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Environment groups have sharply criticised the World Bank after a report
revealed it devotes just 1 per cent of its average £1.8 billion annual
investment on energy projects in developing countries to promoting energy
conservation and efficiency. Representatives of the groups, now in Bangkok
to lobby delegates to the annual meeting of the World Bank and the IMF,
claim that improving energy efficiency is the most cost-effective way to
‘free up new power for developing nations’.

The report draws on three years of research in 18 developing countries
by Michael Philips of the Washington-based International Institute for Energy
Conservation. It concludes that development strategies that incorporate
schemes for conserving energy would provide better, cheaper and cleaner
energy services for billions of people.

Philips stressed that if the bank promoted energy efficiency in industry,
transport and power stations and among domestic users, developing countries
could save more than £1.2 trillion over the next 40 years. His report
points to American investment in energy conservation which the US government
claims saves £100 billion a year, or 14 million barrels of oil a day.
Philips blames the bank’s lack of expertise in energy efficiency. ‘Bank
staff can learn but they don’t have direct experience of designing and running
energy efficiency programmes.’

Gloria Davis, director of the bank’s environment department for Asia,
says the bank spends too little on schemes to conserve energy. But she points
out the bank’s difficulty in funding small projects. ‘The kind of activity
that needs to be done for end-use energy efficiency tends to be small-scale
technical assistance. Borrowing countries have come to the bank for large
capital investments.’

The bank’s own progress report on its environment department, created
in 1987 after prolonged criticism of its environmental record, fared little
better among environmentalists. Mohammed el-Ashry, the department’s newly
appointed director, says that from this month the bank would be assessing
the environmental impact of all its projects. But some projects slip through
with no environmental impact study at all, says Maria Elena Hurtado, director
of a British pressure group, the World Development Movement. ‘Worse still,
the combined impact of related projects may have an environmental impact
that is missed, simply because the projects are treated separately,’ she
says.

El-Ashry says he hopes to build up the ‘intellectual capability and
firepower’ of his department over the next few months.

The bank’s progress report highlights the serious forestry problems
in Third World countries. In Nigeria, for example, it says that soil erosion
and degradation, water contamination, and deforestation are the key environmental
problems. ‘If nothing is done to stem the damage, long-term losses could
reach some $5 billion a year.’

But environmentalists blame poorly designed bank projects for contributing
to the problems in the first place. ‘The bank’s forestry activities have
been held in abeyance pending a full review of its policy. We are watching
very carefully to see just how the new policy will be implemented,’ said
Francis Sullivan, WWF.

The World Bank chose Thailand as its host this year because it regards
the country as a good example of how the bank’s policies can lead to healthy
economic growth. Environmentalists are less convinced and point to the country’s
disastrous record on logging, which has caused massive landslides in recent
years.