The Challenge of Low-Carbon Development - World Bank Internet ...

Special TopicsWBG stakeholders are polarized about the organization’s role in supporting coal-firedpower plants. Coal is the most CO 2-polluting of fuels and a major contributor to climatechange. Environmental nongovernmental organizations argue forcefully for the WBG todevote its resources and moral authority to finding alternatives. But some developingcountries see no affordable alternative to power their aspirations for growth. Withoutthe WBG’s support for coal, “it is the cheaper, dirtier type of coal plants that willproliferate,” argues its chief economist. 1Efficiency in Coal-Fired GenerationIn response, the SFDCC sets out criteria for WBG supportfor coal-based generation. The WBG can support clientcountries in developing new coal power projects if itcontributes to energy security, reduced power shortages,or increased access; if it is least cost, taking environmentalimpacts into account; if it uses best “appropriate availabletechnology”; and if no donor financing is available forlower-emission alternatives.To assess the costs and benefits of the WBG’s involvementwith coal power, this chapter of the evaluation examines fiveof the six greenfield or rehabilitation coal power plants in the2003–08 portfolio 2 and addresses the following questions:• Were there alternatives that were both lower cost andless GHG intensive?• Did WBG involvement improve efficiency or reducepollution at the plant level?• Does the intervention promote or retard diffusion ofhigher efficiency technologies?Global context and the WBG’s role in power sectorfinanceBarring revolutionary technological developments, coal willbe in use through mid-century and beyond. InternationalEnergy Agency projections (OECD-IEA 2009) show thatunder a scenario where the world meets a stringent 450 ppmgoal for atmospheric CO 2, coal will still provide 7,300 terawatthours (TWh) in 2030 (24 percent of global generation),down from 8,200 TWh in 2007 (42 percent). Even in this450 ppm scenario, coal generation in non-OECD countrieswill be higher in absolute terms in 2030 (5,608 TWh) thanin 2007 (4,194 TWh). The Massachusetts Institute of TechnologyFuture of Coal study (MIT 2007) projected that in anactive mitigation scenario, energy from coal over 2000–50grows 12 percent in the United States, declines 11 percent inChina, and grows about 30 percent elsewhere. Coal plantshave a typical lifespan of 40 years, and many existing plantsare decades old. Thus even stringent climate scenarios foreseenew coal plants as part of the mix.The WBG is too small to have a large direct impact onglobal power plant construction. New power plants (acrossall fuels) with 607 GW capacity became operational over2003–08 in countries eligible for Bank borrowing (IDA/IBRD/Blend), but WBG-supported projects approved overthe period contribute only 28 GW. 3 Total 2003–08 WBGcommitments of $5,768 million constitute, as an order ofmagnitude, less than 1 percent of the cost of capacity installedin borrower countries over this period.The WBG is too small to have a large directimpact on global power plant construction,but it has a significant role in newgeneration in the poorest countries.The WBG does play a significant role in new generationin the poorest countries. New generation installed in IDAcountries over 2003–08 was 21.8 GW, whereas new generationplanned in these countries with some WBG involvementwas 6.2 GW, or 29 percent. However, over 2003–08,WBG support for coal-fired generation was much moreprominent outside IDA countries (figure 2.6).Over 2003–08, almost all WBG support forcoal has been outside IDA countries.In sum, substantial developing world investment in coalappears to be inevitable over the coming half century.62 | Climate Change and the World Bank Group