Try Red Pepper in print with our pay-as-you-feel subscription. You decide the price, from as low as £2 a month.

More info ×

Don’t bank on it

With its poor track record on poverty, should the World Bank play a role in resolving the climate crisis?

June 1, 2006
4 min read

The question the World Bank asked itself was ambitious: how to get energy to millions of people that need it, while sustaining economic growth and reducing greenhouse gas emissions. On 23 April, in Washington, the bank revealed some of its answers. But were its conclusions good for the environment and the money-poor? And is the World Bank the best vehicle to provide solutions to the double whammy of energy and climate crises faced by developing countries?

The bank’s conclusions start from the assumption that the world will be reliant on fossil fuels for the next 20-30 years. Its solutions include a mix of energy efficiency, carbon capture and storage, dams, wind and solar power. These would be financed from new funds to cover up-front costs and future income flowing from carbon trading. The response from environmental and social justice activists was decidedly frosty, with accusations that the bank was merely reinforcing the status quo.

On the face of it, the bank is careful to put emphasis on energy efficiency and wind and solar energy, with an increase in funds of 20 per cent per year for renewables. So why the coolness from activists? Daphne Wysham, of the US-based Institute for Policy Studies, suggests we read between the lines: ‘What they spend on renewables is so low already that 20 per cent may sound significant. But when you realise that the bank is throwing billions at fossil fuel projects and mere millions at renewables, then you get some perspective.’

Can the World Bank overcome the antipathy? Professor Michael Dorsey, of the Environmental Studies Programme at Dartmouth University in the US, sees hope for the bank, but only if it can transform itself into a micro-lender targeting small loans with low interest rates at the most vulnerable groups. ‘Right now, since the level of response needed to climate change is obviously global and there is no other institution with the capacity to do this, the World Bank could be best placed to play a role,’ ventures Dorsey.

But although it’s true that the World Bank is in a unique global position, its failure to make significant advances towards eliminating poverty should make us nervous. Dorsey agrees: ‘The bank itself tells you that two thirds of its projects don’t work and a third to half are abject failures. With a track record like that you need to come up with a strategy for success or close the doors.’ Dorsey describes a process where the bank sets a definitive entry and exit strategy, ensuring that investment in renewables is not capital intensive – something that isn’t part of their current practices.

Many activists, however, believe that the bank is rife with inherent contradictions that prevent it from playing a positive role in developing renewable energies. The long-time World Bank activist, Professor Patrick Bond, based in the Centre for Civil Society in South Africa, says: ‘With the leading organic intellectual of the petro-military complex, Paul Wolfowitz, as bank president, there is no hope whatsoever for reforming the institution’s energy policy.’ Daphne Wysham also agrees that there are fundamental problems within the power structures of the bank. ‘They are a bank first and foremost and answerable to their largest investors: the G7 countries. So the result is like the man behind the curtain in the Wizard of Oz, all whizz and bang out front but the same old hands pulling the strings.’

So what is the future for investment in renewable energy? Patrick Bond sees a fundamental problem in World Bank financing: ‘The interest on a World Bank loan soars when a third world currency declines. If the World Bank were not holding the reigns on most third world states’ monetary policy, more local fiscal resources could be used for renewables … The only serious strategy for progressives to pursue is the defunding and delegitimation of the Bank.’

In fact this is not such a radical suggestion. The bank’s own consultants reviewed its investments in fossil fuels and recommended funding cease for such projects by 2008 because they harmed the poor. The report, the Extractive Industries Review, was subsequently shelved by the bank.

Daphne Wysham sees this as a huge mistake. ‘The bank needs to immediately get out of fossil fuels,’ she argues. According to Wysham’s research, the World Bank’s oil, gas and coal projects financed since 1992 will release over 43 billion tons of carbon dioxide in their lifetimes. Perhaps the bank should take its own advice and stop being part of the problem.

Red Pepper is an independent, non-profit magazine that puts left politics and culture at the heart of its stories. We think publications should embrace the values of a movement that is unafraid to take a stand, radical yet not dogmatic, and focus on amplifying the voices of the people and activists that make up our movement. If you think so too, please support Red Pepper in continuing our work by becoming a subscriber today.
Why not try our new pay as you feel subscription? You decide how much to pay.

Contribute to Conter – the new cross-party platform linking Scottish socialists
Jonathan Rimmer, editor of Conter, says it’s time for a new non-sectarian space for Scottish anti-capitalists and invites you to take part

Editorial: Empire will eat itself
Ashish Ghadiali introduces the June/July issue of Red Pepper

Eddie Chambers: Black artists and the DIY aesthetic
Eddie Chambers, artist and art historian, speaks to Ashish Ghadiali about the cultural strategies that he, as founder of the Black Art Group, helped to define in the 1980s

Despite Erdogan, Turkey is still alive
With this year's referendum consolidating President Erdogan’s autocracy in Turkey, Nazim A argues that the way forward for democrats lies in a more radical approach

Red Pepper Race Section: open editorial meeting – 11 August in Leeds
The next open editorial meeting of the Red Pepper Race Section will take place between 3.30-5.30pm, Friday 11th August in Leeds.

Mogg-mentum? Thatcherite die-hard Jacob Rees-Mogg is no man of the people
Adam Peggs says Rees-Mogg is no joke – he is a living embodiment of Britain's repulsive ruling elite

Power to the renters: Turning the tide on our broken housing system
Heather Kennedy, from the Renters Power Project, argues it’s time to reject Thatcher’s dream of a 'property-owning democracy' and build renters' power instead

Your vote can help Corbyn supporters win these vital Labour Party positions
Left candidate Seema Chandwani speaks to Red Pepper ahead of ballot papers going out to all members for a crucial Labour committee

Join the Rolling Resistance to the frackers
Al Wilson invites you to take part in a month of anti-fracking action in Lancashire with Reclaim the Power

The Grenfell public inquiry must listen to the residents who have been ignored for so long
Councils handed housing over to obscure, unaccountable organisations, writes Anna Minton – now we must hear the voices they silenced

India: Modi’s ‘development model’ is built on violence and theft from the poorest
Development in India is at the expense of minorities and the poor, writes Gargi Battacharya

North Korea is just the start of potentially deadly tensions between the US and China
US-China relations have taken on a disturbing new dimension under Donald Trump, writes Dorothy Guerrero

The feminist army leading the fight against ISIS
Dilar Dirik salutes militant women-organised democracy in action in Rojava

France: The colonial republic
The roots of France’s ascendant racism lie as deep as the origins of the French republic itself, argues Yasser Louati

This is why it’s an important time to support Caroline Lucas
A vital voice of dissent in Parliament: Caroline Lucas explains why she is asking for your help

PLP committee elections: it seems like most Labour backbenchers still haven’t learned their lesson
Corbyn is riding high in the polls - so he can face down the secret malcontents among Labour MPs, writes Michael Calderbank

Going from a top BBC job to Tory spin chief should be banned – it’s that simple
This revolving door between the 'impartial' broadcaster and the Conservatives stinks, writes Louis Mendee – we need a different media

I read Gavin Barwell’s ‘marginal seat’ book and it was incredibly awkward
Gavin Barwell was mocked for writing a book called How to Win a Marginal Seat, then losing his. But what does the book itself reveal about Theresa May’s new top adviser? Matt Thompson reads it so you don’t have to

We can defeat this weak Tory government on the pay cap
With the government in chaos, this is our chance to lift the pay cap for everyone, writes Mark Serwotka, general secretary of public service workers’ union PCS

Corbyn supporters surge in Labour’s internal elections
A big rise in left nominations from constituency Labour parties suggests Corbynites are getting better organised, reports Michael Calderbank

Undercover policing – the need for a public inquiry for Scotland
Tilly Gifford, who exposed police efforts to recruit her as a paid informer, calls for the inquiry into undercover policing to extend to Scotland

Becoming a better ally: how to understand intersectionality
Intersectionality can provide the basis of our solidarity in this new age of empire, writes Peninah Wangari-Jones

The myth of the ‘white working class’ stops us seeing the working class as it really is
The right imagines a socially conservative working class while the left pines for the days of mass workplaces. Neither represent today's reality, argues Gargi Bhattacharyya

The government played the public for fools, and lost
The High Court has ruled that the government cannot veto local council investment decisions. This is a victory for local democracy and the BDS movement, and shows what can happen when we stand together, writes War on Want’s Ross Hemingway.

An ‘obscure’ party? I’m amazed at how little people in Britain know about the DUP
After the Tories' deal with the Democratic Unionists, Denis Burke asks why people in Britain weren't a bit more curious about Northern Ireland before now

The Tories’ deal with the DUP is outright bribery – but this government won’t last
Theresa May’s £1.5 billion bung to the DUP is the last nail in the coffin of the austerity myth, writes Louis Mendee

Brexit, Corbyn and beyond
Clarity of analysis can help the left avoid practical traps, argues Paul O'Connell

Paul Mason vs Progress: ‘Decide whether you want to be part of this party’ – full report
Broadcaster and Corbyn supporter Paul Mason tells the Blairites' annual conference some home truths

Contagion: how the crisis spread
Following on from his essay, How Empire Struck Back, Walden Bello speaks to TNI's Nick Buxton about how the financial crisis spread from the USA to Europe

How empire struck back
Walden Bello dissects the failure of Barack Obama's 'technocratic Keynesianism' and explains why this led to Donald Trump winning the US presidency