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Global Issues

Global Issues. Oil prices pierced the $50/bbl barrier this month At current consumption this is a $2.4 billion/day windfall over long-term average oil prices $30/bbl oil creates a $290 billion/yr windfall or roughly 5 times all foreign aid The Russian Government endorsed Kyoto

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Global Issues

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  1. Global Issues • Oil prices pierced the $50/bbl barrier this month • At current consumption this is a $2.4 billion/day windfall over long-term average oil prices • $30/bbl oil creates a $290 billion/yr windfall or roughly 5 times all foreign aid • The Russian Government endorsed Kyoto • Ratification of Kyoto next year helps renewable energy • Hydropower becomes increasingly important

  2. World Bank Issues • The need to increase support for infrastructure in developing countries • Energy lending increased by 20% last year and increase even more so this year • The Bank has committed to increase lending for renewable energy and energy efficiency by 20% p.a. over the next 5 years • Our Water Resources Strategy was endorsed by our Board last year: implementation has started

  3. Hydropower

  4. Economically-feasible hydropower potential 100 Europe North America 80 60 Asia (excl China) developed % of potential South America 40 China Africa 20 0 0 0.5 1 1.5 2 2.5 Potential in million GWH/year

  5. Water storage US and Australia have ~5000 m3/cap; Ethiopia has 50 m3/cap

  6. Why is Hydropower Important to the Bank? • Global energy demand increased 4 Btoe from 1970-2000 • Forecast to grow 6 Btoe from 2000-2030 • > 50% of energy growth in developing countries • Energy production should be adequate • But at what cost, especially in light of current oil prices

  7. What Will Fuel Energy Demand? • Natural gas will meet much of the projected need, but • Electricity demand is expected to be high also • 71% of energy investments in the next 30 years are expected to be for electricity • How will electricity demand growth be met?

  8. New Electricity Generation(Source: IEA)

  9. World Bank lending for hydropower 1200 1000 800 IBRD/IDA & Grant Comm Amt 600 400 200 0 90-92 93-95 96-98 99-01 02-04

  10. The Bank’s Role in Hydropower is not all Bad News

  11. What are the Challenges Ahead? • The Hydropower strategy of the past is in disrepute • The WCD has created hurdles for hydropower development that are not fully endorsed • We need to find a middle ground

  12. The Bank’s Approach • Fully respect the Bank’s safeguard policies • Pro-actively identify opportunities through funding of studies and support for capacity-building • Draw on our cross-cutting skills to help identify the multiple benefits • Mobilize the breadth of our lending tools: Bank, IDA, IFC, MIGA, Guarantees, GEF, Carbon Offsets

  13. Walk the Walk, not just Talk… • The Bank’s current engagements include • Active supervision of projects • Preparation of projects • For example: • Nearing completion of Nam Theun 2 • Identifying hydropower projects in India • Support for Nile Basin Development • Six active hydro projects supported by carbon offsets

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