Keeping the poor in the dark

According to a report in yesterday’s Guardian, the World Bank is proposing to limit its support for coal-fired power stations in the name of sustainability and tackling climate change. The result of this policy change, if it is approved, will not be more renewable power but poor people being deprived of electricity.

The World Bank, one of the global financial institutions created by the Bretton Woods conference in 1944, has the tagline ‘Working for a World Free of Poverty’. One way it has endeavoured to do that in recent years is through funding coal-fired power stations, increasing such aid 40-fold in the past five years. In 2008, for example, the World Bank offered $450million in loans towards the building of a coal-fired plant in Gujarat, India. In April 2010, the Bank agreed a $3.75 billion loan to help construct the enormous Medupi Power Station in energy-desperate South Africa, a decision that was opposed by a number of leading World Bank members, including the US and UK.

Now, it seems, the Bank wants to row back from such support. In the future, only the poorest countries will be eligible for the funding of coal-fired stations and only where there is no practical, low-carbon alternative. Even then, greens and development campaigners have been critical of the new World Bank plan. ‘While it proposes a ban on coal lending to middle-income countries, the bank will continue its fossil-fuel investments in the poorest countries, condemning them to a high-carbon future’, Alison Doig of Christian Aid told the Guardian. ‘In real terms, this means that the bank could still end up spending more than ever on fossil fuels, because it intends to keep backing such dirty projects in the poorest countries.’

But even Doig can see the scale of the task. ‘The draft strategy eloquently describes the plight of the more than two billion people who live in energy poverty, cooking on smoky open fires and with no electric lighting and no power for their small businesses. But it is worryingly vague about how it will tackle this and the target is woefully short on ambition – it would reach less than two per cent of people who currently do not have electricity in their homes.’

Doig’s suspicions probably stem from the fact that, for the most part, renewables are not a practical alternative for developing countries. Until a way is found to store large amounts of electricity, allowing power generated in windy or sunny conditions to be saved for when the wind doesn’t blow or the rain doesn’t shine, renewables are only feasible if used alongside fossil-fuel or nuclear plants. In the developed world, where renewables are only a small part of energy production, there are plenty of coal, gas and nuclear plants to fill in the gaps. But for poorer countries, the over-riding concern is to get as much cheap electricity, as reliably as possible – and that usually means burning coal, not building unreliable windmills.

The World Bank has been well aware of this for years. In 2008, after criticism of the Gujarat project, Marianne Fay, the bank’s chief economist for sustainable development, told The Times (London): ‘There are a lot of poor countries which have coal reserves and for them it’s the only option. The [bank’s] policy is to continue funding coal to the extent that there is no alternative and to push for the most efficient coal plants possible. Frankly, it would be immoral at this stage to say, “We want to have clean hands, therefore we are not going to touch coal”.’

In 2009, a World Bank blog post by Justin Lin, the organisation’s chief economist, explained why support for coal was essential. ‘The answer is that there is an urgent need for energy in the poor countries that we serve and indeed in my home country, China… Because coal is often cheap and abundant, and the need for electricity is so great, coal plants are going to be built with or without our support. Without our support, it is the cheaper, dirtier type of coal plants that will proliferate.’

And while Doig may worry that there will still be support for coal-fired power stations in the poorest countries, where does this new policy leave China and India? Based on International Monetary Fund GDP figures, adjusted to allow for the lower costs of many items in poorer countries, China is the second-largest economy in the world and India is the fourth-largest. Yet both countries have massive, and overwhelmingly poor, populations. China is only in 90th place in terms of GDP per head, and India is 137th. So are these amongst the ‘poorest’ countries that will still get World Bank aid or not? Even these rising economic powerhouses are in desperate need of development.

But far from fretting about this shocking poverty, Western greens don’t seem very keen on the developed world having reliable electricity at all. Even when the chosen energy path is renewable, there’s always a green NGO to criticise the project. So when the Ethiopian government announced plans for a major new hydro-electric scheme – in a country where 70 per cent of people have no access to electricity – greens have demanded that international organisations like the World Bank and the European Investment Bank should refuse to support it (see They don’t give a dam about development, by Nathalie Rothschild).

There should be an outcry about energy policy in the developing world, not because it might lead to a bit more pollution, but because there seems so little urgency in providing power to the 1.6 billion people who must currently live without it. Electricity is an absolute minimum precondition for entry into the modern world. If half the energy devoted to stopping climate change was applied to providing energy to the poor, the world would be a much better place indeed.

Rob Lyons is deputy editor of spiked.