April 13, 2011

Chairman Kerry Highlights Three Key Areas To Help Strengthen World Bank’s Energy Sector Strategy

Washington, DC – Senate Foreign Relations Committee Chairman John Kerry (D-MA) sent a letter to World Bank President Robert Zoellick outlining three key areas the World Bank must address in order to overhaul its Energy Sector Strategy. Chairman Kerry commended the World Bank for tackling the challenges posed by energy poverty and climate change, but he said he is seeking a more aggressive approach by increasing clean energy funding, promoting sustainable clean technologies, and including the true cost of carbon in assessing projects.

In the letter, Chairman Kerry stated:

“The previous strategy is over a decade old, and it is increasingly out of date. Technology has changed substantially in affordability and availability, creating new opportunities for renewable energy and energy efficiency. Meanwhile, the urgency of addressing the threat of climate change has increased dramatically. As I mentioned in my speech at the Bank in late 2009, a 21st century development bank requires 21st century approaches to development. And as the Senate considers the World Bank’s General Capital Increase, we must see the Bank move forward with an innovative and forward-looking Energy Sector Strategy. Unfortunately, the draft Energy Sector Strategy still falls short. In the coming months, I will continue to push for a more aggressive approach as the strategy is finalized.”

The full text of Chairman Kerry’s letter follows:

April 12, 2011

Robert B. Zoellick
President
The World Bank Group
1818 H Street Northwest
Washington, DC  20433-0002

Dear President Zoellick:

I understand that the World Bank’s Committee on Development Effectiveness discussed the draft of the Energy Sector Strategy yesterday. I would like to add some preliminary thoughts.

First, I would like to congratulate you on the progress the World Bank has made in crafting an energy sector strategy that jointly addresses the substantial and integrated challenges of energy poverty and climate change. Clearly the Bank has recognized that we can no longer afford to ignore the threat of catastrophic climate change from unrestrained emissions of greenhouse gases, just as we must work to ensure sufficient energy access for all. As I have said before, it is unacceptable that Africa today has the same amount of installed electricity as Spain—despite twenty-three times more people.

Overcoming these challenges will require a new Energy Sector Strategy. The previous strategy is over a decade old, and it is increasingly out of date. Technology has changed substantially in affordability and availability, creating new opportunities for renewable energy and energy efficiency. Meanwhile, the urgency of addressing the threat of climate change has increased dramatically. As I mentioned in my speech at the Bank in late 2009, a 21st century development bank requires 21st century approaches to development. And as the Senate considers the World Bank’s General Capital Increase, we must see the Bank move forward with an innovative and forward-looking Energy Sector Strategy.

Unfortunately, the draft Energy Sector Strategy still falls short. In the coming months, I will continue to push for a more aggressive approach as the strategy is finalized. Specifically, I would like to highlight three areas in which the strategy does not go far enough.

1.      It fails to set sufficiently ambitious goals for clean energy. While the targets for increasing energy access are ambitious and noteworthy, the 2015 target of 75% clean energy funding remains too low.

2.      It does not go far enough in promoting innovative technologies. The Bank has finally recognized that concessional funding for coal power plants in middle-income countries is unnecessary. However, the Bank must do more to encourage creative, non-fossil solutions in lower-income countries, rather than simply resorting to old approaches. In doing so, the strategy must also better address the need for sustainability in hydropower, an issue of increasing concern in drought-afflicted areas like sub-Saharan Africa.

3.      It still uses an outmoded decision-making process. The Bank is moving in the right direction by pushing for fossil fuel subsidy reform and better accounting for greenhouse gases. But the results of these efforts ought to be included explicitly in how projects are assessed, not simply calculated in a vacuum.

Thank you for your time and consideration. I look forward to your thoughts on these issues moving forward.

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