World Bank secretly finances Asian ‘coal boom’, says report
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 the organisation Inclusive Development International.
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 privatesector arm, the International Finance Corporation, according to the report.
In response to questions from AFP, Frederick Jones, an IFC spokesperson, 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 to invest in renewable energy, not coal,” he said.
Mr Jones added that since 2005 the IFC had already invested more than US$15 billion in renewable energy, energy efficiency and other areas, and had mobilised $10 billion more.
However, Mr Jones conceded that IFC policy did not prohibit equity clients from funding coal plants, meaning the institution might be indirectly exposed to the industry.
The report’s release coincided with the start of this week’s high-profile annual meetings of the 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 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 end-run around environmental safeguards that apply to projects directly supported by the IFC.
The IFC does not identify the end recipients of financing received by such intermediaries. However, through an analysis of records, the report identified 56,127 megawatts of new coal capacity funded indirectly by the IFC.
These included the planned 1360-megawatt Rampal power station in Bangladesh, to be situated on the edge of the sprawling Sundarbans mangrove forest, which is home to endangered species and supports the livelihoods of 2 million people.
The report said the World Bank declined to support the project but six local banks, all IFC-financed, agreed to support it. –
A file photograph shows a Thai fisherman and the coal-fired power plant at Mae Moh in the northern province of Lampang province, Thailand.