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Renewable Energy for poverty alleviation

The executive management of the World Bank – headed by President James Wolfensohn – and member countries of the World Bank need to consider the recommendations of the Extractive Industries Report (EIR) in the expected Management Response and at the autumn meeting of the Board of Governors. Only a clear position in favor of the EIR’s recommendations can live up to the World Bank’s main objective of playing a crucial role in reducing poverty in the world.

Up until now 94f the World Bank credits for energy are given for the promotion of fossil energy, only 6or Renewable Energy. The EIR, initiated by the World Bank and headed by the former minister for environment of Indonesia Prof. Salim, suggests among other issues to turn around this ratio: phasing out the support for coal programmes immediately and for oil by 2008; instead, the WB should increase the support for Renewable Energy by twenty percent per annum.

The World Bank needs to consider these recommendations in order to fulfill its objectives of poverty alleviation consistent with social and environmental standards. Since the creation of the Global Environmental Facility (GEF) in 1990, which is co-administered by the World Bank, the World Bank has underlined its role in both decreasing poverty and increasing environmental protection. This cannot be realized by further providing credit schemes for fossil energy projects. Only Renewable Energy can offer a sound basis for energy access, which is environmental friendly.

It would be fatal in the long run for developing countries and the world as a whole, if public institutions – like the World Bank – further give incentives for the infrastructural and technical development of fossil energy supply. Advantageous credits for central fossil energy structures – such as huge power stations, pipelines or extraction systems – will fix the use of fossil energy for a long time. These investments often have a positive return only after decades and will force the operators to use their fossil energy systems until that time, although problems as climate change, resource scarcity and fossil energy prices will increase in the meantime. This “dead” capital – tax money of the World Bank member countries – could be used more economically and ecological by funding Renewable Energy projects.

Renewable Energy is the prerequisite for economic development and poverty alleviation. Its decentralised use is, in particular, appropriate for the electrification of rural areas and for the 2 billion people world wide who have no regular access to modern electricity services. The use of local biomass, geothermal-, water-, wind and solar energy is much more economical than the increasing import costs for petroleum and coal from other countries. Renewable Energy leads to the decrease of energy import dependency which is already very high in many developing countries. Fossil energy imports often amount to 80f the export revenues, which increases foreign debts and leads to national economic crises in times of varying global exchange markets and lacking national capital resources.

The objective of the World Bank is to provide only then credits, when otherwise credits cannot be obtained. In particular, the big fossil energy companies normally have access to own or outside capital. Instead of helping these multinational companies to realize fossil energy projects, the World Bank needs to concentrate its limited budget to support small local Renewable Energy companies in order to raise local income, to better the environment and to provide excess to energy services.

The World Bank now has the great possibility to move forward to achieve its original goal of poverty alleviation. For this, it needs to take over the recommendations made by the Extractive Industry Report of Prof. Salim, who, by the way, also used to be a director of Indonesia's largest coal company. It would be a great signal to other international developing aid and financial institutions if the World Bank can present its positive view at the International Conference for Renewable Energy, which will take place in Bonn, June 1-4, 2004.

Sumber : Future Energies, 5 April 2004

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