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World Bank turns to hydropower to square development with climate change
The Washington Post, May 8 2013
The World Bank is making a major push to develop large-scale hydropower
projects around the globe, something it had all but abandoned a decade
ago but now sees as crucial to resolving the tension between economic
development and the drive to tame carbon use.
Major hydropower projects in the Congo, Zambia, Nepal and elsewhere —
all of a scale dubbed "transformational" to the regions involved — are
part of the bank's fundraising drive among wealthy nations. Bank lending
for hydropower has scaled up steadily in recent years, and officials
expect the trend to continue amid a worldwide boom in water-fueled
Such projects were shunned in the 1990s, in part because they can be so
disruptive to communities and ecosystems. But the bank is opening the
taps for dams, transmission lines and related infrastructure as
President Jim Yong Kim tries to resolve a dilemma he has placed at the
core of bank strategy: how to eliminate poverty while adding as little
as possible to carbon emissions.
"Large hydro is a very big part of the solution for Africa and South
Asia and Southeast Asia. . . . I fundamentally believe we have to be
involved," said Rachel Kyte, the bank's vice president for sustainable
development and an influential voice among Kim's top staff members. The
earlier move out of hydro "was the wrong message. . . . That was then.
This is now. We are back."
It's a controversial stand. The bank backed out of large-scale
hydropower because of the steep trade-offs involved. Big dams produce
lots of cheap, clean electricity, but they often uproot villages in
dam-flooded areas and destroy the livelihoods of the people the
institution is supposed to help. A 2009 World Bank review of hydropower
noted the "overwhelming environmental and social risks" that had to be
addressed, but also concluded that Africa and Asia's vast and largely
undeveloped hydropower potential was key to providing dependable
electricity to the hundreds of millions of people who remain without it.
"What's the one issue that's holding back development in the poorest
countries? It's energy. There's just no question," Kim said in an interview.
Advocacy groups remain skeptical, arguing that large projects, such as
the Congo's long-debated network of dams around Inga Falls, may be of
more benefit to mining companies or industries in neighboring countries
than poor communities struggling to recover from the country's civil war.
"It is the old idea of a silver bullet that can modernize whole
economies," said Peter Bosshard, policy director of International
Rivers, a group that has organized opposition to the bank's evolving
hydro policy and argued for smaller projects designed around communities
rather than mega-dams meant to export power throughout a region.
"Turning back to hydro is being anything but a progressive climate
bank," said Justin Guay, a Sierra Club spokesman on climate and energy
issues. "There needs to be a clear shift from large, centralized projects."
The major nations that support the World Bank, however, have been
pushing it to identify such projects — complex undertakings that might
happen only if an international organization is involved in sorting out
the financing, overseeing the performance and navigating the politics.
The move toward big hydro comes amid Kim's stark warning that global
warming will leave the next generation with an "unrecognizable planet."
That dire prediction, however, has left him struggling for how best to
respond and frustrated by some of the bank's inherent limitations.
In his speeches, Kim talks passionately about the bank's ability to
"catalyze" and "leverage" the world to action by mobilizing money and
ideas, and he says he is hunting for ideas "equal to the challenge" of
curbing carbon use. He has criticized the "small bore" thinking he says
has hobbled progress on the issue.
However, the bank remains in the business of financing traditional
fossil-fuel plants, including those that use the dirtiest form of coal,
as well as cleaner but carbon-based natural gas infrastructures.
Among the projects likely to cross Kim's desk in coming months, for
example, is a 600-megawatt power plant in Kosovo that would be fired by
lignite coal, the bottom of the barrel when it comes to carbon emissions.
The plant has strong backing from the United States, the World Bank's
major shareholder. It also meshes with one of the bank's other
long-standing imperatives: Give countries what they ask for. The
institution has 188 members to keep happy and can only go so far in
trying to impose its judgment over that of local officials. Kim, in his
younger days, demonstrated against World Bank-enforced "orthodoxy" in
economic policy and now may be hard-pressed to enforce an energy
orthodoxy of his own.
Kosovo has ample domestic supplies of lignite, freeing the country from
imported fuel. Kim said there's little question Kosovo needs more
electricity, and the new plant will allow an older, more polluting
facility to be shut down.
"I would just love to never sign a coal project," Kim said. "We
understand it is much, much dirtier, but . . . we have 188 members. . .
. We have to be fair in balancing the needs of poor countries . . . with
this other bigger goal of tackling climate change."
The bank is working on other ideas. Kim said he is considering how the
bank might get involved in creating a more effective world market for
carbon, allowing countries that invest in renewable energy or
"climate-friendly" agriculture to be paid for their carbon savings by
industries that need to use fossil fuels. Existing carbon markets have
been plagued with volatile pricing — Europe's cost of carbon has
basically collapsed — or rules that prevent carbon trading with
"We've got to figure out a way to establish a stable price of carbon.
Everybody knows that," Kim said.
He has also staked hope for climate progress on developments in agriculture.
Hydropower projects, however, seem notably inside what Kim says is the
bank's sweet spot — complex, high-impact, green and requiring the sort
of joint public and private financing Kim says the bank can attract.
The massive hydropower potential of the Congo River, estimated at about
40,000 megawatts, is such a target. Its development is on a list of top
world infrastructure priorities prepared by the World Bank and other
development agencies for the Group of 20 major economic powers.
Two smaller dams have been plagued by poor performance and are being
rehabilitated with World Bank assistance. A third being planned would
represent a quantum jump — a 4,800-megawatt, $12 billion giant that
would move an entire region off carbon-based electricity.
The African Development Bank has begun negotiations over the financing,
and the World Bank is ready to step in with tens of millions of dollars
in technical-planning help.
"In an ideal world, we start building in 2016. By 2020, we switch on the
lights," said Hela Cheikhrouhou, energy and environment director for the
African Development Bank.
It is the sort of project that the World Bank had stayed away from for
many years — not least because of instability in the country. But as the
country tries to move beyond its civil war, and the region intensifies
its quest for the power to fuel economic growth, the bank seems ready to
move. Kim will visit the Congo this month for a discussion about
development in fragile and war-torn states.
Kyte said the Inga project will be high on the agenda.
"People have been looking at the Inga dam for as long as I have been in
the development business. The question is: Did the stars align?" she
said. "Did you have a government in place? Did people want to do it? Are
there investors interested? Do you have the ability to do the technical
work? The stars are aligned now. Let's go."
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