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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
Consequently, the efficiency with which new or renovatedplants burn coal will affect global CO 2emissions. The scaleof that investment for non-IDA countries dwarfs the WBG’sfinancial resources, so any significant WBG influence oncoal investment or efficiency would have to be primarily viaother channels, including policy, technical assistance, anddemonstration effects.Assessment of WBG support for five coal plantsIn Turkey, the World Bank offered support for the rehabilitationof the Afsin-Elbistan A thermal power plant to remedypower supply shortages. The plant runs on lignite coal,which is plentiful in Turkey but CO 2intensive. The plant’sthermal efficiency fell from its design rate of 37 percentto 27 percent as a result of poor operations. Rehabilitationseemed an obvious, cost-effective way to boost powersupply. One would expect CO 2reduction as a side benefit,though this was not a project objective. However, this projectwas cancelled after two efforts at procurement failed toattract qualified bids, an indication that rehabilitation canbe complicated.Power generation from natural gas—a lower-carbonalternative—would have been economically competitivewith the rehabilitation project, if planning had attacheda shadow price to the local air pollution damages fromcoal use. A shadow price of $5/ton of CO 2would alsohave made gas cheaper; this may possibly be monetizabledepending on Turkey’s role in a future climate regime.However, energy security considerations might put a strongpremium on diversification away from gas.In Kosovo, IDA provided a grant totaling $10.5 million intechnical assistance to help bring in new investments inthe energy sector and attract private investors to developKosovo’s lignite mines and increase capacity for lignitefiredpower generation. Kosovo’s 11.5 billion ton reserve ofeasily accessible lignite constitutes one of this poor country’smain assets, for both internal consumption and exportas electricity. The technical assistance was broad, includingan assessment of carbon mitigation options (including optionsto leave space for a carbon capture and storage plant)as well as policies for promoting renewable energy in thecountry. The economic analysis for the new plant includedcosts of decreased air quality from plant emissions ofair pollutants. A systemwide analysis indicated that a newlignite-based plant in Kosovo is the least-cost option evenwhen carbon prices (or carbon credits) are of the order of€10/ton of CO 2.MIGA has issued guarantees for the construction of a660-MW lignite coal power plant in Bulgaria against risksof expropriation, war, and civil disturbance. The new plantis designed to meet European Union environmental standardsand replaces 500 MW of older, more polluting capacity(MIGA 2008). MIGA claims that its support wasessential for the project to mobilize long-term commercialbank financing. Alternative sources of power for Bulgariainclude nuclear, which has lower conventional pollutantsand would potentially allow Bulgaria to sell CO 2allowances.Nuclear has, however, costs of debated magnitude,related to safety and waste disposal.IFC invested $8 million as equity in the 660-MW LancoAmarkantak coal-based power plant project in Chhattisgarh,India. IFC’s investment is a small portion of the overallcost of the project, which is expected to be about $578 million.The financial closure for both units was achieved bySeptember 2006—prior to IFC’s approval of equity supportin June 2007.IFC’s support played a marginal role in improving the socialimpact assessment from the power plant and improved theenvironmental design standards of the plant. The plant’s designefficiency and GHG emissions are at business-as-usuallevels, and IFC cannot be credited with supporting anytechnological improvements. The environmental impactanalysis discusses the possibility of cofiring the plant withbiomass, which would reduce net emissions. Given IFC’srelatively small investment, it remains to be seen whetherany of the proposed social and environmental improvementswill be implemented.In April 2008, the IFC Board approved a $450 million debtinvestment in the Tata Mundra Ultra Mega Power Plant inGujarat, India. The 4-GW project is IFC’s largest coal-firedproject and IFC’s largest financing to date. The Indian governmentpromoted the development of this plant as criticalin meeting the power needs of a number of Indian statesthrough transmission of power on regional and nationalgrids. The plant is currently under construction.IFC’s support for this project probably resulted in improveddesign standards for environmental performance. IFC didnot have a role in the technology choice, as the Indiangovernment preselected the supercritical technology.Special Topics | 63
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Phase II: The Challenge of Low-Carb
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CLIMATE CHANGE AND THE WORLD BANK G
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Table of ContentsAbbreviations . .
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Figures1.1 GHG Emissions by Sector
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AcknowledgmentsThe report was prepa
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Executive SummaryUnabated, climate
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esettlement plans has been ineffect
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of some technologies, such as landf
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Scale up high-impact investmentsEne
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should have been strengthened in th
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Major monitorable IEGrecommendation
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Major monitorable IEGrecommendation
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Chairman’s Summary: Committee onD
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most places. Before we get there, w
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non-Annex I countries. The World Ba
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attention. In a couple of decades,
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GlossaryAdditionalityBankabilityBas
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Joint ImplementationA mechanism und
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Chapter 1evALuAtiOn HiGHLiGHts• T
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of interventions, from technical as
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would allow industrialized countrie
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growth, poverty reduction (includin
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Table 1.1 Map of the EvaluationSect
Page 47 and 48: Chapter 2eValuaTION HIGHlIGHTS• W
Page 49 and 50: Table 2.2Evaluated World Bank Renew
Page 51 and 52: Figure 2.2Breakdown of 2003-08 Low-
Page 53 and 54: Table 2.4 Commitments to Grid-Conne
Page 55 and 56: Box 2.1The Economics of Grid-Connec
Page 57 and 58: on average (Iyadomi 2010). (Reducti
Page 59 and 60: and industrial policy. An increasin
Page 61 and 62: Table 2.6Hydropower Investments by
Page 63 and 64: costs for remaining unelectrified a
Page 65 and 66: World Bank experienceTwo factors ac
Page 67: Box 2.5On-Grid and Off-Grid Renewab
Page 70 and 71: Energy EfficiencyThe first phase in
Page 72 and 73: Box 3.1ESCOs and Energy Performance
Page 74 and 75: have had limited causal impact on t
Page 76 and 77: measurement of achieved economic re
Page 78 and 79: Since the early 1990s, public entit
Page 80 and 81: part with a $198 million IDA credit
Page 83 and 84: Chapter 4eVAluATioN HigHligHTS• B
Page 85 and 86: The WBG urban transport portfolio (
Page 87 and 88: y conventional transport systems, i
Page 89 and 90: include the forest carbon projects
Page 91 and 92: for Costa Rica for the period 2000-
Page 93 and 94: After 20 years of effort, systemati
Page 95 and 96: orrowers have demonstrated the abil
Page 97: Chapter 5EVALuATioN HigHLigHTS• O
Page 101 and 102: technologies could accelerate diffu
Page 103 and 104: A second issue, inherent to any adv
Page 105 and 106: goal of promoting wind turbine impr
Page 107 and 108: ConclusionsThe WBG’s efforts to p
Page 109 and 110: Table 5.1Carbon Funds at the World
Page 111 and 112: demonstration initiative. The Commu
Page 113 and 114: Impacts on technology transferThe 2
Page 115 and 116: Chapter 6Photo by Martin Wright/Ash
Page 117 and 118: Figure 6.1800Economic and Carbon Re
Page 119 and 120: Specifically, the WBG could:• Pla
Page 121 and 122: Table 6.1Summary of Sectoral Findin
Page 123 and 124: Table 6.1Sector Intervention Direct
Page 125 and 126: Appendix ARenewable Energy Tables a
Page 127 and 128: Table A.4Grid-Based Biomass/Biogass
Page 129 and 130: Table A.5 (continued)Negative examp
Page 131 and 132: Figure A.4A. Hydro/biomass capacity
Page 133 and 134: Appendix bWorld Bank Experience wit
Page 135 and 136: Table C.2Completed Low-Carbon Energ
Page 137 and 138: TAble C.4Reviewed energy efficiency
Page 139 and 140: the new capacity. Transmission syst
Page 141 and 142: Table E.2Climate obligationsCoal Pl
Page 143 and 144: Table F.2GHG objectiveModeNumber of
Page 145 and 146: IEG eliminated a few cases of doubl
Page 147 and 148: Table H.1Project andlocationBioener
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Appendix ICarbon and Economic Retur
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Appendix JRecent WBG Developments i
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y providing value to standing fores
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never had an explicit corporate str
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overnight. The Bank can provide ass
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Chapter 51. From the chief economis
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Hartshorn, G., P. Ferraro, and B. S
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______. 2007. World Development Ind
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IEG PublicationsAnalyzing the Effec
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