World Bank Energy Strategy
Ecoal, June 2010, Vol. 71
The World Bank Group (WBG) is undertaking consultations globally to get input for its new energy sector strategy. The consultations are part of a broader effort to gather input from a wide range of perspectives on how the World Bank can best help developing countries improve the access and reliability of energy, while helping to move to a more environmentally sustainable energy development path.
The World Coal Institute (WCI) has been actively involved in the consultations, highlighting the important role of coal as an energy source and the technologies available to improve the environmental performance of coal. As part of this, WCI submitted a written response to the World Bank Energy Strategy Consultation, extracts of which are below.
Energy governance
Before funding specific energy projects, the WBG has a critical role to play in ensuring that there is an improving and robust global energy infrastructure and a transparent governance and energy architecture in WBG recipient countries. Without these in place, the WBG will be unable to secure private sector co-investment or ensure that public funds invested will result in effective energy and environmental outcomes.
The WBG should place a particular priority on strategic energy planning based on national priorities. The WBG must enter specific countries as a partner in development, and not dictate possibly inappropriate conditions to investments in specific countries.
The WBG should work to enhance energy trading in developing economies and between the developing and developed worlds. Energy trading is common throughout Europe and across the North American continent but needs to be encouraged in other regions.
The role of the WBG: energy access and climate change
The WCI believes the role of the WBG to assist in facilitating the transition to a global low-carbon economy is critical. However, this role is secondary to the primary function of the WBG to act as a catalyst for economic and social development and alleviate poverty in the developing world.
The WBG is not, and should not seek to be, another Global Environment Facility. Through the current energy strategy process it should clearly define those areas in which it needs to be a key player, those areas in which it needs to confine its role to supporting and complementing other agents, and those areas in which it need not be directly involved.
However, the WCI welcomes the WBG's involvement in climate change mitigation and adaptation. In this area it should be guided by the science and expertise of organisations such as the International Energy Agency (IEA) and the Global Carbon Capture and Storage Institute (GCCSI) which have both actively supported the UNFCCC and G8 and G20's climate action agendas.
The WBG also needs to ensure it clearly delineates means and ends in its new strategy. It is not appropriate for the WBG to promote any individual low carbon option (e.g. windpower, CCS, etc) at the expense of other options. In its climate change considerations, the WBG needs to pursue a specific end (e.g. stabilisation of atmospheric greenhouse gases at particular levels) rather than pursuing targets for specific low carbon technologies. In other words, the WBG should not set ideologically-driven targets for the percentage of its portfolio based on one particular low carbon option (or family of options) but set science-based targets on the contribution of its entire portfolio to reducing concentrations of greenhouse gases in the atmosphere.
Funding balance - technologies
In addition the WBG should ensure that its specific funding decisions take into account a thorough calculus of the best climate change mitigation (or adaptation) options. Just as the WBG would calculate the best megawatt return on a given electricity investment in any particular country, it needs to calculate the best "bang for the buck" in terms of mitigation or adaptation effect.
To not use this calculus in its funding decisions would be to waste financial resources that could be used more effectively.
In this regard, the WCI remains convinced of the merits of including coal projects and CCS projects in the WBG portfolio. The IEA, IPCC, the Stern Review and MIT all refer to the importance of including CCS in the climate mitigation mix to:
- Ensure the effectiveness of measures aimed at stabilisation; and
- Minimise the costs of effective climate - mitigation action.
They have suggested it may not even be possible to achieve stabilisation of greenhouse gases at 450ppm without CCS. They have further demonstrated that withholding CCS from the portfolio would mean a rollout of other low carbon technologies (nuclear, wind power, solar, etc) at rates geometrically higher and faster than that suggested by even the most enthusiastic advocates of these technologies.
Funding balance - poorest versus other potential recipient countries
Generally, the WBG should focus on assisting the poorest nations. However, it cannot ignore the cross-border impacts and benefits of investment in particular energy markets.
The recent WBG decision to invest in coal power generation in South Africa in part responsibly recognises the beneficial impacts this investment will have across sub-Saharan Africa. Similar investments in key countries such as Brazil, Colombia, Vietnam, and Indonesia could have similar beneficial flow-on effects in their regions.
The WBG also specifically requested input from stakeholders on six key areas. Below are the WCI's views on these areas:
1. Where the help of the WBG in the energy sector in developing countries is most needed:
In terms of demand side management, the WBG should seek to facilitate the gathering of accurate energy statistics as well as promoting energy efficiency awareness and pragmatic energy efficiency programmes.
From a supply side perspective, the WCI believes there are several areas in which the WBG should seek to help:
- Project financing, including financing - conditional on the implementation of renewable energy, CO2 mitigation or energy efficiency programmes
- Energy demand forecasting and planning - for power demand growth in relation to economic development
- R&D promotion
2. Whether the proposed approach adequately addresses the needs of the poor and marginalised and any suggestions for strengthening this aspect:
The WCI believes that the WBG is taking the correct core approach towards addressing the needs of the poor and marginalised and strongly supports the points made under the "Setting" section of the Energy Strategy Approach Paper.
However, WCI believes there is further scope for the Paper to take account of the widespread positive impacts of responsible coal mining companies in the areas and communities in which they operate.
3. Whether the proposed approach strikes the right balance between meeting the needs and priorities of low-income countries along with those of middle income countries:
The WCI strongly supports the need for improved WBG energy governance, especially in procurement policies, in all developing countries and also supports improved technical and administrative management. However, the WCI believes that, overall, the WBG's strategy is weighted slightly in favour of lower income developing countries and the WBG should therefore increase its focus on middle income developing countries.
4. Which principles the WBG should follow resolving trade-offs between meeting the local energy needs of individual countries and reducing global greenhouse gas emissions:
The WCI believes that a balanced approach to this issue is desirable; recognising that for many individuals in developing countries the primary objective is to improve their economic circumstances. For many of the poorest individuals in these countries, energy efficiency and climate change imperatives are very distant notions, if they feature at all.
While the WBG's approach correctly pushes for a balanced approach to energy security, stability and affordability of supply, as well as climate change objectives, the options provided in the Paper make little reference to CCS, a technology that is highly compatible with the WBG's strategic approach. Rightly, emphasis is placed on high efficiency plant, but unless there is an additional application of CCS technologies (even solely in terms of capture readiness in the early stages of development) it is difficult to see how energy provision and climate change imperatives can be met where coal is, and will continue to be, the dominant fuel in energy supply.
5. What role the WBG should play in promoting new technologies and/or helping to transfer existing technologies to new markets and how much weight the Bank Group should give to each:
The WCI believes that the WBG has the opportunity to be an influential leader in respect of technologies (including CCS) to address the burden of current and likely fossil fuel use as well as in new renewable energy technologies. In seeking to exercise such influence the WBG will be required to judge the extent to which it can push for change on a case-by-case basis.
6. Other suggestions for strengthening the WBG's work in the energy sector via this energy strategy:
A focus on implementation and pragmatic solutions to people's real needs should be central to all the WBG seeks to achieve via this strategy. Too much policy formulation amongst too many agencies, whilst well intentioned, often results in very little. The WCI believes that tackling energy poverty requires workable solutions; simple to implement on the ground and free from corruption.
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