WASHINGTON • The World Bank is indirectly financing a boom in some of Asia's dirtiest coal-fired power generation despite commitments to end most funding for the sector, according to a US-based development advocacy group.
The power plants, which contribute to climate change and deforestation as well as premature deaths due to illness, are cropping up from Bangladesh to the Philippines, all with funds provided by financial intermediaries supported by the bank, said a report by Inclusive Development International (IDI) and released yesterday to coincide with this week's annual meetings of the bank and the International Monetary Fund.
In a policy shift in 2013, the bank said it would end virtually all support for the creation of coal-burning power plants, except in "rare circumstances" where there are no viable alternatives.
It raises important long-term questions about how we need to create stronger markets for clean energy and create incentives for countries and the private sector not to invest in coal, but rather in renewable energy.
MR FREDERICK JONES, International Finance Corporation spokesman.
However, since that pledge, 41 coal projects have received funding from banks and investment funds supported by the World Bank's private-sector arm, the International Finance Corporation (IFC), according to the IDI report.
IFC spokesman Frederick Jones said the global lender took the report seriously.
"It raises important long-term questions about how we need to create stronger markets for clean energy and create incentives for countries and the private sector not to invest in coal, but rather in renewable energy," he said.
Mr Jones added that since 2005, the IFC had invested more than US$15 billion (S$20 billion) in renewable energy, energy efficiency and other areas, and had mobilised US$10 billion more.
But he conceded that IFC policy did not prohibit equity clients from funding coal plants, meaning it might be indirectly exposed.
Through an analysis of records, IDI claimed to have identified 56,127MW of new coal capacity funded indirectly by the IFC.
These included the planned 1,360MW Rampal power station in Bangladesh, on the edge of the sprawling Sundarbans mangrove forest which is home to endangered species and supports the livelihoods of two million people.
The report said the World Bank itself declined to support the project, which could threaten air and water pollution. But six local banks, all IFC-financed, agreed to support it.
The report also cited power construction in the Philippines, where coal burning is estimated to result in almost a thousand premature deaths annually. IFC-financed banks have supported at least 20 new coal projects since 2013.
They include the proposed 540MW Lanao Kauswagan power station, expected to begin operations next year and which may threaten marine life in nearby Panguil Bay and the livelihoods of fishing communities, IDI said.