A World Bank proposal to its steering committee to create two new funds to help developing countries generate cleaner, more efficient power is misguided because it backs fossil fuel projects, experts said on Monday. A copy of the report obtained by Reuters argued that current financing from multilateral lenders like the World Bank as well as governments and the private sector "cannot lead to a meaningful transition to a low-carbon economy."

A World Bank official declined to say whether the proposed Clean Energy Financing Vehicle low-interest loans and the Clean Energy Support Fund grants correspond to British finance minister Gordon Browns call in April for a seed fund of US$20 billion for clean energy to invest in alternative energy.

The proposed Clean Energy Financing Vehicle calls for an initial capitalization of US$10 billion, the report said. The two funding ideas endorse low-carbon technologies and carbon emission reductions and were drafted after an original April report. They go to World Bank directors for review on Aug. 29 ahead of next months annual meeting in Singapore.

The progress report also says 10 times as much cash should go to the banks Global Environment Facility, a 15-year-old grant program to help developing countries fund biodiversity, climate change and land degradation projects, among others. A world bank official said he could not comment on the contents of the report before it goes to the directors later this month. Environmentalists familiar with the revised report commended it for focusing in greater detail on the needs of the 1.6 billion people -- mainly in Sub-Saharan Africa and South Asia -- who do not have access to modern energy.

But they criticized the study for arguing that World Bank funds continue to be earmarked for fossil fuel projects. "Renewable energy technologies are the best option to reduce poverty by providing access to modern energy for the rural poor," said Peter Bosshard, policy director at International Rivers Network, a nongovernmental organization.

The World Bank said it committed US$871 million in renewable energy and energy efficiency programs in the year that ended in June. The Washington-based lender reckons every dollar it invests in a project draws US$5 from the private sector, government and others and that developing nations need to invest US$300 billion a year for the next 25 years to meet their energy needs, largely electric Nuclear power generation, which caused some controversy in the original report, is mentioned less frequently in the latest version but remains on the table for funding proposals, said Daphne Wysham of the Institute for Policy Studies. "It (the report) seems to be a random assortment of policies that are a perpetuation of their usual approach, which is to throw a lot of money at large infrastructure projects," Wysham said.
(Por Gilbert Le Gras, Planet Ark, 15/08/2006)