U.S. Congress Cuts Funds for World Bank's So-Called Clean Technology Fund

February 25, 2009

The U.S. Congress today passed its omnibus appropriations bill for Fiscal Year 2009, H.R. 1105. Missing in action: the U.S. contribution to the World Bank's so-called Clean Technology Fund (CTF), which has repeatedly come under fire from CGD's David Wheeler and others for including coal-fired power plants among those potentially eligible for CTF support.Previous bills introduced in the 110th Congress had authorized or appropriated between $200 and $400 million for the fund for FY 2009. But the Omnibus report clearly shows former President Bush's CTF funding request of $400 million getting the ax:Omnibus Report on the CTFThis does not mean that Congress is backing away from the commitment to help poor countries adopt clean energy for sustainable development -- only that the money is unlikely to go to the World Bank. Instead the appropriations package sets aside $100 million for USAID activities that are remarkably similar to those of the CTF -- with the important provision that they include carbon accounting, that is, including in project feasibility calculations a cost for the resulting greenhouse gas emissions. This move, which Wheeler and others have advocated, would basically eliminate the possibility of financing coal and other high-emission power projects. The bill summary reads:

Energy and EnvironmentClean energy - The bill provides $100,000,000 for programs and activities that reduce global warming by promoting the sustainable use of renewable energy technologies and energy efficient end-use technologies, carbon sequestration, and carbon accounting. Given the growing demand for energy in developing countries and concern with climate change, USAID is strongly encouraged to strengthen the capacity of its staff with expertise in these issues.

Wheeler argued in Congressional testimony last summer that the use of scarce resources to fund coal projects in poor countries to tackle climate change makes little sense. Instead he proposed pushing down the costs of near-zero-carbon renewables, such as solar and wind, by strategically investing in projects that will accelerate learning and economies of scale. CGD and others have repeatedly made these arguments, both directly to the World Bank and to the U.S. government and other potential donors to the CTF. It seems that the U.S. Congress has been listening. Too bad the same thing can’t be said for executives at the World Bank.


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