WASHINGTON - The World Bank's decision to reject the recommendations of its own Extractive Industries Review process in favor of a business-as-usual approach towards oil and coal industry investments is a profound disappointment that will do little to alleviate poverty or meet the long-term energy needs of developing countries, World Wildlife Fund said Tuesday.
An exhaustive review of energy sector investments, commissioned by World Bank President James Wolfensohn, concluded earlier this year that oil and coal projects funded by the bank were not contributing to the institution's mission of poverty alleviation but were, in fact, creating more environmental, social and economic problems for the countries they are supposed to benefit. It recommended that the bank phase out its investments in oil and coal sectors by 2008 and increase its investments in renewable energy sources.
The bank's board of directors, however, has now decided to ignore most of those recommendations in favor of a program that would continue to invest nearly $3 billion per year in dirty fossil fuels, while making only a token $200 million investment in renewables.
"The World Bank is responding to the recommendations of its own independent review with a set of token measures that are wholly inadequate to the closely linked challenges of poverty alleviation and sustainable resource use," said Francis Grant-Suttie, WWF's director of private sector initiatives. "The bank has a historic opportunity to show real leadership and help guide the developing world towards a truly sustainable and clean energy future. But small and timid baby steps won't get us to where we need to be."
Grant-Suttie reiterated WWF's call to the bank to allocate at least $800 million of its $3 billion annual energy budget to clean renewable energy and efficiency projects and to increase that amount by 20 percent annually over the next five years. "If the bank were to invest that much, split equally between renewable energy sources and energy efficiency projects, then in five years half of its energy lending would be both clean and sustainable and contribute to climate change mitigation," Grant-Suttie said.
"The World Bank should set strong clean energy lending priorities, not dirty ones," he added. "Increased lending for renewables and energy efficiency will deliver clean energy sources to developing countries and help alleviate key threats posed to the developing world by climate change, air pollution, health hazards, as well as increased energy import dependence and rising fuel prices."
The World Bank decision takes place against the backdrop of increasing signs of environmental damage caused by climate change, which particularly affect developing countries. Scientists warn that the extreme floods as well as increasing temperatures and droughts observed in parts of India, Bangladesh and China will occur more frequently and threaten health, water supply and food security if the world does not reduce CO2 pollution, mainly from the coal and oil industry.
Notes to editors:
1. The Extractive Industries Review (EIR) was initiated at the World Bank Annual Meetings in Prague in 2000 by Bank President James Wolfensohn, who pledged to evaluate how much extractive industries contribute to poverty alleviation. The Bank appointed Dr. Emil Salim, the former Indonesian Environment Minister under Suharto and a former director of Indonesia's largest coal company, to direct the review. In January 2004, Dr. Salim presented President Wolfensohn with the Extractive Industries Review Final Report: Striking a Better Balance. The aim of this independent review is to produce a set of recommendations that will guide involvement of the World Bank Group in the oil, gas and mining sectors.
2. WWF has consulted extensively with World Bank throughout the EIR process, and continues to play an active role in pressing the Bank to fully adopt and implement the EIR recommendations.