Last year, the World Bank committed to increasing its renewable energy financing by 20 percent each year for the next five years, and this year, the G8 has asked the Bank to "finance a framework for climate change." The World Bank Group itself has also emphasised the global leadership role it hopes to play in addressing climate change and financing for renewable energy.Friends of the Earth (FOE) asks in this report whether the World Bank’s record on financing of renewables so far commends it as the correct institution to take the lead on tackling climate change issues and renewable energy financing for developing countries.Based on an examination of publicly available documents for World Bank Group energy lending, FOE claims that the Bank has failed to adequately fund and create policies to push the development of clean energy and has failed to meet even its own commitments:lending for renewable energy and energy efficiency projects increased only 7 percent ($14 million) in fiscal year 2005, significantly short of the 20% targetonly 49 percent, of the World Bank’s renewable financing came from the World Bank’s own funds. The rest came from the Global Environment Facility (GEF)the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) are not included in the 20 percent target, and therefore have no concrete goals for increasing financing for renewables. The IFC devoted only 2 percent of its total energy lending to renewables in fiscal year 2005renewable energy and energy efficiency financing was very geographically uneven, with little attention or resources given to several regions with critical energy needslending to renewable energy and energy efficiency has been and continues to be quite small compared to its funding of greenhouse gas producing fossil fuel projects.If the Bank is to deliver on the apparent potential of renewable energy to promote development and poverty alleviation, the report finds that it will have to significantly shift its approach to the financing of renewable energy by:dramatically increasing its funding for renewable energy, both in absolute terms and as a proportion of its overall energy fundingcommitting the private sector lending arms of the Bank – the IFC and MIGA – to renewable energy financing targets and develop clear strategies to meet those targetsadopting regional targets for renewable and efficiency financing and creating renewable energy and energy efficiency teams to focus on specific countries and technologiesintegrating climate change mitigation and non-conventional energy approaches more deeply into its overall lending strategy. The Bank will have to find a way to pursue the cleanest sustainable technologies, rather than defaulting to projects that are environmentally and socially damaging. It will have to increase its support for renewable and efficiency projects through the use of financing tools such as grants, concessional credits, credit enhancement products, and lending for micro-credit financing projectsleveraging carbon finance funds to finance clean renewable technology like wind and solar power, rather than using the funds for harmful projects such as large damsintegrating renewable energy and energy efficiency more into lending outside the energy sector, including financing for electricity in schools and health clinics.
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