"World Bank’s New Climate Strategy: Keep Financing Coal, Just Don’t Call It A Coal Plant"
by Nicole Ghio
With the release of its “Turn Down the Heat” report, it seemed the World Bank was finally ready to take the climate crisis seriously.
But while the World Bank may hate climate change, it still loves funding dangerous coal projects that destroy local communities and contribute to global warming. Now that it has come out openly with its concerns for climate it has to hide all that pesky coal lending.
Thus its new and creative way to make its rhetoric and actions match up — just don’t call it a coal plant!
Let me explain. The World Bank’s International Finance Corporation (IFC), along with the European Bank for Reconstruction and Development (EBRD) and several other international finance institutions (IFIs), are planning to finance roughly $4 billion of the $13 billion Oyu Tolgoi gold and copper mine. Outwardly, this is not a coal project — it’s just a huge destructive mine causing an uproar with local herders who filed a formal complaint challenging the project. But here’s the rub: After four years, the investor agreement explicitly requires the construction of a huge, dirty, new 450- 750 MW coal plant to power the mine.
And this is where things get really fun. The World Bank is required to consider “associated facilities” when it finances projects. So even though the coal plant is clearly part of the project, the World Bank has pretended it wasn’t. That way it doesn’t have to follow its own rules for approving coal projects. Because after all, climate change is serious and the World Bank hates it.
Just how bad was this blatant attempt to flout the rules? Well, had the Bank considered this a coal plant, the institution’s “coal guidance” (the Strategic Framework on Development and Climate Change) would have required a panel of experts to analyze the project with a specific mandate to explore low-carbon alternatives. But the project’s contract explicitly requires a coal plant after four years. Why bother to analyze low carbon alternatives if you are contractually obliged to build a coal plant?
Ironically enough, the project documents do mention wind, but fail to analyze it, or any other source, as a viable alternative. And yes, wind is viable in Mongolia, very viable. In fact, Mongolia is not only trying to ramp up wind to combat severe pollution, a recent New York Times piece even cites this very project as ripe for wind development. It might make you laugh if it first didn’t make you want to cry.
Had the Bank bothered to assemble an expert panel, someone would have noticed that a number of violations were happening. (You can see our assessment here). In fact, they may have even found clean energy alternatives that the Bank could push for, or even finance. Heaven forbid! But maybe they didn’t want anyone digging into the details because exposing this dirty project would be squarely at odds with Dr. Kim’s attempt to lead on climate.
When the World Bank released its “Turn Down the Heat” report, Bank President Dr. Jim Yong Kim said it should “shock us into action.”
The real shocker is just how far the institution will go to hide its support for a dirty coal plant. With the Kosovo coal project already causing extreme controversy, our patience is wearing thin. Dr. Kim needs to make good on his rhetoric and move the World Bank beyond coal, now.
Nicole Ghio is a campaign liaison at the Sierra Club.