The World Bank and energy

The World Bank Group’s energy work is managed under the sustainable development network which promotes “environmentally responsible and socially acceptable” growth strategies, affirms Katherine Sierra, vice president of sustainable development. The Bank’s energy objectives are to “improve access to clean, modern and affordable energy services for the poor” and “achieve sustainability in the environmental, financial, and fiscal aspects of the energy sectors”.

The Bank’s strategy to achieve these objectives is founded on: an effective regulatory system based on investor and consumer confidence in transparency and regulation; support for sustainable, rural energy solutions based on low-cost and efficient energy technologies; and access to modern energy services via low cost distribution methods, subsidies and incentives for local participation in the provision of these services.
Since 2004, IBRD/IDA lending for renewable energy has been greater than for oil and gas. However, oil and gas continues to account for most energy funding from the Bank’s private sector arm, the IFC. During 2004 the IFC made $340 million in commitments to 7 oil and gas projects, and in 2006 claims commitments of $430 million for similar projects. However, neither aggregate figures nor sectoral details comparable across the IBRD, IDA and IFC are available.

The World Bank states that it is the largest lender for Renewable Energy and Energy Efficiency (RE&EE) projects in developing countries since 1990, investing more than $6 billion in Bank-managed resources and mobilising more than $10 billion from other public and private sources. In 2004 the Bank committed to increase its RE&EE financing by 20 per cent per year over the following five years. There have been questions raised over the low baseline from which this target was set, the Bank’s definition of renewable energy which includes large hydropower and the exclusion of the IFC from the target. The Bank states that much of its RE&EE lending includes money from the Global Environment Facility and carbon finance funds, such as the Clean Development Mechanism and Prototype Carbon Fund (see Updates 53, 47). In 2005 the World Bank launched its Investment framework for clean energy and development to address developing country energy needs; control greenhouse gas emissions; and support climate change adaptation (see Update 55, 52).

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