In 2000, in response to worries that World Bank investments in extractive fossil-fuel projects were exacerbating poverty and degrading the environment, then-WB president James Wolfensohn conceived an independent review to investigate the legitimacy of the concerns. In 2001, he launched the review and appointed Emil Salim, former environment minister of Indonesia, to lead it. The Extractive Industries Review was completed in December 2003. The review confirmed the worst accusations of World Bank critics. Its recommendations were, at least in terms of the status quo, fairly radical, urging a substantial reduction in fossil-fuel investments and increase in renewable energy investments.
In September 2004, after several delays, World Bank management issued its formal response (press release; full PDF), rejecting most of the recommendations. In particular, it elected not to cease investing in fossil-fuel extraction.
To avoid unpleasant optics, management did pledge to increase investment in clean energy. Specifically, it pledged to increase such investments by 20% every fiscal year. So how’s it doing with that?
The report finds that the World Bank, despite being tapped by the G8 countries to develop a framework for financing renewable energy sources, fell far short of its own target for increasing financial support for renewable energy and energy efficiency. The Bank increased funding by only 7 percent, or $14 million, in fiscal year 2005 — less than half its announced target of a 20 percent increase annually over the next five years.
The renewable and efficiency financing by the World Bank for fiscal year 2005 represents only 9 percent of all the Bank’s financing in the energy sector. Meanwhile, the Bank continues to finance fossil fuel pipelines and is making a move back into destructive large dams for energy generation in developing countries.