Power to the people: fossil fuels are a tempting cash cow, but they won't work for the developing world.

When the World Bank commissioned a review of its policy of underwriting fossil fuel projects, the advice of the three-year study was unambiguous--stop funding oil, natural gas, coal and other mining projects by 2008 and redirect investments to renewable energy.

Yet the largest financier of antipoverty programs for the developing world continues to ignore its own 2003 report. A more recent study by the Institute for Policy Studies (IPS), a Washington think tank, charged that the bank's energy programs "have utterly failed" to curb climate change and alleviate poverty.

Emil Salim, Indonesia's former environment minister and the head of the World Bank review, argues that countries that rely primarily on so-called "extractive industries" tend to have higher levels of poverty, child disease and mortality, civil war, corruption and totalitarianism than those with more diversified economies.

Salim, who once ran his nation's largest coal company, recently wrote in the Financial Times, "The bank is a publicly supported institution whose mandate is poverty alleviation, Not only have the oil, gas and mining industries not helped the poorest people in developing countries, they have often made them worse off."

Nevertheless, the World Bank has doled out US$11 billion for 128 fossil fuel ventures since the 1992 Rio Earth Summit, according to the IPS report, "A Wrong Turn from Rio." Of those, some $2 billion went to 31 projects in Latin America, including natural gas in Bolivia, Brazil and Chile, oil extraction in Venezuela and a coal plant in Colombia operated by Drummond, a U.S. company accused in five lawsuits in U.S. courts of using paramilitary gunmen to assassinate union organizers.

"We are seeing many extractive projects being developed in the Amazon and Andean countries," says Nadia Martinez, Latin America coordinator with the Sustainable Energy and Economy Network, an IPS project. "We may see more World Bank involvement in those projects."

Of course, the reality of our world, particularly in developed economies, is that we rely on fossil fuels every day to heat and cool our homes, drive cars and supply electricity to sprawling cities. The $11.70 trillion U.S. economy needs energy to grow, and in fact relies on the discovery, processing and sale of that energy for part of its economic output.

But there's no good reason to expect the developing world to copy that flawed model. Many economists believe that energy-saving technology can create more jobs than almost any other economic sector in developing nations. Worldwide investment in renewable energy--wind, solar, hydrogen, tidal and biomass, such as plants, animals, fungi, carne to $20 billion in 2003, a market that should reach $85 billion a year in a few years, according to the World Watch Institute in Washington.

Renewable energy is also cheaper and can be easily set up in remote areas. Fossil-fuel projects, on the other hand, "have hardly made a dent in the energy needs of 2 billion people across the world, who rely on wood, crop waste, and animal dung," according to the IPS study. In Latin America, where an estimated 43% of the region's 511 million inhabitants are poor, 15% still use firewood and charcoal for their energy needs, according to the Canadian International Development Agency.

Bank officials have said that that ending support for fossil-fuel projects would unfairly penalize poor countries that have few other means for stimulating economic growth. Rashad Kaldany, director of the World Bank's oil, gas and mining division, says its fossil fuel projects meet stringent environmental and social standards. He also points out that the bank now loans just 3% of its total portfolio each year to fossil fuel ventures--between $500 million and $600 million; is active in carbon trading; and finances renewable energy operations.

Skewed. Yet Hilary Benn, Great Britain's International Development Secretary, notes correctly that the bank's target of spending just $440 million on renewable energy by 2010 is "disproportionately skewed toward fossil fuels." Worse, a World Bank endorsement of any fossil fuel project can lead to millions in investments from the private sector.

Scientists and industry experts certainly disagree over how long the world's supply of oil and natural gas will last, but it will end, most probably within this century. Fossil fuel leads to polluted cities, global warming and higher energy costs. Renewable energy produces cheaper and cleaner energy and reduces poverty.

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