social safeguards that apply to projects directly supported by the IFC.
Financial-sector lending now accounts for 52% of the IFC’s long-term commitments, according to IDI, which jointly produced the report with other advocacy organisations including the Bank Information Center and Accountability Counsel.
Picture of ING headquarters on Avenue Marnix, Brussels, during an extraordinary works council meeting regarding a major restructuring of the banking insurance group yesterday.