For evidence that wind and solar energy wind and solar push up energy costs, wreak havoc on the investment needed to keep the lights on and compromise grid security, look no further than South Australia. The state has faced crippling black-outs, spiralling energy bills and fleeing businesses. Rich countries that have already built their grids can throw money at the problems created by weather dependent wind and solar. Poor countries that are still building out their grids don’t have that luxury. Why, then, would anyone think it sensible to push these expensive, flawed technologies down the throats of vulnerable developing countries?
Cheap, universal access to reliable grid power is the single most powerful boost to economic development and improving the lives of the world’s poor. The World Bank’s mission is to free the world of poverty. Yet under its current president, Dr. Jim Yong Kim, appointed by President Obama in 2012, the World Bank abandoned its core development mission and now prioritises environmental sustainability over poverty reduction. In 2013, it adopted anti-coal funding policies, effectively blocking investment in what, for many developing nations, is likely to be the cheapest and most reliable generating capacity. The World Bank’s near categoric refusal to finance coal-fired capacity is worsened by it favouring high-cost, unreliable wind and solar technologies.
The World Bank justifies doing this in order to cut global emissions of greenhouse gases. But poor people in developing countries consume very little power. Their per capita consumption of coal can be measured in kilograms and pounds (in the case of Bangladesh, in ounces). The World Bank admits that the incremental greenhouse gas emissions from extending access to the grid to the world’s poor “will not make a material difference.” That being the case, the World Bank’s anti-coal/pro-renewable policy is morally and economically indefensible. For those genuinely worried by the prospect of anthropogenic global warming, enabling the energy-starved in the world’s developing nations is genuinely not a problem.
The World Bank’s own analysis also highlights the extra costs caused by the variability of wind and solar output and the extra grid infrastructure they need. In spite of this analysis, the World Bank decided to from a “unique partnership” with the then UN Secretary-General Ban Ki-moon in the 2011 Sustainable Energy For All initiative (SE4ALL). This set an arbitrary target of doubling renewables’ contribution to the global energy mix by 2030. Mr. Ban’s own numbers show why the World Bank made a colossal blunder: According to Mr. Ban, universal energy access has a price tag of $50bn a year. Renewable energy costs $500bn a year and a further $500bn a year for energy efficiency. To any objective analyst, these numbers should have settled the matter.
In giving its support to Mr. Ban’s aim of doubling renewables’ share in the energy mix, the World Bank went much further than the UN General Assembly, which in a March 2013 resolution noted that renewable technologies had yet to achieve economic viability. The UN’s 2030 Sustainable Development Goals, agreed in September 2015, also watered down SE4ALL’s renewable energy target. When the governments of the world finalised the text of the December 2015 Paris Agreement, they removed references to renewable energy from the draft circulated by the French conference president.
Leaders in the developing world blast the West’s apparent hypocrisy in denying them the energy that made them rich. The West’s industrialisation was built on coal, notes Nigeria’s finance minster, Mrs. Kemi Adeosun. Yet when Africa wants to use coal, the developed world says, “you have to use solar and the wind which are the most expensive.” There’s a similar story in Asia. At last month’s ASEAN+3 meeting in Manila, energy ministers affirmed the need to achieve energy security with economic efficiency and environmental sustainability before going on to recognise that “coal continues to be a major fuel source in the region.” The communiqué calls for continued public financial support for new coal-fired power stations and promoting of the newest clean coal technologies, including high efficiency coal-fired generation.
The World Bank’s self-imposed embargo on coal financing has opened up the field to rivals like China’s Asian Infrastructure Investment Bank. Australia is also an investor in the AIIB. Responding to pressure from the Turnbull government, its lending guidelines allow it to support the latest generation of highly efficient, low emission coal fired power stations. As the world’s largest coal exporter, Australian mining jobs are on the line. So is the welfare of the world’s poor. It is irresponsible for a multilateral development bank to push high-cost, operationally defective technologies onto nations which will retard development and make electrification vastly more expensive.
Complaints from its customers and the arrival of a powerful competitor show how badly adrift the World Bank has become under Dr Kim’s leadership. The World Bank should not be the plaything of eco-fundamentalists and renewable energy lobbyists. At this week’s annual meeting of the World Bank, the United States is seeking to rein in the World Bank so it focuses on its mission to alleviate world poverty by helping countries access and use fossil fuels more efficiently.
It is up to the World Bank’s shareholders to rescue the World Bank from itself by requiring it to desist from its inhumane and senseless attempt to try to save the planet on the backs of the world’s poor. The World Bank’s mission is straightforward. It is to alleviate poverty. The sooner it reverts to its true mission, the sooner all the world’s poor can realise the dream of cheap, reliable power.
Rupert Darwall is the author of The Anti-Development Bank: The World Bank’s Regressive Energy Policies published this week by the Global Warming Policy Foundation