UK Government Urges World Bank Towards Renewable Energy

LONDON, UK, August 16, 2004 (ENS) - The UK Government has sent a letter to the World Bank saying that the bank has not gone far enough to implement recommendations of the Extractive Industries Review - a three year review of the bank's lending for oil, mining and gas projects. The letter was disclosed to Friends of the Earth, which has been lobbying the UK Government, represented on the World Bank Board and a major shareholder of the Bank, to ensure full implementation of the review's recommendations.

The Extractive Industries Review has been endorsed by hundreds of indigenous groups, European parliamentarians and religious leaders around the world.

Friends of the Earth's International Financial Institutions Campaigner Hannah Ellis said, "Friends of the Earth welcome with caution the government's agreement that the World Bank is not doing enough for the people and the environment it is supposed to serve. The government is yet to make clear what exactly the World Bank must do now and how the UK government, as a major shareholder of the Bank, is going to make them do it."


James Wolfensohn is chairman and president of the World Bank Group. (Photo courtesy World Bank)
On August 3, the Board of the World Bank Group agreed that management’s response to the Extractive Industries Review and internal reports on the Bank’s Group’s investments in the extractive industries – oil, gas, and mining – was "a balanced way forward" for the Bank Group.

Management, in its proposal to the Board, indicated that it would continue investments in oil, gas, and mining production, as these will continue to be an essential part of the development of many poor nations.

“The proposals of management are built around the central theme that our investments and policy advice in the extractive industries should benefit the poor first and foremost,” said James Wolfensohn, chairman and president of the World Bank Group.

“The harsh reality is that some 1.6 billion people in the developing nations still do not have electricity, and some 2.3 billion people still depend on biomass fuels that are harmful to their health and the environment,” Wolfensohn said. “That underscores the need for our continued but selective engagement in oil, gas, and coal investments.”


Oil spill on Navajo Nation land from a corroded oil production facility pipe. (Photo by Pete Reich courtesy EPA)
At the same time management will invest in renewable energy generation. Following the renewable energy conference held in Bonn, Germany earlier this year, “we intend to take a leadership role on this issue and work with stakeholders to ensure the renewable and energy efficiency agenda is central to an environmentally sustainable energy policy,” said Peter Woicke, executive vice president of the International Finance Corporation.

The World Bank Group "will seek to scale up its activities in this sector," said Woicke. Management has set an initial target to increase its renewable energy and energy efficiency portfolios by 20 percent annually over the next five years, which will increase the level of investments in this sector to more than $400 million per year. This target will be reviewed on a regular basis.

In addition, the World Bank Group management said it "will put an increased emphasis on the development of natural gas and other cleaner fuel alternatives, and has committed to working with stakeholders to update the Bank Group’s renewable energy strategy, expand capacity, and identify opportunities for partnership."

The World Bank Group management told the Board that it "continues to refine and improve its approach to environmental and social issues."

The private sector lending arm of the World Bank Group, the International Finance Corporation, is currently revising its environmental and social safeguards to improve their clarity, accessibility, and implementation.


Kao and Malifut Community oppose Newcrest Mining in Halmahera, North Maluku, Indonesia. The Indonesian Human Rights Commission is investigating the allegations made by local people of human rights abuses by Brimob paramilitary police acting as security for Newcrest's mine. (Photo courtesy Mineral Policy Institute)
In addition, the Bank Group will immediately put in place a process to ensure that the use of security forces to protect extractive industry project sites is in line with best practices. Clashes between local communities and extractive corporations have turned deadly in the past several years.

But the Extractive Industries Review went much farther. The Review concluded that in most cases, World Bank investments in oil, mining and gas were not alleviating poverty or promoting sustainable development.

The Extractive Industries Review recommended that the World Bank must phase out lending for oil and coal by 2008, and not lend for extractive projects in scientific or spiritual areas or places of civil unrest.

The Review recommended that the bank ensure the free prior and informed consent of affected communities, and invest much more in renewable energy.

In a position paper sent to Friend of the Earth, the UK Government, headed by Prime Minister Tony Blair, described the World Bank's response to the Extractive Industries Review recommendations to increase bank lending for renewable energy as "insufficient."

The position paper states, "The World Bank needs to make a greater and more urgent commitment to renewable energy, cleaner energy technologies, natural gas and improved energy efficiency."


British Prime Minister Tony Blair (Photo courtesy No. 10 Downing St.)
But the environmental advocacy group says the Blair government's response comes too late to do much good. "It is very disappointing that it only now, when the final decision has already been made, that the UK Government has made its views regarding the Extractive Industries Review public," Ellis said.

"Now that the review process is over, how is the UK Government going to take this forward? It is all very well coming out with the right words after the event but it is time the UK demanded the World Bank make poverty alleviation and sustainable development a reality," she said.

Wolfensohn, however, says the process of review is not at an end. “It is important to understand that the various reports and the management response do not end with today’s meeting,” Wolfensohn said.

“We are engaged in a process aimed at improving the situation of those in poverty and ensuring that work with extractive industries and new initiatives on renewable energy continue to be developed," he said.

Management proposed, and the Board agreed, that the Bank Group would have an annual review with the Board of progress toward achievement of the objectives outlined in the management response and would remain engaged with all stakeholders.