World Bank Group vows continued support for RE

MANILA, Philippines - The World Bank Group (WBG) has vowed to continuously support and finance all forms of renewable energy (RE) of its client countries to ensure the affordable, reliable, and sustainable energy supply needed to end extreme poverty and promote prosperity.

In a paper entitled “Toward a sustainable energy future for all: directions for the World Bank groups energy sector” released late last week, the Bank said that to help countries manage trade-offs between financial and environmental costs, it would support more expensive energy options, such as RE, with smaller global environmental footprints if there is strong client ownership, or if concessional climate finance can be found to cover incremental costs.

After declining to an annual average of $2.4 billion in fiscal years (FY) 2000-’04, WBG’s lending in the energy sector rebounded strongly, reaching $13 billion in FY2010 — driven by the global financial crisis — before falling to $8 billion in FY2011 and FY2012.

The WBG far exceeded the five-year Bonn commitment made in 2004 to increase energy efficiency and renewable energy financing.

“The question for the WBG, then, is where it can best add value with its limited resources in the context of each country defining and pursuing its own energy sector development path. The WBG’s selectivity is thus driven largely by individual countries’ aspirations, the WBG’s own comparative advantage, and how it can complement the work of other international financial institutions,” it said.

“In selecting areas of engagement, the directions outlined in this paper are anchored in the WBG’s overarching goals of reducing the global rate of extreme poverty to three percent by 2030 and fostering the income growth of the bottom 40 percent in every country,” it added.

In its paper, the group also noted that client countries should focus on universal access, accelerating improvements in energy efficiency, and doubling the global share of renewable energy by 2030.

The WBG said supporting universal access to reliable modern energy is a priority.

“Economic growth, which is essential for poverty reduction, is not possible without adequate energy. And economic growth cannot be said to be building shared prosperity as long as 1.2 billion people are without access to electricity and 2.8 billion are without modern cooking facilities. Lack of energy limits opportunity, job creation, business development, and access to health and education,” it said.

It noted that, “In countries with low energy access, the priority will be affordable and reliable energy. Grid, mini-grid, and off-grid solutions will all be pursued for electricity. In rural, remote or isolated areas, off-grid solutions based on renewable energy combined with energy-efficient technologies could be the most rapid means of providing cost-effective energy services. Engagement in cleaner cooking and heating solutions will grow.”

As part of a drive for universal access, WBG said financial solutions or guarantees would be made available for the most feasible energy options for the poor and for people living in fragile and conflict-affected states.

The WBG also acknowledged the global challenge of balancing energy for development with its impact on climate change and would help client countries realize affordable alternatives to coal power.

“The WBG will provide financial support for greenfield coal power generation projects only in rare circumstances. Considerations such as meeting basic energy needs in countries with no feasible alternatives to coal and a lack of financing for coal power would define such rare cases,” it said.