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Views from the Center


This is a joint posting with Vijaya Ramachandran
The World Bank Group's board appears to be operating under a severe case of cognitive dissonance, supporting efforts to save tigers - threatened in India and Bangladesh by habitat loss due to climate change - while helping build coal-fired power plants that will only speed up this process.
Back in June the Bank launched a campaign to help governments develop and better manage forests inhabited by endangered tigers, including in the Sunderbans. This massive mangrove forest spans the India-Bangladesh border and is home to the Bengal tiger. While the Bank has a less-than-stellar conservation track record in Sunderbans, more important is the fact that this impoverished World Heritage site would be one of the hardest hit by climate change, whether from rising sea levels or the disappearance of the glacier that feeds the Ganges river.
But the Bank's commitment to poverty reduction and biodiversity stands in stark contrast to its bread-and-butter financing choices. As the Bank planned its save-the-tiger campaign, the International Finance Corporation (IFC), the Bank's private sector arm, was putting together a deal to finance $450 million of the misguided $4+ billion Tata Mundra Ultra Mega coal-fired plant in India. Financing 10% of the cost of a plant being built by India's largest company will help propel India's power sector emissions to third highest in the world within a few years, behind China and the U.S. Is this a smart use of scarce international public resources?

The IFC also just announced that it is facilitating a $97 million syndicated loan and also investing $25 million of its own funds to help build a 60MW coal plant in Indonesia. Presumably a country that has almost tripled its generation capacity since 2000 does not need dollars from abroad for such a small-scale project. But the IFC persists in its investments in coal fired power plants. Indonesia's power sector CO2 emissions will soon jump from 23rd in the world to 17th, putting it ahead of South Korea, Spain and Canada.
These power sector investments stand in stark contrast to the Bank's save-the-tigers program. With one hand the Bank is trying to reverse the precipitous decline of tiger populations and help improve the sustainable use of forest resources - with the other it is undermining this work by financing coal plants that can only leave the natural world worse off. Alternatives are now well within reach (see recent work by our colleague David Wheeler). It is now time for the World Bank Group to show real leadership on the issue of climate change.


CGD blog posts reflect the views of the authors drawing on prior research and experience in their areas of expertise. CGD does not take institutional positions.