World Bank energy strategy (debate) 
President
The next item is the debate on the oral question to the Commission by Eva Joly, on behalf of the Committee on Development, on the World Bank's energy strategy for developing countries - B70012/2011).
Franziska Keller
author. - Mr President, today, 1.5 billion people are currently without access to electricity, but access to energy is a prerequisite for the eradication of the poverty that these people live in. The right to energy implies that energy supplies achieve universal and reliable access: equitable access that bridges the gap between urban and rural areas and is also affordable. It is also crucial for a country to develop a sustainable and secure energy supply, and the most reliable and secure one is a decentralised use of renewables.
But energy does not only need to be secure and reliable; its production also needs to take into account other issues such as climate change, deforestation, environmental degradation, human health, and the poverty it causes. These problems cannot be tackled by fossil fuels. Fossil fuels have a disastrous impact on health, environment and climate. At the same time, the climate crisis is doing more damage to those living in extreme poverty. Fossil fuels create pollution that endangers both human health and a healthy environment, and they are expensive and their prices increase the more we run out of oil and gas. Fossil fuels create centralised, hierarchic and inflexible energy distribution.
We have to focus on renewables. We have to assist developing countries to leapfrog our destructive fossil fuel path. Only renewables can bring a solution to these problems. Renewable energy uses resources that will never run out and that many developing countries have in abundance: sun and wind mainly. They can be employed locally on a very small and inexpensive scale, which is also, in a very literal sense, empowering people. Decentralised power supplies are in the hands of the people. They are democratic. Nevertheless, the World Bank continues to push fossils in its energy strategy. Recent increases in lending for renewable and energy sufficiency remain tiny and cannot cover up the obvious preferences.
Fossil fuel investments are also taking place through financial intermediaries which the World Bank does not sufficiently monitor. There is an under-reporting of fossil fuels. The bank continues to make significant investment in coal-fired power plants, locking developing countries into coal-based energy for decades to come. This is not what an energy revolution looks like.
The World Bank's energy policy suffers from a lack of transparency. This problem should be addressed through the definition of clear requirements that financial intermediaries must meet in order to be eligible for multilateral financing. 40% of World Bank loans to the private sector are transferred through those financial intermediaries and a large part of those loans goes to the energy sector, in particular, extractives. However, unlike direct bank project investments, there is no information publicly available on these individual sub-project investments, making it very difficult to track what ultimately happens to financial intermediaries' funding.
When we look at what sort of energy is counted as low carbon, we can find large hydropower plants in the strategy. Such large hydroplants destroy vast amounts of nature and drive people from their homes. This is not sustainable and this is not in the interests of the people and of society. Also, carbon capture and storage do not make coal power low carbon. The CO2 is still there and nobody can predict what will happen to it underground. None of us can say for sure that it will stay there, calmly for the next millennia. This is fortune telling and not research, and certainly not policy making.
The same goes for nuclear energy. Uranium mining produces huge amounts of CO2 and nobody knows what to do with the waste we are producing. This is not low carbon and this is not sustainable. This is why the Green/EFA Group will vote against the resolution unless the low carbon wording is replaced.
However, we also see some good points in the resolution: for example, the focus on off-grid renewables for rural areas and small-scale local production, as well as the concern about the dominance of export orientation, large-scale plants and bio fuels.
A last word: we also very much focus on the call for enhanced technology transfer. In particular, technology transfer will not need much if intellectual property rights are left intact. The overriding goal should be to treat intellectual property rights in a manner that allows access to technology at affordable prices. This is what we promised at the climate negotiations, and we should stick to our promise.
(The speaker agreed to take a blue card question under Rule 149(8))
Hans-Peter Martin
Mr President, I can only congratulate Ms Keller for what she has said and her analysis. The question though is this. We have known about these problems for two decades now. Ms Keller, since you have dealt with the issue in more depth than most of us, is there any particular point that makes you optimistic that what we are about to decide upon could actually bring some progress, or that the World Bank is now finally heading in the right direction?
Franziska Keller
author. - Mr President, indeed, we have been discussing these issues for more than two decades, and I really hope that the World Bank will learn from these discussions since everybody agrees that the future lies with renewables.
We have seen a slight change in this strategy. For instance, it has moved a bit more towards renewables, but this is a little step and not enough by far. There is still too much dominance of fossils and, when it comes to renewables, too much focus on hydropower plants - and they are not renewable, they are not sustainable, not for anybody.
So I hope that this Parliament can make a strong statement on where we want the European energy policy and the policy that we promote for energy in the world to go. I hope for your support to remove the wording on low carbon and go for proper, sustainable, renewable energy.
Andris Piebalgs
Member of the Commission. - Mr President, I feel I also made a very strong statement. Firstly, I would emphasise that the World Bank energy strategy is very welcome because the World Bank plays a very particular role in the world, particularly in dealing with development issues. It is not an understatement to say that they are leaders of public opinion and approaches to development strategies. My point is that we should address this issue with all seriousness.
At the same time, we should not forget a couple of elements that are very crucial when we are estimating our answer to the strategy. There are still a substantial number of households today that have no access to any type of energy. It is true that, although we have been discussing the issue for 20 years, substantial investment in the energy sector or energy service provision have not been delivered to hundreds of millions of people, particularly in sub-Saharan Africa. So I believe that we need to understand the scale of the challenge.
The second point that we need to take into account is growth. Each of the countries that are on the path of development have an immense growth in demand. We should respond to growth in demand with supply. There is an additional fundamental challenge because of the scale of this.
The third point - and here I fully agree with Ms Keller - is sustainability and anticipation. Whatever the energy sector does should be considered in the light of the consequences that it has on climate change. We know that the energy sector which exists today is the biggest cause of greenhouse gases. Additionally, we should also look at the price of fossil fuel, because we should not forget that the challenge of fossil fuel prices is still ahead of us. I hope that we will face this later rather than sooner, but it is definitely part of anticipation of the strategy.
As for the orientation, I would expect Parliament to take account of the Green Paper on EU development policy, where we make access to renewable energy in developing countries one of the central pillars of the new EU development policy. If we do not take this pioneering step, we cannot easily expect to convince the World Bank and others that we should be focusing investment on renewable energy. I believe that we are capable of managing the scale of investment in renewable energy. We just need to have courage. It is true that it requires a lot of financial means today, but any energy strategy would require quite a lot of investment. So, if I see anticipation of the prices, I would always argue that renewable energy is definitely the one that should be at the heart of any energy policy in any part of the world.
Our knowledge of renewable technologies today gives a good guarantee that we really could make a change in these countries. I also believe that there is a lot of untapped potential. I know that hydropower, for example, is a rather challenging source of energy from all points of view but, provided environmental sustainability analysis is being done, I believe that most countries also have a fantastic untapped potential in hydropower, which gives additional arguments that the scale - the Inga Dam, for example - is huge.
At the beginning, we need to lead by example. If the EU is able and you discuss a report on the EU development policy's Green Paper, Parliament should strongly support driving EU development policy in this direction. We will have a better argument for convincing the World Bank to actually follow this drive and be more focused on investments in the coal-fired power station. The Bank has now established six criteria as general guidelines for future coal investment. The World Bank, under the leadership of Bob Zoellick, is extremely active in the debate, so it would seem that the World Bank is an asset and not something that we should be afraid of. It is our ally but we really need to provide European leadership on this issue and in the energy sector for the developing world.
I would also like to address the issue of the EIB, because it was in the question. The Cotonou Agreement is the legislative basis for EIB activity for an amount of EUR 3.1 billion to ACP countries. A major instrument in this framework is the ACP Investment Facility. The facility finances infrastructure and climate friendly energy projects. As far as the energy sector is concerned, no projects exist in the area of fossil fuels. The general policy is very clear - to fund climate friendly energy projects based on wind, hydraulic or solar energy.
In the context of the mid-term review of the EIB External Mandate - covering pre-accession, neighbourhood and partner countries, Asia, Latin America and South Africa - a proposal has been put forward by the Commission to activate an additional EUR 2 billion mandate for 2011-2013 to support EIB financing operations in the field of climate change mitigation and adaptation across all regions. The proposal stresses that the EIB's own rules and procedures shall include the necessary provisions to ensure that only projects that are economically, financially, environmentally and socially sustainable are supported under the mandate.
I believe that the EU has already taken some steps in the right direction, but we could really take more steps to provide real leadership for the world, not least by addressing the World Bank's energy strategy.
Alf Svensson
Mr President, it is a very pressing and important matter that is being addressed in this Chamber, namely, that of the phasing out of loans for fossil fuel projects. I believe that we should have the courage to say exactly what Commissioner Piebalgs said, namely, that the World Bank has a very deliberate energy strategy. We can even talk about incentives in this regard, and that is obviously a positive thing. Of course, it is not just a question of phasing out, but also, as has been said, of phasing in.
Being rather persistent, I want to repeat that there are opportunities here for the EU to make specific investments to help people in developing countries, in Africa, Asia and Latin America. I believe the Commissioner has heard me speak on a previous occasion about the wood stoves currently found in huts and ordinary houses that are poisoning people. Two million people are dying prematurely on account of the gases that are found in ordinary homes.
In this regard, like the United States and a number of European countries, we could invest in simple solar-powered stoves that at least eliminate 95% of the gases. Then they would no longer need to use manure, which we know that they need for cultivating crops, and they would no longer need to use black coal for heating. Nor would they need to chop down forests that absolutely should not be chopped down.
I would like, once again, to emphasise that there are opportunities to do something tangible. Often, when we talk about alternative energy sources, we talk ostentatiously about wind energy and solar energy, and of course we should do that. However, there is a lack of tangible results, despite the fact that the opportunities are there. Do not allow the EU to get left behind on these matters, but let the EU be involved in developing concrete ways of replacing this fossil fuel that we no longer want in either the industrialised nations or the developing countries.
Kriton Arsenis
Mr President, Commissioner, first, I should like to thank Mrs Keller for her exceptional work on this report. Indeed, everyone who worked on this report saw just how unviable the World Bank strategy is on several counts. As Mrs Keller said, it finances unviable, large-scale projects, such as hydroelectric and numerous other projects.
It is a fact that financing for renewable energy sources has risen by 300%. At the same time, however, financing for fossil fuel projects has risen by 430%.
The World Bank - and, to my mind, this is a scandal - has failed to take account of the environmental impact of the projects which it finances. At the same time, it is still discussing, even today, the possibility of starting financing for programmes for palm oil plantations. It has no respect for the principle of free, prior and informed consent by locals to projects being financed, nor has it integrated (and it should integrate) a full cycle analysis of the projects it finances.
I truly hope that this report, in its final version after the vote, will send a strong message about the environmental reforms which the World Bank needs to implement internally.
Charles Goerens
on behalf of the ALDE Group. - (FR) Mr President, under the terms of its mandate, the World Bank is required to contribute to eradicating poverty in developing countries. All projects financed by the World Bank must have this aim. Even when financing a business project to invest in basic social services - health, education, access to water - this requirement must be met. If the World Bank makes combating poverty a priority, we can be satisfied that it is fulfilling the remit that we laid down.
The oral question that we are debating expresses grave reservations about funding petrol or coal-related projects. I would like to make a number of comments.
Firstly, the terms of reference for a World Bank-financed project must include the evaluation criteria to be applied from the outset. It must be clear what is to be evaluated and, consequently, the evaluation criteria need to be integrated throughout the project's lifetime.
Secondly, political dialogue between the World Bank and its partner must consider political and economic governance, both in the country concerned and in relation to the lender.
Thirdly, where it is possible to promote renewable energies and the costs are justifiable, we need to favour this form of energy generation.
Fourthly, and here I need to thank Commissioner Piebalgs for having already addressed one of my concerns in his answer to Mrs Keller, the European Investment Bank already takes all these factors into account.
I can but hope that the World Bank will follow the example of others who have already adopted these priorities, not least the European Investment Bank. Given that the 27 Member States of the European Union are also members of the World Bank, we cannot claim to be without any influence on its policy.
I think that it would be well worth discussing combining forces within the World Bank with a view to resolving the issues raised by Mrs Keller. I would like to congratulate Mrs Keller on her excellent work.
Marisa Matias
Mr President, before I go on, I would also like to praise the work which has been done by my fellow Member, and say that I fully support the issues that have been mentioned here.
I am going to do something now that I have not done before, but which I think is worthwhile. We have a series of documents which holds a set of assumptions, all of them rarely discussed. It is as if they were assumptions unworthy of discussion. We have the oral question, and we have a resolution which tells us various things, including that the conventional rural electrification programmes financed by the World Bank have failed globally in their task of reaching the poorest in rural areas.
We are also finding that there will be a possible, putative, change in the World Bank's energy strategy in mid-2011, but we also know that it is in the energy sectors that we can combat poverty in a very specific way, and help to lift people out of poverty. We therefore appeal to the World Bank to adopt a development approach that can maximise benefits to the poor while, at the same time, allowing us to combat climate change.
We have also already said that the loans intended for fossil fuels continue to play a predominant role in the overall energy portfolio of the World Bank, and that we must abandon this predominance. We also have the promise that this predominance will no longer be a predominance by 2015, and that there will be a gradual reduction in the financing of these projects based on fossil fuels.
We have, finally, a set of statements, specifically regarding the need for the World Bank to give priority to access to local energy on a small scale. There are many, many others, taking climate change into account.
Having said that, I would like to edit what has been said, and to which I subscribe. I will edit all of the statements that we have made, and leave just two, final, questions, because it is not worthwhile continuing with mere statements of intent.
The first question is: why can we not draw from all this such a basic conclusion as this? Why do we continue to allow those who pay the piper to call the tune? Why does the World Bank continue to hold responsibility for the world energy strategy? When are we going to make the decision that the world energy strategy should be the object of worldwide coordination anchored in the United Nations?
The second question that I will leave with you - I apologise for going slightly over time - is: when are we going to stop imposing a development model upon others, whether this be first or second generation, that is, whether first or second hand, upon the rest of the world, as if it were a development model that should be applied to everyone?
There are limits to arrogance. We must be more democratic.
Hans-Peter Martin
(DE) Mr President, in the 1970s and the early 1980s, the blindness of the World Bank to environmental issues was a major topic for discussion. The same speeches were made then as are being made here today, together with certain promises by the World Bank. Moves were made to reform the World Bank, but decades have passed since then. For a wide variety of reasons, I recently made a visit to a number of countries which are generally referred to as developing countries. The situation was unacceptable. What has happened to all the projects? Where are the solar plants in the tropics? Where are the sustainable forests in the Amazon or in Vietnam? Where are the solar panels and wind turbines in Kenya?
There is absolutely nothing there. The only thing that has happened is that the European system of self-government has been copied exactly. The people there are governing themselves and they have played into the hands of a few large interested parties, but they have not made any progress. Then we are surprised when citizens of the developing countries say despairingly: 'I do not want to live in the Caribbean any more. I want to move to the USA and get into the EU via Martinique'. We are surprised when the people in the Maghreb countries all want to move here. The hypocrisy of this debate is totally unbelievable. We have to understand that millions of people have been radicalised. They have simply said 'We have had enough!'.
Everyone who has seen the European Parliament motion for a resolution will have to admit that it could not have been that. We should have spoken out much more loudly. We should have called on the World Bank much more clearly to take the necessary action. Why do we have all these committees - the Committee on Development, the ACP-EU Joint Parliamentary Assembly and so on - if all they can produce is a scrappy little piece of paper that, in part, contains the conclusions of the debate which took place in the late 1970s? The whole thing is embarrassing.
Filip Kaczmarek
(PL) Mr President, we need convince no one of the importance of energy for developing countries. I have seen the surprise on people's faces many times when they learn how much electricity costs in Africa. It is probably also true that we need convince no one that the World Bank plays a far from insignificant role when it comes to energy matters in developing countries.
My political group, the Group of the European People's Party (Christian Democrats), tabled a number of amendments to be voted on separately to the resolution we are discussing. It seems to us that some parts of the resolution are too critical of the World Bank. I do not believe, for example, that we can draw the World Bank's attention to the fact that it regards some types of energy as clean when they should be regarded as environmentally wrong or undesirable. Nuclear energy, for example, is widely used in the EU's Member States, and an increasing number of European countries which are dependent on coal or gas are suffering to a certain extent since they are having to limit their emissions, which gives rise to costs which are distributed very unequally between the individual Member States. We must therefore exercise caution when telling external bodies which types of energy should be developed. I do agree, however, with the idea that it is worth giving particular support to local projects covering small areas, that it is worth supporting low emission projects and that it is worth supporting ideas relating to diversified sources of energy and avoiding energy dependency.
We would like the World Bank to invest in renewable energy and increased energy efficiency, but we must always bear in mind the fundamental goal, or, in other words, how access to energy is supposed to help people break out of poverty. We want to kill several birds with one stone - to create the conditions for development, limit emissions and take into account social and environmental aspects in new energy projects. These are ambitious tasks, and I hope the World Bank is not afraid of them. At the same time, I know that Commissioner Piebalgs places a great deal of emphasis on the development of energy projects in developing countries, and I can confirm that this is discussed in the Green Paper and that the European Parliament should support this strategy.
Silvia-Adriana Ţicău
(RO) Mr President, there are currently 1.4 billion people in the world without access to electricity, 85% of whom live in rural areas. The Millennium Development Goals to eradicate poverty by 2015 will not be achieved due to the lack of significant progress on providing access to energy. Achieving this goal by 2015 means that 395 million people will have access to electricity and 1 billion people will gain access to hygienic facilities for preparing food. All these measures will require an annual investment of roughly USD 40 billion in the 2010-2015 period, which amounts to 0.6% of global GDP.
Universal access to electricity is one of the most important goals set by the governments in developing countries. Among the barriers identified as preventing electrification are the high cost of supplying electricity in rural areas and to houses in peri-urban areas, the lack of tax or financial incentives, insufficient capacity for developing and implementing electrification projects, along with the limited ability to generate electricity.
Rural areas are a special case when it comes to energy requirements. In rural areas, not only does the required energy need to be provided, but the actual process of generating it as well, which also creates jobs and supports economic and social development.
On 11 February 2011, a World Bank report showed that local energy production from renewable sources at a low production cost is a more viable economic solution in the long term. This may play a key role in increasing India's energy security so that energy imports and the influence of oil price fluctuations can be reduced. The World Bank could therefore act as a partner to the developing countries. I believe that the World Bank should support the projects concerned with boosting energy efficiency and local energy production from renewable sources, as well as extensive projects involving electrification and establishing interconnections between different countries.
Zigmantas Balčytis
(LT) Mr President, firstly, I would like to thank the rapporteur for raising in a timely manner what truly is a very relevant issue. Energy poverty remains a huge problem, and related issues are preventing those living in the world's poorest regions from improving their quality of life, from having the opportunity to earn a living and generally contribute towards increasing growth and productivity. This is one of the fundamental factors impeding general social and economic development and preventing these regions from being lifted out of poverty.
As the rapporteur mentioned, the statistics are disturbing - around 1.5 billion people do not have any access to electricity, and more than 2.5 billion people are still using traditional fuel obtained from biomass. According to World Health Organisation data, across the world, two million people die prematurely from respiratory diseases each year due to the use of this fuel.
So far, the World Bank's previous energy strategy has not produced tangible results. Furthermore, support for the use of fossil fuel still remains greater than for renewable or clean sources of energy. Hitherto, significant investment has been provided for coal-fired power plants, and this continues to make these poor countries dependent on fossil fuel, which heavily pollutes the environment.
The agreement adopted by the G20 leaders to reduce support and funding for fossil fuel projects, which should not receive any funding at all from 2015, is a positive and welcome stimulus. The new strategy must also thoroughly assess the issue of funding supervision and control, so that this assistance is used for those energy projects that may bring long-term benefits and genuinely contribute to the development of these regions and improving the quality of people's lives.
Paul Rübig
(DE) Mr President, I would like to thank Mr Piebalgs in particular. As a former Commissioner for energy, he naturally knows all about our strategy. I believe that there is a lot to be done in the field of development cooperation, particularly with regard to technical aid. Europe must not only make payments to the World Bank; it must also take action. Europe and the European institutions must play a stronger role in the World Bank and it will be a major challenge to ensure that family businesses can be supported with development aid, that small and medium-sized energy generation enterprises can be promoted, because a lot of small businesses together can achieve economies of scale and produce a corresponding return on investment.
One of the most important issues is, of course, the storage of energy. This will play a central role in development cooperation.
Seán Kelly
Mr President, I suppose one could say that those of us who are still here at this hour of the night are probably powered by some form of renewable energy, perhaps solar power or maybe even divine power in the form of a halo above our heads.
Either way, the discussion has been very varied, and not surprisingly, because this is always a contentious issue. But I think the Commissioner got the balance right, probably better than most of us, in terms of where we are going and what needs to be done in the future. I think a few points need to be made more precise. Whether countries are in the developing world or the developed world, if they have resources of fossil fuel - coal - or nuclear energy, they are going to utilise them. The question is: do we finance them or do we not? Obviously in Europe, in terms of Cancún, Kyoto, etc. we want to push the renewable agenda, and that is absolutely correct. But I think in doing that, Mr Martin is probably right in one sense that we need to speak with a louder voice and push the World Bank into promoting and financing more renewable energy projects than they are perhaps doing right now.
Andris Piebalgs
Member of the Commission. - Mr President, this is very important to our debate, even if it is late at night, because I think the World Bank's energy strategy is an opportunity. It is a genuine opportunity to respond to energy challenges.
If we also look at what the International Energy Agency is saying about energy poverty, about renewable energy, it is certainly a huge challenge, but the World Bank, together with our leadership, could make the necessary change. If we go back a couple of years in our Union's history, our renewable energy target seemed impossible to meet, even if it was a rather humble target of 18%, if I recall correctly. Now it seems that we are well on track.
Sometimes, however, you need to take your courage in both hands and anticipate the real challenges. The World Bank makes the whole process very open. There will be the World Bank energy week in Washington. We could also submit our contributions to the World Bank, which is very open to new ideas. If we are courageous, that will give even more courage to the World Bank. So it is important that we go with open hearts and put these very ambitious ideas to the World Bank. Otherwise, many people could attempt to evade this challenge.
It is definitely a question of where to start. I would say it is still access to energy that we should be looking at, because access to energy also means sustainable and efficient energy. The recent trends in the countries we are working with show huge urbanisation, so in a way, it has changed the pattern of the whole energy riddle. It means not only decentralised generation, but also agglomeration areas, so energy efficiency, strange as it sounds, should also be part of the strategy.
Most importantly, we should beef up. We have energy facilities: EUR 200 million. You cannot do too much on energy with EUR 200 million. We need to envisage long-term funding, because I believe Europe's trademark should be renewable energy. With this, and the capacities of the World Bank, we really could do something that matters, not only for energy supply, but also in terms of taking substantial steps to combat climate change.
President
I have received one motion for a resolutiontabled in accordance with Rule 115(5) of the Rules of Procedure.
The debate is closed.
The vote will take place on Thursday, 17 February 2011.
