Batang residents take action to agains Coal Fired Power Plant in their land.

Across the world, countries look to the World Bank more than any other institution for the latest expertise and assistance on development.  This week in Washington, DC the Spring Meetings of the World Bank will bring together thousands of government officials, civil society organizations, journalists and private sector representatives to debate the institutions’ work and implications for international development.  With the United Nations’ climate negotiations set to make a global agreement in Paris this December, it is a critical time for the Bank to put forward ambitious and concrete commitments on how the World Bank will lead the world onto a low-carbon development path.

In a recent speech the World Bank President, Jim Yong Kim, stressed “…if we don't confront climate change, there will be no hope of ending poverty…”  He called on countries to agree in Paris to binding language that provides a clear pathway to zero net greenhouse gas emissions before 2100, which is necessary in order to achieve the globally agreed goal of limiting warming to 2 degrees Celsius. 

The World Bank needs to heed its own advice and follow a clear pathway to low-carbon development – starting with its own energy sector operations.  Unfortunately, the World Bank continues to finance fossil fuel projects and policies that are locking countries into carbon intensive infrastructure that undermine the 2 degree goal. 

For example, the World Bank continues to support the development of the 2,000 MW Batang coal power plant in Central Java and two Sumsel coal-fired power plants of 1,200 MW and 600 MW in South Sumatra.  Through four World Bank infrastructure policy lending operations worth $850 million, Indonesia established the Indonesia Infrastructure Guarantee Fund(IIGF) and the 2012 Land Acquisition Law to support a development model based on public-private partnerships (PPP).  The IIGF provided its first government guarantee of $34 million to the Central Java coal power plant of Batang.

Currently, the World Bank has a direct $30 million loan to the IIGF which, according to the Bank, involves “a platform for ongoing engagement in the development and appraisal of PPP infrastructure operations” seeking IIGF guarantees.  Part of this on-going Bank engagement involves ensuring IIGF projects abide by an Operations Manual that is based on the Bank’s own Social and Environmental Safeguards. 

For nearly four years, thousands of Batang residents have struggled against the development of the Batang coal power megaplant to protect their productive agricultural land and rich fishing grounds, which their livelihoods depend on. They have been threatened and attacked by thugs, police, army, and government agents. They and Greenpeace and other groups have protested, filed a complaint with the National Human Rights Commission, and commenced a process to lodge a formal complaint within JBIC. A lawsuit has been filed against the project for environmental violations.  The Ministry of Environment itself is currently reviewing the plant’s EIA. Residents and landowners have complained of facing intimidation and violence to force them to sell their land against their will.

At the World Bank’s 2013 Annual Meetings, a member of Greenpeace Indonesia traveled to Washington, DC to inform the Bank of the Batang communities’ rejections to the coal plant and local and global civil society groups sent a letter calling on the World Bank to request that the government of Indonesia cancel its loan guarantee. But, the Bank dismissed this request and the communities’ concerns stating the Bank was not involved in the project.

The continued refusal by villagers to sell their land for the proposed coal plant has forced the Indonesian government to extend the deadline for financial closure of the project for three consecutive years.  Greenpeace Indonesia reports that, “According to Presidential Regulation No. 66 of 2013: if the companies fail to finish the land acquisition process for Batang in the time allotted, and fail to respect the deadline (October 6, 2014), the agreement between the government and consortium will end and the project must be canceled.” 

However, the proposed Batang coal plant has not been canceled. Instead, the project has recently requested that the government-owned power company, PLN, exercise a consignment clause in the World Bank-supported 2012 Land Acquisition Law to acquire the remaining land. The troubles with the Batang plant also did not cause the World Bank to halt the IIGF from approving further government guarantees for two more coal power plants in February this year in South Sumatra – Sumsel 9 and 10. 

It is important to point out that the IIGF has not provided any government guarantees to clean renewable energy infrastructure projects. This is all the more shocking considering Indonesia’s vast and largely untapped potential for geothermal, solar, and other renewable energies

In President Kim’s speech he specifically called on countries to end harmful subsidies to fossil fuels.  Meanwhile, the World Bank continues to create new subsidies to fossil fuels through government guarantees and tax breaks for infrastructure investments, especially in the case of PPP projects.

The World Bank must stop turning a blind eye to the multiple ways it provides support to coal and other fossil fuels. Through policy lending and financial intermediaries like the IIGF, the World Bank is continuing to lock the world into carbon intensive development, which undermines the 2 degree goal and, thus, provides “no hope of ending poverty. "The World Bank must heed its own advice on confronting climate change, and start by challenging the destructive Batang coal power plant now."