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April 25, 2011

Sierra Club India: What Role for Coal in World Bank Energy Strategy?

A little more than a year ago the World Bank's highly controversial $3.75 nillion loan for one of the world's largest coal plants - the 4,800-megawatt (MW) Medupi coal plant in South Africa - laid bare the tension surrounding coal and development. Now the World Bank's draft Energy Strategy, a document that will guide energy lending at the institution for years to come, has again placed the debate front and center with a partial ban on coal financing.

While developing countries are still free to finance coal from a variety of other sources in the vast and diverse world energy market, controversy now swirls as the majority of coverage focuses the debate on climate disruption, development, and geo-politics - pitting the global north against the global south.

However, this debate fails to capture the primary motivation for ending coal lending at an institution whose overarching mandate is poverty alleviation: Coal is the wrong tool for the job. Spouting facts and figures rarely drives home the failure of coal to alleviate energy poverty. This failure is best presented visually, something Srinivas Krishnaswamy of the Vasudha Foundation has done remarkably well.

Below you can see two maps of India. On the left hand side you see the largest clusters of coal fired power plants. On the right you see the highest levels of energy poverty (measured by lack of electricity access). The resulting picture is a damning condemnation of coal's ability to alleviate energy poverty in a country that currently holds roughly one-third of the global un-electrified population. (click image to enlarge)

Coal and ea

This map dovetails with the findings of a recent OilChange International report (PDF) showing that the World Bank agrees that not a single coal project in FY 2009-2010 could be classified as improving access to energy services for the poor.

Moreover a special excerpt from the International Energy Agency's (IEA) World Energy Outlook 2010 (PDF) conclusively shows that if the global community fails to shift from large scale centralized sources of power, like coal, we will fail miserably in our goal of ending energy poverty, let alone significantly reducing it. In fact, the IEA declares that for universal energy access to occur, 70% of rural areas around the world will require decentralized renewable energy systems. Therefore the controversy over climate disruption and geopolitical concerns in relation to the coal ban is a distraction from the real issue at hand, which is that coal will not alleviate energy poverty.

If, however, the World Bank is truly sincere in its efforts to alleviate energy poverty, it must maintain and build upon the coal ban by creating 21st-century indicators and staffing in order to create the institutional shift necessary to make energy poverty a thing of the past. For instance, the World Bank's goal to increase energy access is largely measured by megawatts (MW) of installed capacity and kilometers of transmission and distribution lines built. Metrics that represent 20th-century thinking skewed towards large scale power plants that have failed to electrify 1.4 billion people around the world, while leaving another 2.5 billion people with only a few hours of electricity each day.

A 21st-century Energy Strategy must instead prioritize rural entrepreneurs capable of delivering energy services to the poor measured in part by the quantity of decentralized renewable energy systems installed in poor off-grid households. For on-grid households, "energy efficiency power plants" created through the aggregation of energy savings measures such as CFL light bulb distribution would more accurately indicate progress than MW of additional capacity installed. To be successful however, these indicators must be supported by an increase in the quantity and quality of staff devoted to building out household energy programs along with staff to support the proper evaluation of energy alternatives for developing countries.

The World Bank now sits at a critical juncture. The World Bank can draft an Energy Strategy that largely resembles the one it drafted for the previous century, which will all but ensure energy poverty for hundreds of millions around the world, or it can move firmly into the next century by turning its rhetoric on access to energy services for the poor into reality.

While the strategy is by no means the progressive, forward-leaning, 21st-century policy document it must be, the recognition that coal fails the crucial litmus test of delivering access to energy services for the poor represents a firm step forward. The future for 1.2 billion people around the world expected to lack electricity access by 2030 depends upon this step.

-- Justin Guay, Sierra Club International Program


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