World Bank Favors Fossil Fuel Projects in Developing Countries, Report Says
A watchdog group studied four countries and found the bank’s financing encouraged policies that steered money toward coal, gas and oil.
A watchdog group has issued a new study saying the World Bank, which distributes billions of dollars to developing countries each year with a goal of reducing poverty, is pushing those countries toward fossil fuel projects despite acknowledging that climate change poses a threat to its mission.
The study, released late Thursday, said one of the bank’s primary lending programs has steered investment toward coal, gas and oil, while blunting efforts to advance renewable energy sources, including wind and solar.
The Bank Information Center looked at one of the bank’s three lending programs—known as Development Policy Finance—in four countries between 2007 and 2016: Peru, Egypt, Mozambique and Indonesia. It said the program pushed countries toward coal projects and transmission in Indonesia, new coal plants in Egypt, three natural gas pipelines in the Peruvian Amazon and oil exploration in Mozambique, among other projects.
The bank distributed funds to the four countries, totaling $5 billion over the 11-year period, after agreeing that these countries would enact certain policy changes. Those policies, the Bank Information Center says, supported tax breaks, subsidies and public-private partnerships that enabled these projects, despite the World Bank’s intention that the program would help countries hasten their transition to low-carbon economies.
“We analyzed what sort of industry was benefiting and across the board, the fossil fuel industry was at the top of the list,” said Nezir Sinani, a manager at the Bank Information Center’s Europe and Central Asia divisions, “which is troubling because the World Bank is using this lending instrument to sell these countries on a low-carbon path.”
The report said that the World Bank distributed $15 billion, or about a third of all its development funding, through its Development Policy Finance wing in 2016. (World Bank figures show it distributed a total of nearly $30 billion, of which $13 billion went to the program.) The program provides funding—via grants, credits or loans—after the countries agree to implement a package of policy reforms. The bank says it uses this funding as an incentive for countries to transition to low-carbon technologies or toward other goals, such as improving education or public health. The money from the program goes directly toward a government’s budget and is not earmarked for a specific project, unlike other World Bank distributions.
Source
inside climate news | By Georgina Gustin, InsideClimate News 2017
