The World Bank – which over the years of it’s long history has financed more coal-fired power stations around the globe than any other national or international institution – has just announced that it will stop doing so. The World Bank announced earlier this month that it would stop all of its financing of coal-fired power plants in developing countries and focus instead on scaling up renewable energies, as well as lighter fossil fuels like natural gas and hydroelectric power, in an effort to address global warming.
This announcement comes just weeks after President Barack Obama declared that the U.S. would cut off most funding for coal plants overseas. “Today, I’m calling for an end to public financing for all new coal plants overseas unless they deploy carbon-capture technologies, or there’s no other viable way for the poorest countries to generate electricity,” President Obama had said in his speech at Georgetown University earlier this month.
The Timeline goes as follows: When the Environmental Parliament released a series of reports examining public financing of fossil fuels, starting with the World Bank 20 odd years ago, we were treated as being out of the reservation. Then we went to address then in 1997 the EBRD, then in 2005 the OPIC and the Export-Import Bank — all major Washington Institutions — we didn’t know when these banks we had set our sites on would finally be forced to get out of coal. But we knew the day would have to come soon.
That day came on some twenty years later on June 25, when we finally heard the following words uttered by President Obama: “Today, I’m calling for an end of public financing for new coal plants overseas unless they deploy carbon-capture technologies, or there’s no other viable way for the poorest countries to generate electricity. And I urge other countries to join this effort.” This speech had a ripple effect throughout the Washington Institutions.
This was really President Obama’s Agenda reverberating throughout the World’s Economy and shifting the leading Financial Institutions of our World. President Obama’s voice had been heard – loud & clear. His speech was not magical realism but serious Leadership, because nary a month later, on July 16, the World Bank Board of Directors under the leadership of our friend President Jim Yong Kim approved a new energy strategy which would effectively phase out all of the Bank’s institutional support for coal. The Strategy was outlined in a new Paper titled: “World Bank New Energy Strategy.” The paper “affirms that the World Bank Group will ‘only in rare circumstances’ provide financial support for new greenfield coal power generation projects only when these are going to be “meeting basic energy needs in countries with no feasible alternatives.”
Great financiers like George Soros and Buffet hailed the World bank move as a step in the right direction. Both men have seen their renewable Energy investment strategies as winners. This month, we also got the news that the US Export-Import Bank had rejected funding for a coal plant in Vietnam. It was the first rejection of a coal burner since Obama’s climate speech @ Georgetown Uni last month.
It was a Good Day.
Still this day may have come a little too late for many children around the World who were forced to drink dark poisoned water from the trailing ponds and the fly ash lakes of Coal Generation plants leaking into the aquifer. And it might have come too late for the folks who breath the foul air generated by Coal plants and are dying from it all around the world too. And it certainly has come too late for all the residents of major Chinese cities who live five years less on average — because of the coal generation plants that are polluting their urban air and instead provide angry and toxic fly ash thickened dark air, for them to breathe. I’m also not pleased with the caveat Obama placed on his pledge… Nor am I pleased with the possibility that the World Bank, Ex-Im Bank and others may simply switch from coal to gas, especially if that gas is derived from “fracking,” which can be worse for our already unstable climate than coal. Yet, hopefully, this is the dawn of a new day, when public financing of coal mines and power plants around the world is no longer acceptable. It’s not enough, of course, but after 21 years of persistent pressure from EP, from IPS, and from many other groups — our government seems to finally be listening.
The World Bank’s proposal mirrors Obama’s recent moves in that the international financing group will “only in rare circumstances” give financial support to coal power projects if they are needed to meet basic “energy needs in countries with no feasible alternatives.” The announcement marks an important symbolic step in the bank’s transition from being one of the world’s principal environmental bogeyman to being a champion of combating climate change, a process accelerated by its Obama appointed President, scientist Jim Yong Kim.
In the US, President Obama’s plan will also affect lending done by the U.S. Export-Import Bank, which gives government-backed loans to boost American exports. According to The Washington Post, “the bank has provided financing for a handful of large coal plants, including $805 million for the 4,800-megawatt plant in South Africa and $917 million for the recent 4,000-megawatt facility in India.”
However, even without international financing, demand for dirty energy is driving developing countries to build coal-fired power capacity because of the momentum of cheap coal and easy locally built infrastructure and blast furnace technology. Without pollution controls this is the most wasteful energy resource and the most damaging to humans. Still we are building it. Mainly because we need to reach high levels of Renewable Energy in order to achieve escape velocity from dirty coal.
The World Resource Institute reports that nearly 1,200 coal plants have been proposed globally, totaling more than 1.4 million megawatts of power. Most of these coal plants are being built in developing nations — 76 percent of the proposed coal-fired capacity is in India and China.
The greening of the World Bank owes much to Ian Johnson its Vice President of Sustainable Development for the best part of a decade from 1998, and Rachel Kyte, who now holds the post. But it has been given a big push by the arrival of Mr Jim Yong Kim, the first scientist to serve as its president, who has made tackling global warming one of his chief priorities and has produced two groundbreaking reports warning of its dangers in less than a year in the job. Ms Kyte calls it “a pragmatic set of directions for energy development”, adding: “We need to be sure that everyone is reaping the benefits of modern energy by 2030, and we need to do it sustainably.”
There is still a great need for electrification around the world. As an example today in 20 sub-Saharan African countries, only one in five of the people at present have electricity… And this is repeated in many other places around the world… So we need to double down to leapfrog Coal in the effort to offer Economic Development to the peoples of this world. Now the hope is that World Bank’s move away from King Coal will stimulate other lenders also to heavily restrict support for coal around the world. But most Coal plants are built without international funding, especially in China which did not block the new policy — a powerful member of the Bank — as it did previous attempts to cut back funding for the dirty fossil fuel.
Now if the Bank is serious about renewables and it wants to meet the energy needs of the two-thirds of people in the poorest countries who don’t have access to electricity, it clearly needs to consider large scale renewables as the main option in the mix of Energy Finance and Economic Development.
Because, while international financing for coal is being cut, funding for renewable energy needs to grow to fulfil the vacuum in Energy funding that is being created. Because today according to the World Bank the figures do not reflect this since by the end of 2012 the Bank spent $12.5 billion in six years on renewable energy projects — which was about one-twentieth of what it booked as investment on Coal Generation Energy Finance during that very same period.