World Bank and Asian Development Bank financing under fire

Alexander Richter 12 May 2009

Opinion piece: Why does the World Bank (WB) and the Asian Development Bank (ADB) finance coal-fired energy instead of geothermal and solar energy projects?

The Jakarta Post posted an interesting article the other day in which it was asked “Why … the World Bank (WB) and the Asian Development Bank (ADB) finance coal-fired energy instead of geothermal and solar energy, and why do they finance the development of roads and not railway lines?

The article goes then on to look into where the money goes and if institutions like the World Bank or the Asian Development shouldn’t apply some selection process for investment projects, excluding e.g. projects that are adding more greenhouse gases to the atmosphere.

“ADB vice president for knowledge management and sustainable development Ursula Schaefer-Preuss said that the bank had addressed environment and climate change in its long-term strategic framework of development. The ADB, she added, had even established a special fund generated from its own income to finance CO2-reducing projects. But she acknowledged the amount was very small.

J. Warren Evans, director of Environment Department at the World Bank, noted that if the bank incorporated the environment factor into all of its projects it would increase the cost of projects, and it’s unclear who should pay the difference. Most likely project owners and the governments of developing countries, would not be willing to absorb the added environmental costs, he said.

He suggested the issue be discussed and negotiated at an international level to help resolve the problems; at the upcoming climate change negotiation in Copenhagen, later this year, for instance.

The problem is, financing climate change adaptation is not yet on the table for Copenhagen. Financing for climate change mitigation, which is already incorporated in the Kyoto Protocol, is however.

Evans predicted it would be an uphill battle to simply include financing adaptation into the climate change conference agenda in Copenhagen. But, it’s worth a try.”

So the article shows a major problem, while political leaders are pushing for a greener agenda, nobody really wants to pay for it. Geothermal needs a stronger lobby to help overcoming the current financing obstacles to increased development in the sector worldwide.

Source: The Jakarta Post