World Bank staff has spent the last several years drafting a new strategy that will provide high-level policy guidance for energy sector lending decisions over the next decade. One of the most important and controversial provisions in the draft strategy is a ban on lending for new coalfired power plants in specific categories of World Bank client countries. The ban covers all countries that qualify for loans from the International Bank for Reconstruction and Development (IBRD), including “blend” countries that also receive loans from the International Development Association (IDA). This includes middle-income countries, ranging from India, China, Brazil and South Africa to Vietnam and Pakistan. IBRD offers loans with better terms than commercial lenders, including longer payback and grace periods. The ban on new coal generation lending does not cover the poorest (IDA only) countries or efficiency improvements for existing coal plants in middle-income countries.
Middle-income countries argued that placing restrictions on projects for specific groups of countries is unprecedented, and that countries should be allowed to choose their own energy pathways. Developed countries argued that middle-income countries are easily able to attract private capital for new coal plants, and thus, World Bank lending provides no additional development benefit.
http://www.brookings.edu/~/media/Files/rc/papers/2011/1010_world_bank_coal_aid_purvis/Coal%20Aid%20Global%20Views.pdf
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