The Xiaolangdi dam on the Yellow River. Reversing its previous position, the World Bank sees big hydropower dams as a key source of energy for the developing world. Photo: AFP

World Bank U-turn brings hydropower in from cold

Organisation sees expansion of generating capacity as crucial to enabling development while cutting back on greenhouse gas emissions

The World Bank is making a major push to develop large-scale hydropower projects around the globe, something it had all but abandoned a decade ago but now sees as crucial to resolving the tension between economic development and the drive to tame carbon use.

Major hydropower projects in Congo, Zambia, Nepal and elsewhere - all of a scale dubbed "transformational" for the regions involved - are part of the bank's fundraising drive among wealthy nations. Bank lending for hydropower has scaled up steadily in recent years, and officials expect the trend to continue amid a worldwide boom in water-fuelled electricity.

Such projects were shunned in the 1990s, in part because they can be so disruptive to communities and ecosystems. But the bank is opening the taps for dams, transmission lines and related infrastructure as president Jim Yong Kim tries to resolve a dilemma he has placed at the core of bank strategy: how to eliminate poverty while adding as little as possible to carbon emissions.

An influential voice among Kim's top staff members, vice-president for sustainable development Rachel Kyte, said: "Large hydro is a very big part of the solution for Africa and South Asia and Southeast Asia … I fundamentally believe we have to be involved." The earlier move out of hydro "was the wrong message … That was then. This is now. We are back."

Large hydro is a very big part of the solution for Africa and South Asia and Southeast Asia … I fundamentally believe we have to be involved

It is a controversial stand. The bank backed out of large-scale hydropower because of the steep trade-offs involved. Big dams produce lots of cheap, clean electricity, but they often uproot villages in dam-flooded areas and destroy the livelihoods of the people the institution is supposed to help.

A 2009 World Bank review of hydropower noted the "overwhelming environmental and social risks" that had to be addressed, but also concluded that the vast and largely undeveloped hydropower potential of Africa and Asia was key to providing dependable electricity to the hundreds of millions of people who remain without it.

"What's the one issue that's holding back development in the poorest countries? It's energy. There's just no question," Kim said in an interview.

Advocacy groups remain sceptical, arguing that large projects, such as the Democratic Republic of the Congo's long-debated network of dams around Inga Falls, may be of more benefit to mining companies or industries in neighbouring countries than poor communities struggling to recover from the country's civil war.

"It is the old idea of a silver bullet that can modernise whole economies," said Peter Bosshard, policy director of International Rivers, a group that has organised opposition to the bank's evolving hydro policy and argued for smaller projects designed around communities rather than mega dams meant to export power throughout a region.

"Turning back to hydro is being anything but a progressive climate bank," said Justin Guay, a spokesman for the US environmental group Sierra Club on climate and energy issues. "There needs to be a clear shift from large, centralised projects."

But the major nations that support the World Bank have been pushing it to identify such projects - complex undertakings that might happen only if an international organisation is involved in sorting out the financing, overseeing the performance and navigating the politics.

The move towards big hydro comes amid Kim's stark warning that global warming will leave the next generation with an "unrecognisable planet".

This article appeared in the South China Morning Post print edition as: World Bank U-turn brings hydropower in from cold