Over 1.2 billion people are without access to electricity worldwide. Another 2.8 billion rely on solid fuels for cooking, which resulted in over 4.3 million premature deaths in 2010 due to indoor air pollution.
Energy is a major contributor to global CO2 emissions. Although low-income developing countries are not large emitters, some emerging market countries are, along with developed nations. The policy measures with the greatest potential to contain CO2 emissions and keep global warming below two degrees Celsius are energy efficiency, followed by a shift towards renewable energy.
The World Bank Group’s President co-chairs the Sustainable Energy for All (SE4ALL) initiative, which seeks to achieve three goals by 2030, namely universal access to electricity and clean cooking solutions; double the share of the world’s energy supplied by renewable sources from 18% to 36%, and double the rate of improvement in energy efficiency. Seventy-seven countries have opted in to the initiative. Many public, private and non-governmental actors are supporting its implementation.
The Bank Group’s Energy Sector Directions Paper, endorsed by its Board in July 2013, describes how the Bank Group will help client countries secure the affordable, reliable, and sustainable energy supply needed to end extreme poverty and promote shared prosperity. The paper is consistent with the Bank Group’s engagement in Sustainable Energy for All.
Expanding access to modern energy services is central among the directions. In countries with low energy access, the priority is to provide affordable and reliable energy. Grid, mini-grid, and off-grid solutions will all be pursued for electricity, including programs such as Lighting Africa and Lighting Asia. Our engagement in cleaner cooking and heating solutions will grow, in partnership with others, including the Global Alliance for Clean Cookstoves.
The Bank Group favors a long-term, sector-wide planning approach to energy development, with an emphasis on supporting low-carbon power options that expand access, such as hydropower and natural gas. The Bank Group engages to improve utility performance and sector governance, and promotes market solutions in the energy sector. It supports governments in adopting policy, regulatory, and contractual frameworks that enable Bank Group financing to leverage additional investment, including from the private sector.
The Bank Group acknowledges the challenge of balancing energy for development with its impact on climate change and helps countries realize affordable alternatives to coal power. It will provide financial support for greenfield coal power generation projects only in rare circumstances. Considerations such as meeting basic energy needs in countries with no feasible alternatives to coal and a lack of financing for coal power would define such rare cases. The “Criteria for Screening Coal Projects under the Strategic Framework for Development and Climate Change” will apply.
Bank Group energy financing—including IBRD, IDA, IFC, and MIGA guarantees—totaled over $43 billion over the last five years since 2010, of which $19 billion was for energy efficiency and renewable energy projects, $9.8 billion for transmission and distribution expansion, and another $10 billion in support for other energy programs, including policy and regulatory reform.
Access. Since 2000, IDA/IBRD financing brought electricity to 41 million people, of whom about 10 million were reached with off-grid power. In Rwanda, IDA support helped provide nearly one million people with electricity between 2009 and 2012, a threefold increase, while schools and health centers achieved a 70-percent increase in connections. In Bangladesh, over two million low-income rural households now have electricity—delivered by solar panels—thanks to a project partly financed by IDA.
Energy Efficiency. Among energy efficiency projects is support for a $104.3 million Green Energy for a Low-Carbon City in Shanghai, featuring energy efficiency and renewable energy measures in buildings, and energy-efficient vehicles and public transport. Similar initiatives are under way in eight other Chinese cities. The Bank’s ESMAP also helps city governments in developing their energy efficiency options, and serves as a knowledge clearinghouse for best practices on energy-efficient urban development.
Renewable Energy. Projects include support for concentrating solar plants in North Africa, off-grid household solar in Mongolia, wind farms in Turkey, and geothermal power in Kenya. Support for hydropower has included financing for the Bujagali run-of-river project, now meeting half of Uganda’s electricity needs. Two IDA credits supported the Felou hydroelectric project, increasing by 63 megawatts (MW) low-cost power to utilities in Mali, Mauritania, and Senegal. In Chile, IFC invested $31 million, leveraging a similar amount from DnB Nor, a Norwegian investor, to finance a 46 MW wind farm. In Indonesia, the Bank is helping to boost geothermal power generation in South Sumatra and North Sulawesi, to add 150 MW of capacity, thereby displacing coal-based power generation.
World Bank Group Financing for Energy by Type, Fiscal Years 2010-14 (Revised US$ Millions)