World Bank Energy Lending Still Veering in Wrong Direction

(Flickr/Claudio Schwarz)

(Flickr/Claudio Schwarz)

More than one billion people around the world still lack access to modern electricity.

At this week’s spring meetings, discussions between environment and development civil society groups and the World Bank highlighted tensions between those who seek to tackle energy poverty using every energy option available, and those advocating for the Bank’s financing to focus on clean, sustainable solutions for these developments.

In 2013, the World Bank released a report describing how the institution’s energy sector activities have shifted — except in special circumstances — away from coal and toward renewable energy and “lower carbon” fuels.

But analysis of the World Bank’s energy investment tells a different story. Oil Change International points out that the Bank spent $1 billion last year alone financing oil, coal, and gas exploration projects.

Vijay Iyer, Director of the World Bank’s Sustainable Energy Department, argued on a panel at the spring meetings that energy lending must focus on reliable access to affordable modern energy at volumes that cover people’s needs. According to Iyer, fossil fuel options — particularly expansion of greenhouse gas-emitting natural gas — must stay on the table in order to keep power affordable. He cited the relatively high up-front investment needs of renewable energy installation as a barrier to clean energy access for the poor.

But Oil Change International managing director Elizabeth Bast, also on the panel, underscored that despite the Bank’s rhetoric on reaching the poor, only 8 percent of the Bank’s energy portfolio is actually focused on energy access.

If the World Bank were serious about bringing energy access to the poor, it would dedicate the majority of its lending to do so. For the rural poor, that means providing small and medium-sized businesses the capital — and investors, the guarantees — to build mini- and off-grid renewable energy systems.