World Bank president Jim Yong Kim leads landmark policy shift
- 22 July 2013
LONDON: President of the World Bank, Jim Yong Kim, has won approval for a landmark new energy strategy that redirects coal-fired power finances to clean energy projects.
In a closed-door meeting, executive directors from the World Bank agreed to slash funding for the global development of new coal plants, a move put forward by the bank’s President Jim Yong Kim.
Details are outlined in the World Bank’s Energy Sector Directions Paper, including plans to increase support for energy efficiency and clean energy projects. However, the paper also states that there are rare exceptions where new coal plants will still be funded, for example in countries where there is no feasible alternative to coal.
The paper explains how expanding access to cleaner energy is central to its work in the energy sector, and closely aligned with the organization's Sustainable Energy For All initiative. Jim Yong Kim, World Bank Group President, said: “We need affordable energy to help end poverty and to build shared prosperity. We will also scale up efforts to improve energy efficiency and increase renewable energy—according to countries’ needs and opportunities.”
Rachel Kyte, World Bank Vice President for Sustainable Development, reiterated the importance of investing in cleaner energy in a statement about the policy change. She said: “It’s a pragmatic set of directions for energy development. We need to ensure that everyone is reaping the benefits of modern energy by 2030, and we need to do so sustainably. This paper positions us to partner with our countries to realize this vision.”
The World Bank’s announcement comes as international dialogue intensifies around the public financing of coal plants. US President Obama called to end such funding in his critical climate speech last month, and last week, European Commissioner for Climate Action, Connie Hedegaard explicitly urged the World Bank to end support for fossil fuel projects. She wrote in the foreword to a bank lending policy report: "I am particularly keen to see three international financial institutions – the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the World Bank – join their EU and OECD partners to take a lead role in eliminating public support for fossil fuels."
Under Jim Yong Kim, the World Bank has amped up its climate work, including launching the influential Turn Down the Heat report last year, which warned that a 4 degree rise in global temperatures would cause widespread devastation, especially for the planet’s poorest communities. The bank’s renewables funding has also doubled, with US$12.5 billion spent in 2012.
Mark Kenber, CEO, The Climate Group, welcomes the World Bank’s policy shift: “This is a landmark moment for the World Bank. Redirecting these substantial funds from coal plants to clean energy projects globally is a critical step towards avoiding a catastrophic 4 degree world, and keeping the rise in global average temperature below 2 degrees to avoid the worst impacts of climate change. It also means accelerating the path to a smarter, better, more prosperous future for all.
“Although a complete end to all coal plant financing should remain a goal, we welcome Jim Yong Kim’s move. The policy change represents an important transition for the organization and a big opportunity for Jim Yong Kim to position the World Bank and its partners as leaders of the global clean revolution.”
Mark added: "The move is also a flashing signal for other lending institutions to follow suit. Tomorrow the board of the European Investment Bank (EIB), the world’s largest public financial institution, will also hold a vote on its energy financing policy. The EIB must follow in the World Bank's foot steps and redirect finances from coal to renewables."
The World Bank is a Clean Revolution Campaign Supporter and partner of The Climate Group.
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By Clare Saxon