The World Bank's drive to promote fossil fuel-generated power for 1.6 billion people lacking electricity will drive developing countries deeper into debt, a report by a development thinktank claims today.

Fossil fuels, such as oil, gas and coal, will never provide enough power for developing nations because of the cost of connecting remote communities to a national grid, whereas renewable forms of electricity generation could provide a cheaper solution, the New Economics Foundation says.

The subsidies paid by the World Bank and export credit agencies to fossil fuel industries to expand in the developing world, particularly Africa, are driving countries deeper into debt rather than helping the poor as is the declared intention, stresses the foundation. It criticizes the president of the World Bank, James Wolfensohn, who has dismissed renewables as an expensive solution. The report says Mr Wolfensohn "at best has a bad grasp of basic economics and at worst reflects the entrenched interests of the Bank's major donors, the fossil fuel industries".

Rural communities in poorer countries, particularly in Africa, are often many miles from any kind of power grid. On current trends, in 2030 there will be more people relying on wood and dung for cooking and heating than there are now, according to the International Energy Agency.

But with small-scale hydro-electric schemes, wind and solar power, developing world villages could become self-sufficient in power. And the death rate among women and children from respiratory diseases brought on by fumes from unsuitable stoves would fall dramatically.

Already one scheme, in Rajasthan, India, has given 130 remote villages, home to 15,000 people in all, solar power in place of kerosene and candles, allowing 200 women to gain work via electrically powered spinning wheels.

On Mindanao, in the Philippines, where there was no hope of a grid connection, a micro-hydro scheme is providing power to 110 households and public buildings, cutting out the need for diesel. On the island of Sagar, Bengal, five solar-powered photovoltaic plants produce electricity for various outlets, including 1,600 families. Wind power is being added to the energy mix to pump water.

These communities are able to exercise a greater degree of self determination, says the report. Renewables not only improve quality of life and reduce carbon dioxide emissions, they provide educational opportunities as well as political independence.

This path out of poverty contrasts with the route offered by the World Bank, the International Monetary Fund and the World Trade Organization, where alongside large-scale coal, gas and oil power projects, corruption can leave little of the money generated in the hands of local people and much of the profit passed on to developed countries.

For the poorest countries, one advantage of renewables lies in not increasing debts by importing ever more fuel. Once installed, renewable energy facilities incur only maintenance costs. In a further step, reduced debt and spending on energy imports lessen the need to generate foreign exchange revenue through exports and local economies can focus on meeting domestic needs, the report says.

Currently less than 3% of the £25bn spent annually on energy investment in developing countries goes to renewables. Providing solar electricity to a village of 50 households in sub-Saharan Africa costs an average of £17,000.

There are about 500 million people in Africa without electricity, but one year's spending on fossil fuel by the World Bank, redirected to renewables, would provide power for 10 million, the report says.

Copyright © Guardian Newspapers Limited 2004

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