World Bank Must Look at Energy Project Loans' Impact, Internal Audit Says
The World Bank, which has increased loans for renewable energies over the past decade, needs to better assess the results of projects it finances, an internal audit of the bank’s efforts to mitigate climate change says.
Between 2003 and 2008, the Washington-based agency increased annual investment on renewable and energy efficiency tenfold to $2 billion, according to the Independent Evaluation Group, which reports directly to the bank’s board of directors. At the same time, there haven’t been enough measures of impact in areas such as forest management, according to the report released today.
The World Bank “and the world at large need to learn faster what works and what doesn’t and focus on results, not just dollars committed,” Kenneth Chomitz, the report’s author, said in a press release. “Most projects reviewed lack periodic, reliable reporting on impacts, leading to lost opportunities for learning.”
The bank is currently drafting a new energy strategy as it seeks to reconcile its mandate to reduce poverty and help more people gain access to electricity with growing concerns about global warming. A $3.75 billion loan in April to South Africa to help build one of the world’s largest coal-fired power plants raised protests from environmental and civil rights groups and prompted the U.S., the bank’s biggest shareholder, to abstain from voting on it.
Coal Alternative
The independent evaluation recommended the bank help clients “find domestically preferable alternatives to coal power,” saying such a source of energy “should be a last resort.”
The bank has no plans to finance any coal-fired power plant, according to Roger Morier, a spokesman for the bank’s sustainable development unit.
The report also said the bank should focus on sectors and instruments with “high impact,” such as energy efficiency and use long-duration loans.
The World Bank management in a written response said that the report “does not recognize the significance of ongoing changes that have been facilitated by the adoption” of a new strategic framework on development and climate change.
It said that the recommendations in the report “largely fit” with what the bank is currently doing.
To contact the reporter on this story: Sandrine Rastello in Washington at srastello@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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