SUNS  4368 Friday 5 February 1999

Washington, Feb 3 (IPS/ Abid Aslam) -- Power companies and environmental groups are joining forces in urging the World Bank to overhaul its agreements to lend money for energy projects in the
developing world.
In an open letter to the Bank, multinational corporations and non-governmental organisations (NGOs) have asked the global lender to boost support for renewable energy development in poor countries and to drop plans for a controversial pollution-swapping fund.

"We are united in our belief that clean energy technologies provide solutions to environmental problems while fuelling economic development in Bank client countries," says the letter, released Tuesday.

For the past month, the World Bank has been seeking public comment on its energy lending strategy. The business-NGO coalition wants the Bank to earmark 20 percent of its total energy lending for renewable technologies - including wind, solar and geothermal power, which harnesses heat energy from Earth's crust.

"This mandate is clear and enforceable, and it demonstrates the type of leadership that will make the Bank's sustainable energy proposals a reality," they argue.

Some Bank staffers support the 20-percent goal and, in fact, first suggested it in 1997. But the idea was dropped last year amid internal squabbles. "Let's face it, there are varying viewpoints on the (Bank's executive) board and within Bank management," says Charles Feinstein, chief of the agency's Global Climate Change Unit.

Eight percent of the Bank's total energy portfolio is allocated to renewable technologies, according to Feinstein. The agency is embarking on "business planning and forecasting exercises" to determine achievable targets, he says. "There's no sense in promising things that can't be delivered."

At issue is how the largest public financier of power projects in the developing world can help meet the needs of the two billion poor people in the world's rural areas, who have no electricity, without
contributing further to climate change.

Most scientists assert that, in particular, global warming threatens vast portions of the world with extremes of drought and flooding. In some scenarios, entire island nations such as the Maldives could be lost to rising seas as Earth's polar ice caps melt.

Reformists at the Bank fret about the likely consequences for poor countries and favour increased energy efficiency and greater use of renewable technologies. But they are hindered by the lending agency's stated mission of economic development, according to Daphne Wysham, research fellow at the Washington-  based Institute for Policy Studies.

"Energy consumption is a key indicator of a nation's economic growth, so it is no surprise that roughly one-fifth of the World Bank's lending goes toward increasing energy and power supply in poor nations," she explains.

In the absence of clear targets for cleaning up the Bank's energy lending portfolio, it remains "strongly biased in favour of the more polluting, fossil fuel energy projects which contribute to global
warming," says Andrea Durbin, international programme director at Friends of the Earth.

Since the 1992 Earth Summit alone, the Bank has approved fossil-fuel projects which will burn enough oil, coal and gas to add 1.3 times more carbon dioxide to the atmosphere than was emitted by all countries in 1995, Wysham notes. Carbon dioxide is a prime culprit in climate change.

"It is these emissions from which the Bank now hopes to profit," she says. Under a 'Prototype Carbon Fund' now being developed, the lending agency "plans to enter the market in pollution credits - estimated to reach 150 billion dollars by 2020 - and skim five percent from each trade it brokers."

According to Bank documents, 60 percent of the agency's take would be "profit above administration costs."

The letter from the business-NGO coalition calls on the Bank to halt these plans, which critics say will exacerbate climate problems by allowing dirty nations and corporations to skirt emissions-reduction targets agreed under the Climate Change Convention.

Under emissions trading, industrial companies and countries could buy cheap carbon 'credits' from low-level polluters by, for example, building new, more efficient coal-fired power plants in  developing countries. They would then take credit for the resulting efficiency and convert this into a 'right' to keep polluting at home.

According to the Bank, this eventually would yield reduced carbon emissions while boosting power generation.

The U.S. Treasury Department, however, notes in a document leaked during last November's climate change conference in Buenos Aires, Argentina, that: "The Bank has a credibility problem, having long supported fossil-fuels development."
Compounding the Bank's credibility problem is the secrecy with which it has pursued its emissions trading ambitions, say the companies and environmental groups.

"There has been a relative lack of information flow," Feinstein acknowledges. "But this is not because of deviousness." Rather, the Bank has been seeking guidance from its lawyers and the U.S. Securities and Exchange Commission on how to talk up the fund without violating securities laws or appearing to solicit investors, he says.

Bank staff can now begin "outreach" activities this month, starting with talks involving officials, NGOs, and private market players in the Nordic countries, Feinstein says.

Bank staff also will draft a new environmental strategy document for the energy sector which should be ready by mid-March. Agency higher-ups have yet to decide whether to release it to the public.

Among the 26 institutions signing on to this week's open letter are the NGOs Friends of the Earth and the US-based Union of Concerned Scientists.

Business groups include the U.S. Business Council for Sustainable Energy, whose members include the multinational Enron Corporation and American Gas Association, and the European Business Council for a Sustainable Energy Future, which counts Cogen Europe and numerous
industry associations among its flock.