Translation: The new fund would pay for the same old things that the bank has been doing all along, with a little greenwash sprinkled on top. As for the "forecast" that coal will continue to be important for 30-50 years, this is neither supported in the paper nor is it relevant to the purpose of a clean technology fund, which is presumably to support clean technology, not more-efficient dirty technology. (Remember, the atmosphere does not care about intensity of emissions; it responds only to total load.) Since carbon capture and sequestration (CCS) is an unproven and potentially dangerous technological gamble, the only reliable "forecast" about coal is that continued rapid increases in use will push the planet over multiple climate tipping points (See, for example, Bill McKibben’s Remember This: 350 Parts Per Million), leading to run-away heating, droughts, floods, accelerated sea-level rise, and collapsing agricultural productivity (i.e. not good for development and other human activities!) It's enough to make American tax payers and others, including the Europeans and the Japanese, who are being asked to ante up billions of dollars for the proposed new fund wonder whether some other organization besides the World Bank might be better suited to manage it. World Bank president Robert Zoellick talks like he is serious about climate. During his speech at the climate conference in Bali last December he said:
For existing coal-fired plants, the CTF will follow a three-pronged approach: (1) upgrading/rehabilitating plants with a reasonable remaining life; (2) decreasing the duty cycle of existing plants; and (3) early retirement of older units, where such plants account for a large percentage of capacity, with a view to achieving significant increases in energy efficiency.
For new coal-fired assets: Recognizing that coal is forecast to remain an important component of global energy use over the next 30-50 years, the coal-fired projects would be supported where they are least cost, focusing on decreasing CO2 emissions at scale through substantial improvements in plant efficiencies (moving from sub-critical to super and ultra-supercritical technologies as well as IGCC, oxyfuels and cogeneration) and supporting readiness for implementation of carbon capture and storage.
Yet yesterday the board of the IFC, the bank's private investment affiliate, approved a $450 million investment in the Tata Ultra Mega power project, which would produce nearly 25 million tons of CO2 per year for at least 25 years, making it one of the top 50 sources of CO2 in the world. Just in case somebody might wonder if the IFC is serious about fighting climate change, just days before they also announced a $20 million investment in Evolution One, a private equity fund investing in climate change mitigation in Africa. Before yesterday's vote eight environmental and development advocacy NGOs wrote to the U.S. representative on the World Bank/IFC board asking that the IFC postpone consideration of the Tata Ultra Mega until low-carbon alternatives, especially rapid-advances in solar thermal, could be properly evaluated. The letter drew on analysis of the changing costs by my colleague David Wheeler. Mr. Zoellick has defended the decision to proceed with the plant on the grounds that India needs the power. Make no mistake: India urgently needs more electricity. Per capita power consumption is barely four percent of our profligate power usage in the United States; two out of three rural families lack even electric light. With shortages this severe, babies die and kids grow up unable to read. As the planet's leading development institution, the World Bank is right to help India to solve this problem. The question is not whether the bank should be investing in India's power sector, but how. Other funders including private lenders are already investing massively in new power projects. Several plants that use the same high-efficiency coal combustion technology proposed for Tata Ultra Mega are ready for construction or in advanced planning stages. But efficient coal technology is still extremely dirty, emitting large amounts of health-damaging pollutants such as mercury, sulfur and nitrous oxides, in addition to greenhouse gases. For poor people in India, this new electricity -- like the new plants being built in China and the coal-fired electricity that powers my computer as I type -- comes at an immense cost in the not-too-distant future. Because much of India already has high average temperatures, further heat increases will devastate agriculture. A recent CGD book by William Cline has shown that under a "business as usual" approach, northwestern India will face a 30 to 40 percent drop in agricultural productivity by 2080 -- within the lifetime of children born in India today. Projections of agricultural impact are similarly dire for much of the rest of the developing world. Fortunately, there are alternatives that can meet the urgent need for electricity in India and other developing countries without putting future generations in peril. Wheeler has shown that rapidly falling prices of renewable energy technology and rising coal prices mean that the cost gap between zero-carbon alternatives and coal is shrinking fast. Because the price of sunlight never goes up, and the technology for turning it into electricity gets cheaper all the time, the difference between the price of the coal-fired electricity and zero-carbon solar thermal power in the same locale has recently dropped to less than two cents per kilowatt hour (10.5 cents for solar thermal vs. 8.5 cents for coal). This gap can and should be closed, and the rich countries that are responsible for most of the greenhouse gases already in the atmosphere should pay the difference (in addition to cutting back sharply on our own obscene emissions) for our own sake as well as the sake of people in developing countries. The U.S. and other rich countries have implicitly accepted this principle. In February U.S. Treasury Secretary Henry Paulson and his counterparts from the U.K. and Japan announced their intention to support a new "Clean Technology Fund," suggesting it could be administered by the World Bank. To get things going, Paulson pledged an initial U.S. contribution of $2 billion over three years. Congress would have to appropriate the money, of course. It's that promised money that the World Bank is hoping to capture in putting forward this laughable so-called "Clean Technology Fund" proposal. Too bad, for the bank and the world, that the proposal fails so dismally in the central task of actually supporting clean technology. Are there any other organizations out there that would like to manage billions of dollars in clean technology money?
Climate change policies cannot be the frosting on the cake of development; they must be baked into the recipe of growth and social development… We need to help shift countries to a development paradigm based on low-carbon growth and adaptation to new risks.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.