World Bank accused of undermining climate funds by backing coal

Environmental groups have this week launched a blistering attack on the World Bank's efforts to tackle climate change, ahead of its annual meeting this weekend.

Earlier this year the Bank stepped up its efforts to address climate change, unveiling two climate investment funds in July, with 10 industrialised nations pledging $6.1bn (£3.5bn) in aid to help developing nations adapt to rising global temperatures and accelerate the adoption of low carbon technologies.

But environmental groups have argued that despite the new funds the bank is continuing to back fossil fuel-intensive projects, such as the planned Tata Mundra coal plant in India, Peru's Camisea gas project, and infrastructure projects that will trigger significant deforestation in the Amazon.

A report co-published by Oil Change International, the Institute for Policy Studies, Friends of the Earth, and Campagna per la Riforma della Banca Mondiale has found that World Bank Group lending to coal, oil and gas is up 94 per cent from 2007, reaching over $3bn, while lending to coal projects alone increased more than threefold in the past year.

An independent analysis from the Bank Information Center also suggests that when large hydropower and energy efficiency projects are excluded, World Bank Group funding for renewables in 2008 actually dropped 42 per cent year-on-year.

The groups claim that environmental concerns have been increasingly sidelined in the Bank's decisions, with senior figures within the bank accused of ignoring both the recommendations of the blue ribbon panel of advisers on the environment and the stated wishes of many donor countries for more sustainable projects.

For example, concerns about the Bank's involvement with coal projects have prompted the US Congress to delay approval for an American contribution to the climate funds.

However, despite the reports climate change is likely to be pushed down the agenda at this week's meeting as the Bank seeks to respond to the global financial crisis.

The World Bank insists that renewable energy is increasing year-on-year as proportion of its portfolio, and cited recent funding for a solar-thermal hybrid project in Egypt, a renewable energy company Grameen Shakti in Bagladesh and IDCOL, a renewable infrastructure development company, also based in Bangladesh, as evidence of its commitment to the sector.