World Bank sets direction for energy sector investments

A new Energy Sector Directions Paper discussed by the Bank Group's Executive Board recently stated: "Nearly one-fifth of today's global population - 1.2 billion people - live without access to electricity. Their businesses can't operate after dusk, their schools lack power for technology, their children struggle to study by candlelight. The lack of power limits their opportunities, keeping communities in poverty.

"Two-fifths of the population - 2.8 billion people - still rely on solid fuel such as wood, charcoal, dung, and coal for cooking and heating, resulting in three and a half million deaths every year from the effects of indoor air pollution.

"Delivering reliable energy services for economic development and providing access to electricity and modern household energy services to these billions living without it, is essential to reduce the level of poverty and build shared prosperity.

That is why expanding access to energy, along with accelerating energy efficiency and renewable energy, is at the core of the World Bank Group's future work in the energy sector."

The World Bank Group will use the paper to inform its on-going operations.

The paper stated that the World Bank Group will make every effort to "minimise the financial and environmental costs of expanding reliable energy supply" while also recognising that "each country determines its own path for achieving its energy aspirations." It emphasises the importance of selecting areas in which the Bank Group can best help countries mobilise energy solutions that reduce poverty sustainably.

World Bank Group President, Jim Yong Kim, who led the discussion with the Executive Board, said the paper's directions are anchored in the World Bank Group's overarching goals of reducing the global rate of extreme poverty to three percent by 2030 and fostering the income growth of the bottom 40 percent in every country.

"We need affordable energy to help end poverty and to build shared prosperity," Kim said. "We will also scale up efforts to improve energy efficiency and increase renewable energy - according to countries' needs and opportunities."

The paper is closely aligned with the Sustainable Energy for All initiatives to achieve universal access to modern energy, double the global rate of energy efficiency improvement, and double the share of renewable energy in the global energy mix.

It focuses on a long-term system-wide approach that enables governments to manage resources in an integrated way and address the needs for energy supply and demand at once. At regional level, it could promote regional integration to develop cross-border energy markets to deliver more reliable and affordable energy.

Other guiding principles identified in the paper include an emphasis on improving the financial, operational, and institutional environment for the energy sector in countries to help stimulate private sector investment, and consulting with affected communities and civil society organisations and industry.