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Lumps of coal

Fossil fuel projects supported by the World Bank are often large-scale and bypass the communities that need energy the most

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UK urged to stop funding dirty coal power stations overseas


10th February, 2011

Overseas aid still being channelled by DFID through the World Bank who is investing record amounts in coal-fired power stations

UK aid organisations have criticised the UK's continued financing of coal power stations, the dirtiest fossil fuel, through the World Bank.

The Department for International Development (DFID) currently channels 10-15 per cent of its overseas aid budget through the World Bank. However, there are concerns that much of this finance, far from helping less industrialised countries, is actually tying them into reliance on fossil fuels for the next 40 to 50 years and worsening the devastating effects of climate change on those same countries in the future.

Recent figures revealed World Bank funding for coal power stations soared 40-fold over the last five years to hit a record high of $4.4 billion in 2010. Far in excess of the $3.1 billion in finance for new renewable energy and energy efficiency projects. The UK recently committed to paying £888 million per year for the next three years to the World Bank.

'I would not want the UK to be spending its aid to encourage dirty fuel use... even indirectly as that is counter productive to climate change goals,' Dr Tom Mitchell, from the Overseas Development Institute (ODI) told MPs from the Environmental Audit Committee who have begun an inquiry into the issue.

In its evidence to MPs, Christian Aid said the World Bank was 'failing to prioritise a low-carbon approach' and that its support for large-scale power generation often bypassed the communities that needed energy the most. It said none of the 26 fossil fuel projects reviewed in 2009 and 2010 identified access for the poor as a direct target of the project.

Along with the International Institute for Environment and Developemnt (IIED), Christian Aid also told MPs much of the World Bank's lending to the forestry sector remained 'incompatible with the UK Government's objectives in relation to natural forest protection and climate mitigation'. More than 50 per cent of $4 billion-worth of finance between 2003-2006 went to paper and pulp mills.

A spokesperson for DFID said: 'The UK government is committed to low carbon development. We expect organisations such as the World Bank to pioneer innovative approaches in response to climate change and to support a shift to climate-smart investment and lending.' A review of the UK's aid policy is due to be published by the department later this month.

Useful links

Environmental Audit Committee
WMD campaign - What should UK aid money be spent on?

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