PRESS RELEASE: Civil society opposes Zoellick’s GCI request

Civil society organizations voice opposition to the World Bank’s recapitalization ask.

Press Release

April 22, 2010

Global outcry from international NGOs on eve of World Bank recapitalization ask due to Bank’s ongoing support for oil and coal

World Bank President Robert Zoellick is expected to formally release the World Bank Group’s request for an estimated $58 billion general capital increase (GCI) on Sunday, April 25th at the conclusion of the World Bank’s Spring Meeting this weekend.  A broad and growing global coalition of environmental, faith-based, human rights, community, and indigenous rights groups are calling for an end to the Bank’s continued financing of dirty energy projects, withholding support for the Bank’s GCI request within member country capitals as a consequence.

“We will be calling on governments to oppose a general capital increase for any part of the World Bank Group unless the Bank Group ends support for all dirty energy projects that do not have energy access for the poor as their sole purpose,” said Gerald LeMelle, Executive Director for Africa Action.  “The Bank Group must focus its limited resources on new renewable projects that provide affordable, reliable, and clean energy to those who are in greatest need.”

The timing of the GCI request – and the civil society objections – is especially conspicuous as The World Bank Group is currently reviewing their Energy Strategy, which will guide their substantial energy investments (more than $8 billion in FY 2009 alone) over the coming decade.  The new World Bank Energy Strategy is not expected to be published until April 2011.

“A new World Bank Energy Strategy that limits financing for dirty energy projects and prioritizes investment in clean, renewable energy opportunities for the poorest communities must be approved and publicly available before countries support this general capital increase,” said Mark Kresowik of the Sierra Club.  “Governments should direct their support for poverty reduction, sustainable development, and clean energy through other institutions until the Bank has a clean energy strategy in place.”

The request also comes in the wake of the World Bank Board approval of a highly contested $3.75 billion loan to South African power utility Eskom for the construction of a 4800 megawatt coal-fired power plant.   That decision, which was opposed by nearly 200 groups  and elicited abstentions from the United States, United Kingdom, Italy, the Netherlands, and Norway, was seen by some as a particularly hypocritical move from an institution both yearning to take on the mantle of “Climate Bank” and the attached billions in international climate funds, while consistently financing dirty energy projects as a sizeable component of its energy portfolio.

“The people of this diverse and beautiful planet we live on cannot afford more lending to projects like Eskom’s coal plant,” said the Right Reverend Geoff Davies, former bishop of the Anglican South African Diocese of Umzimvubu and current Director of the Southern African Faith Communities’ Environment Institute, currently in Washington, DC to attend the World Bank meetings.  “Why should countries reward the Bank with additional capital for financing dirty energy projects that won’t benefit those who are least well off or deal with the health and environmental damage caused by burning fossil fuels?”

The finance ministers of the G-20 are also meeting in Washington, DC this week, with the G-20 pledge to phase out fossil fuel subsidies at the top of the agenda.  The groups opposing the World Bank’s financial support for coal and oil have argued that approval of additional capital for the Bank must be contingent upon the Bank working within the confines of this G-20 pledge.

“The members of the G-20, who are also the largest donors to the World Bank, have made the right decision to stop subsidizing fossil fuels, and the World Bank must follow suit,” said Karen Orenstein of Friends of the Earth.  “Energy lending reform is clearly necessary before countries give the Bank another dime.”

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