Access to environmentally and socially sustainable energy is essential to reduce poverty. Over 1.3 billion people are still without access to electricity worldwide, almost all of whom live in developing countries. About 2.5 billion use solid fuels—wood, charcoal and dung—for cooking and heating. Every year fumes and smoke from open cooking fires kill approximately 1.6 million people mostly women and children, from emphysema and other respiratory diseases.
Africa faces acute energy challenges, with the lowest electrification rate of all the regions at 26 percent of households. About 550 million people, mostly Africans, are without access to electricity. Without access to energy services, the poor are deprived of the most basic economic opportunities needed to improve their standards of living.
To make the leap to universal access to modern energy services by 2030, new capital investment of about $35-40 billion will be needed every year. This is in addition to worldwide annual investments of about $450 billion just to sustain energy services at current levels.
Climate change remains a critical concern. At present, more than 75 percent of energy consumed comes from burning fossil fuels, which produces greenhouse gases that cause climate change. To reduce the energy sector’s impact on the climate, as we must, moving to low-carbon renewable energy and enhancing energy efficiency is essential. The World Bank Group is contributing to this worldwide effort, through lending, analytical support, technical assistance and capacity-building.
Strategy
World Bank Group reviews its energy strategy
The Bank Group is preparing an updated energy sector strategy. It is needed, as the current framework, Fuel for Thought - The World Bank Group’s Energy Program: Poverty Alleviation, Sustainability and Selectivity, dates back to 2001. Based on an Approach Paper, the new strategy will also draw on consultations with over 2,100 participants from government, civil society, the private sector, and academia, among others, in 56 face-to-face meetings held around the world, as well as over 170 written submissions. A summary of the input has been posted on our website. The World Bank Group's Board Committee on Development Effectiveness is now reviewing the draft energy sector strategy for the organization. The strategy document will be posted on the website when this review is completed.
Moving towards clean energy
COAL
About 72% of South Africa’s and 70% of India’s electricity comes from coal-fired power stations, as does 49% of the electricity generated in the US. But the world knows that burning coal, as well as other fossil fuels, produces about 70% of the planet’s greenhouse gas emissions. Here is the challenge: given these numbers, experts agree that the world cannot, at present, provide affordable access to electricity to 1.4 billion people without relying to some extent on coal. But investing in coal alone for electricity—when considered in light of population growth projections—would push human-caused climate change deeply into a catastrophic zone. That’s why we have strict criteria for financing of coal projects, limiting our financing to cases in which a country has no other options to respond to urgent demands for electricity, and providing several other conditions have been met and the process reviewed by an external advisory committee.
The future of energy is in smarter energy. Countries are making ever-bigger investments and developing expertise in renewable energy and energy efficiency, laying the foundation for sustained green development and prosperity. The World Bank Group is supporting this transformation. Through lending and analytical work, we are delivering energy to the poor in sustainable ways, ranging from low-carbon cook stoves to supporting countries’ development of hydropower, large and small, as well as solar, wind and construction of energy-efficient infrastructure. We are supporting low-carbon country studies, analyses and plans to develop regional energy markets, to remove fossil fuel subsidies, and develop new sources of renewable energy.
The Bank Group is leading efforts to overcome challenges in the energy sector through investments, policy advice, capacity building, and technical assistance. During fiscal year 2010, the WBG invested $13 billion in the energy sector, the highest-ever annual amount.
The Bank Group’s lending for low-carbon energy projects and programs rose 62 percent in fiscal year 2010, to reach more than $5.5 billion, an all-time high, representing more than 42 percent of all energy financing, also a record.
Since 2003, the WBG has invested about $17 billion in low carbon investments, of which $14.2 billion were in renewable energy and energy efficiency. Excluding large hydropower, new renewable energy investments alone contributed $4.9 billion. Financing of renewable energy and energy efficiency projects and programs in developing countries rose 7% in FY10 to reach a record $3.6 billion.
The Bank supports coal projects where it is the only option for the poor
The World Bank funds less than 1 percent of power plants around the globe. However, the World Bank Group does support coal power generation if it is the only way to get electricity to people who don’t have it. This was the case with a major project in South Africa in 2010, where the Bank provided financing to the only “super-critical” (i.e.: cleanest technology available) power plant on the African continent, to help South Africa after a blackout in 2008 that cut power to hospitals, schools and the country’s entire manufacturing base. The Bank Group’s policy is to support countries in such, but under strict criteria, which are:
there is a demonstrated developmental impact (e.g. improving overall energy security, reducing power shortage, or access for the poor)
there is assistance to identify and prepare low carbon projects
there has been optimization of energy sources by considering the possibility of meeting the country’s needs through energy efficiency and conservation
there has been full consideration of viable alternatives to the least-cost options (including environmental externalities), and when additional financing from donors for their incremental cost is not available
the project uses the best appropriate available technology, to allow for high efficiency and, therefore, lower GHG emissions intensity
In regions such as sub-Saharan Africa and countries such as India, where hundreds of millions of people have no electricity, getting access to energy is the predominant issue for them and for their governments.
Results
Reaching the poor
Since 2000, for the poorest countries—many of them in Africa— Bank Group support has helped build, and make more reliable, almost eight gigawatts (GW) of electricity. 8 GW is roughly the total installed generation capacity of Peru, which serves the needs of that country's economy, including about 24.2 million people who have access to electricity. World Bank (IBRD and IDA) support has also connected 24 million people in low-income developing countries to energy for the first time by building 27,000 miles of transmission and distribution networks.
Millions of people worldwide have benefited from Bank Group energy financing. Women can earn an income by keeping a corner store or village eatery open at night. Mothers in childbirth after dusk and their newborns have a better chance at survival. Medicines and perishable food can be kept cool in a refrigerator. Children can read and study at night. Factories that otherwise would be closed, can stay open, providing jobs and a path out of poverty.
Renewable Energy
The World Bank’s financing commitments to new renewable energy projects increased to $1.5 billion in 2010, more than triple the amount committed in 2008. Energy efficiency lending increased 48 percent during the same period. Our low-carbon energy lending is now about 42% of our energy portfolio. These figures confirm that we are on track to meet our commitment to increase support for new renewable energy and energy efficiency by nearly $8.8 billion over 2008-2012.
Combined with the Bank’s large hydropower commitments, this amounts to $3.63 billion for green energy. It’s a record for the World Bank Group, and clear evidence of a shared commitment between the institution and borrowing countries to invest in a sustainable energy future.
The International Finance Corporation (IFC)) has increased direct investment in renewable energy from $440 million in 2007 to $2 billion between fiscal years 2008-2010.
Since 1990, the World Bank Group has been the largest lender for energy efficiency and renewable energy projects in the developing nations, investing more than $10 billion.
Wind Power
China
China, with installed wind power capacity reaching 12 gigawatts (GW) at the end of 2008, has set a target for 30 GW that is likely to be achieved much earlier than the target date of 2020. China’s wind power development is part of the China Renewable Energy Scale –Up Program, to which the World Bank has committed approximately $230 million.
Egypt
The World Bank has expanded its engagement in wind energy development in several countries. In June 2010, the Bank approved a $220 million loan for Egypt to support the Wind Power Development Project, out of which $150 million is financed from the Clean Technology Fund, a first for the region.
Colombia
A World Bank study, Wind Energy in Colombia concluded that wind is a realistic renewable energy alternative in Colombia, prompting the country’s government to consider several projects, including a 200 MW project to tap wind power. The study has been complemented by a Prototype Carbon Fund grant for a wind farm in Jeripachi, in northern Colombia.
Turkey
In May 2009, the Bank approved a $600 million loan for Turkey to develop its renewable energy —including wind. This project includes construction of 966 MW of renewable energy generation (hydro, geothermal, wind, landfill gas) capable of producing 3810 Gwh of electricity per year, contributing to a reduction of greenhouse gas emissions by about 1.7 million tons per year. The project finances energy efficiency sub-projects and it includes some concessionary financing by the Clean Technology Fund, supporting renewable technologies and energy efficiency. This project builds on a $202.03 million Renewable Energy Loan for Turkey approved in March 2004.
Africa
Sub-Saharan Africa is looking to harness wind energy, with the assistance of the World Bank. According to a recent Bank report, The Economics of Energy Expansion in Rural Sub-Saharan Africa, great potential exists for cost-effective renewable power, including wind, in large regions of rural Sub-Saharan Africa.
South Africa
In April 2010, the Bank approved a $3.75 billion energy sector loan to South Africa, which included $260 million for piloting a utility-scale 100 MW wind power project and a 100 MW concentrated solar power project with storage.
Solar Power
Mali
In Mali, the Bank has provided—through the International Development Association—two zero-interest loans in 2003 and 2008 respectively, for a total of $70.6 million, to support a household energy and rural access project, which includes installation of solar photo-voltaic electricity systems in some 40 rural communities.
China
A renewable energy project in which the World Bank and the Global Environment Facility (GEF) provided $13 million and $27 million respectively, as well as technical assistance, supported an initiative led by China to build a market for solar photovoltaic and wind energy technologies almost from scratch. The Bank-supported renewable energy development program has enabled sales of over 402,000 PV solar-home systems (SHS) to rural families in remote areas of West and North-West China. About 1.6 million nomadic people now have access to
Morocco
The World Bank is implementing a $750-million grant by the Clean Technology Fund to the Middle East and North Africa Concentrated Solar Power Scale Up Program, part of which is financing the world’s largest concentrated solar power plant in Ouarzazate, in eastern Morocco. The plant produces low-carbon solar electricity, and is at once creating jobs and helping to expand the skill base in Morocco to construct and operate such facilities. It will pave the way for the deployment of a pipeline of solar energy projects in Morocco and across North Africa.
Bangladesh
The Bank’s International Development Association (IDA), through support for the Rural Electrification and Renewable Energy Development (RERED) Project, has helped connect more than 900,000 households through grid extensions and solar home systems. With additional financing approved in 2010, the government of Bangladesh’s original target of just 50,000 new connections through solar home systems has been increased 20-fold to a million systems by 2012.
Energy Efficiency
Tajikistan
Tajikistan has faced severe energy shortages in winter, which culminated in a crisis in 2007. The Bank responded to this emergency by ensuring that critical facilities, such as hospitals, had standby power year-round, and also by working to ensure that the improvements were sustainable.Energy efficiency measures financed by IDA included the installation of 105,000 new meters that reduced power consumption and increased bill collection, increased water reserves at Tajikistan’s major hydropower plant, and provided 250,000 people in northern Tajikistan with basic modern energy services for the first time.
Energy Efficiency in Cities
Energy efficient measures can help cities save money on energy, cut investments in new infrastructure, and make them more competitive. But it is difficult for city managers to learn about what measures, options, and practices would be best for their cities. In fiscal 2010, the Bank-administered Energy Sector Management Assistance Program launched a database of case studies to showcase best practices by cities implementing energy efficiency policies and programs. This platform helps policymakers learn about diverse initiatives, and draw from a menu of policies and programs. The database is drawn from 15 case studies—in the buildings, transport, solid waste, water, public lighting, and heating/power sectors—of China, Colombia, Egypt, India, Mexico, Pakistan, South Africa, Ukraine, and Portland, Oregon (USA), as well as Eco2 cities case studies from Australia, Brazil, Japan, New Zealand, Singapore, and Sweden. Additional studies will double the database source countries to 30 in fiscal 2011.
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