Tuesday 3 August 2004

Having commissioned a three year review of its own involvement in extractives, the World Bank has spent the last six months working against the recommendations by defending the status quo.

On the eve of the World Bank Board of Directors' announcement regarding energy project strategies in developing countries WWF is dismayed that the bank has failed to take up the renewable energy challenge.

The Extractive Industries Review (EIR) concluded that oil and coal projects funded by the World Bank Group have not contributed to poverty alleviation, but have led to further environmental, social, and economic problems. It appears that the World Bank is unable to change.

Earlier this year, World Bank officials responded to reform calls by proposing an annual 20 per cent target for its renewable energy lending growth for the next five years, starting with US$ 200 million next year. The bank seems to have forgotten that in the mid-90s its budget was $US 400 million.

It is unacceptable that the bank can merely point to existing initiatives, when the EIR clearly calls for fundamental shifts in both policy and implementation. The World Bank cannot supply evidence that providing project finance to extractives delivers on its mission of poverty alleviation through sustainable development.

The bank claims to be contributing to achieving the Millennium Development Goals, yet continues to support dirty fuels which contribute to poor health. By perpetuating the dependence on fossil fuels, the World Bank is also responsible for climate change impacts. The increasing number of environmental refugees resulting from floods and droughts is making tackling poverty even harder.

James Leaton observed: "If the World Bank does not listen to its own major reviews, it sends a very negative message to all those who participated in the multi-stakeholder process."

The key environmental recommendations of the EIR are:

• an amendment of natural habitat policy that will adopt clear no-go zones;


• phase out of oil investment by 2008;


• a moratorium on coal investment;


• a phase in of 20 per cent per year for renewable energy resources for the energy portfolio;


• sector specific guidelines for tailings disposal;


• revise waste management guidelines;


• integrated closure planning and recommendations related to policy based lending at the country program and project level;


• structural adjustment policies require upstream social and environmental analyses in structural and sectoral adjustment and technical assistance loans wherever extractive sector development is likely.