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.


10 Responses to World Bank’s New Climate Strategy: Keep Financing Coal, Just Don’t Call It A Coal Plant

  1. marco says:

    Great insights, but 750 MW to power a mine..? That size sounds immense even for the largest immaginable mining site; how could they motivate it is only for the mine’s exploitation and not for feeding energy into the grid?
    Thank you.

  2. BillD says:

    The new president of the world bank, Dr. Jim yong Kim, former president of Dartmouth is a progressive with strong credentials on combating proverty and improving health care in developing countries. He is a scientist who understands the threat of climate change. Perhaps it is not possible for him to turn around the World Bank immediately, especially concerning deals in the pipeline before he took the job this spring, but I feel really good about his appointment. He is certainly a big improvement over the typical corporate investor types who typically are president of the world bank. The recent report from the world bank on the threat of climate change was very important. I am at least hopeful that Kim will make the World Bank a positive force in the needed transition away from fossil fuels.

  3. Mike Roddy says:

    That’s good news, Bill, and I hope that you have a way to contact Kim directly. Let’s hope that he has the power to halt this madness and hypocrisy.

    I have had experience with the World Bank on overseas housing projects. In the case of these coal plants, don’t assume that the decisions were determined by WB accountants, because momentum for large projects often gathers before feasibility is proven. Cash is changing hands. Coal is so dirty, and so destructive, that corruption is embedded on all levels, including here in the United States.

  4. Bob M says:

    Mongolia is the perfect example of the challenges facing clean energy. Nicole, I agree that wind is an excellent candidate for development there. Unmentioned is the fact that natural gas, of which Mongolia has proven reserves, is a great complement to wind to help stabilize its variability.

    But from a practical standpoing – Mongolia has too much coal, it’s too cheap, and an infrastructure is in place. The first step, which would get the most ROI, would be to install scrubbers on existing coal plants. The next should be be to establish a system of natgas distribution to the public:

    “That pollution is largely attributed to the tens of thousands of families living in slum areas called ‘ger districts,’ where residents burn raw coal in winter to keep warm.”

    Time is of the essence, and the implementation of clean energy shares equal importance with its support.

  5. M Tucker says:

    The World Bank ought to publish a real press release saying, “We all know the climate crisis will rip your children’s world apart, we know because we actually did a study, but we don’t care!” They are just another diabolical financial entity that is not really interested in the world’s future.

  6. John Paily says:

    Earth can never tolerate further induction of heat into her environment. Earth power can destroy nations and its economy in minutes. We had tastes of her destructive power in the recent past. She is calling us to awaken to Truth of Her Design, Principle and functioning and evolve into New Thinking to live in Harmony with Her, not debating our selfish economic interest and material power. We have pushed Earth to its critical state. She is reacting. It is time Climate propagandists know how Earth functions to maintain certain energy to matter ratio and thus the heat within certain limit and speak climate and change in terms of management of Earth’s energy or heat. Only Truth can awaken the world and lay a foundation for Green world and Economy

  7. Merrelyn Emery says:

    Bill, I have been called an ‘optimist’ on this blog but even I gave up on the World Bank and its trail of destruction around the world a long time ago, ME

  8. Artful Dodger says:

    Indeed 750 MW is marginal for a mine. Electric powered drag lines (mining equipment) can consume up to a GW instantaneously. The story here is the World Bank, and their cynical attempt to hide their continued support for business as usual.

  9. BillD says:

    The point is that Kim is very different from previous world bank presidents and this should make a real difference.

  10. Merrelyn Emery says:

    I’ll give him the benefit of the doubt and await the results, ME