Greens praise EIB but slam World Bank

By Karen Carstens

Date: 10/06/04

THE European Investment Bank (EIB) has been praised by activists for pledging to promote renewable energy.

Usually its harshest critic, the CEE Bankwatch Network applauded the EIB for presenting a six-point action plan on renewables at an international conference in Bonn.

The European Commission, by contrast, has been roundly criticized for going into the 1-4 June meeting without a new medium-term target on renewables that would have sent a strong political signal and enhanced investor confidence in alternative energies.

And the World Bank came under fire for what activists denounced as the 'mere spin' it put on a 'paltry promise' to back renewables at the conference.

So the EIB announcement to pump more cash into alternative energies came as a pleasant surprise to green groups and the renewables sector.

"We hope that the World Bank and other regional development banks will follow the EIB's example and bring substantial funding to renewable energy," said Petr Hlobil of the CEE Bankwatch Network, a coalition of grassroots groups in 12 central and eastern European countries that monitor international financing institutions.

Still, the EIB must "do more", he claimed: "Their target does not cover investment outside the European Union, particularly in developing countries, and it does not include provisions aimed at reducing lending for other damaging energy and fossil fuel extraction investments."

And it remained unclear whether the EIB targets would exclude large hydropower projects, which the World Bank defines as a renewable source of energy, waste incineration and other practices that campaigners claim do more environmental harm than good.

The EIB, meanwhile, stressed that its lending for renewable energies is "already substantial", totalling more than €1.6 billion over a five-year period up to 2003.

Peter Sedgwick, the bank's vice- president, said that, in presenting the new action plan in Bonn, the EIB would increase its lending for renewables by up to 50% of its financing for electricity generation in the EU by 2010.

This would help meet an EU target of 22% of electricity generation, or 12% of overall energy consumption, coming from renewables by 2010. (It was hoped that an official 2020 target of 20% compared to the 12% target would be set ahead of the conference in a Commission communication, but this was thwarted by internal wrangling within the EU executive.)

Sedgwick said the EIB would also enhance its support for renewable energy investment in developing countries and for emerging markets in the EU via a public-private fund that aims to increase access to risk capital for renewables projects.

The bank would, moreover, allocate €500 million until 2007 to finance carbon dioxide reduction projects through its own 'climate change facility' related to the Union's emissions trading scheme, which also covers projects outside the EU.

It will also provide €10m for a new 'EIB Climate Change Technical Assistance Facility' for grants towards carbon trading transaction costs, as well as continue to explore with other multilateral financing institutions the establishment of a 'carbon credit fund'.

While green groups applauded the EIB's beefed up backing of the renewables sector, they slammed the World Bank for falling far short of the recommendations made in its own extractive industries review (EIR), published earlier this year.

The EIR, commissioned by the bank's President James Wolfensohn in 2000, found that its investments in the sector did not contribute sufficiently to poverty alleviation and sustainable development.

It recommends phase-outs of support for coal and oil, and a phase-in of renewables by increasing lending by 20% of its total energy lending portfolio annually.

"They're not even close to the EIR recommendation," said Steve Kretzmann of the Washington-based Institute for Policy Studies (IPS).

"They're pledging 20% of a cent when they were asked to give 20% of a dollar." According to an IPS analysis of the bank's lending over the past decade (1994-2003), the World Bank Group approved some $20.2 billion in financing for fossil fuel extractive and power projects, while at the same time approving just $0.86bn in renewable energy projects.

(These figures, however, exclude hydropower projects such as large dams.)

"Marginally increasing the funding for renewables is not enough because the World Bank's own numbers show that lending for polluting fuels is growing even faster," said Stephan Singer of the World Wide Fund for Nature.

CEE's Hlobil said that the $164m that the bank is pledging for renewables "is roughly the cost of their contribution to just one of the many fossil fuel projects they support annually".

He said campaigners now hope EIB investments "that significantly impact on global climate change", including "extensive support for the aviation industry, massive road construction projects and financing of large oil extraction and transport projects", could benefit from its renewables commitment.

"We've previously seen a lot of empty promises from the EIB," he said. "Therefore we will be closely monitoring the implementation of this action plan."

The CEE Bankwatch Network has been a thorn in the side of the EIB for years.

It claims the bank lacks transparency, is too secretive about its investments and has wreaked havoc by providing huge loans for controversial projects, such as the Chad-Cameroon pipeline and the Sepon copper mine in Laos.

The EIB has, however, pointed out that many projects it backs are public-private partnerships, meaning it must often act at the discretion of private investors.

At the International Conference for Renewable Energies, Bonn, 1-4 June 2004, the European Investment Bank (EIB) presented a six-point action plan on renewables. The move was welcomed by CEE Bankwatch Network, an international non-governmental organisation which monitors the activities of international financial institutions in Central and Eastern Europe.

http://www.renewables2004.de/ http://www.renewables2004.de/

http://www.bankwatch.org/ http://www.bankwatch.org/

http://www.bankwatch.org/press/2004/press33.html http://www.bankwatch.org/press/2004/press33.html

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