World Bank urges new breed of clean energy funding

The World Bank is urging its steering committee to approve a new breed of loans and grants that would go to developing countries to help them make power generation cleaner and more efficient. A report drafted for the meeting of the International Monetary Fund and World Bank at the request of Group of Eight leading nations already seems to have gained traction among some emerging countries.”
“The World Bank said developing nations need to invest some $ 300 bn each year for the next 25 years to meet their energy needs -- largely in electricity -- so the report focused on ways to make projects less environmentally taxing. It's quite clear we have a number of technologies but the private sector has walked away,” World Bank chief scientist Robert Watson said. “The problem is to induce investment.”

“One idea floated by the World Bank is the creation of a grant to help developing countries cut the cost of buying new high-efficiency energy technology and infrastructure. Another would see existing power plants upgraded, with the gains from more efficient production going to repay the loans that funded the original overhaul.”
“The Bank also suggested establishing a venture capital fund to finance the development of promising new clean energy technologies as well as bringing them to market.”

British Chancellor of the Exchequer Gordon Brown said in March that at the meeting in Washington he would propose a World Bank fund under which $ 20 bn would be invested to develop alternative energy sources in poor countries. But Steen Jorgensen, the Bank's acting vice president for sustainable development, said that while Brown's idea had been welcomed it was not debated by the Development Committee.
“We think the needs will be much larger,” he said of the $ 20-bn price tag on Brown's idea.

The World Bank study noted that “‘large developing countries must improve their regulation of energy markets to remove the biggest obstacle to investment in clean energy…”
Rapid policy and regulatory reforms could increase private-sector investment in the electricity sector in developing countries, as would better risk management tools, like political risk insurance,” the World Bank said. “Removal of broad energy subsidies would promote conservation. Public funding could concentrate on clean energy technologies that are not quite economically viable but which have potential for wider use to mitigate greenhouse gas emissions,” the World Bank said.
“There is a wide range of technologies,” Robert Watson, chief scientist at the World Bank, said. “The problem seems to be the private sector has walked away.”

“Rich nations and Russia are responsible for at least 70 % of greenhouse gases, and developing countries that are expanding energy production to feed economic growth and reduce poverty say it is unfair to expect them to bear the financial burden of producing clean power,” said Robert Watson.
“The developing countries say if you want us to be climate friendly, we have to be compensated for the additional costs,” he said. “The Bank estimates it will cost $ 10 bn to $ 200 bn per year to reduce greenhouse gas emissions, depending on the rate of the reductions. To help meet those costs, Bank officials authorized a proposal for accelerating investments in clean energy, to be drafted in the next five months.”

The Bank plan has provoked criticism in some quarters. Some "find the (project) to be biased toward the development of alternative, renewable sources of energy not yet commercially viable while neglecting the bigger picture of aiming for cleaner, more efficient traditional energy sources."
Dutch Development Minister Agnes van Ardenne noted that the project principally targets middle-income countries where there is a potential market for the development of clean energy. She said she would have preferred an "energy for all" initiative that would embrace the millions of people -- 500 mm living in sub-Saharan Africa alone -- who have no access whatsoever to electricity. Her German colleague, Heidemarie Wieczorek-Zeul, meanwhile called for the creation of a fund at the African Development Bank to which oil producers would contribute for the promotion of renewable power sources in African countries.