Jean-Michel Devernay is the World Bank's chief technical specialist for hydropower. He spoke with us about why sustainable hydropower is critical to meeting the challenges of the developing world, and why the bank is committed to DR Congo's Inga 3 project.
What is the current policy of the World Bank on hydropower and how much financing will be dedicated to it in the coming years?
The World Bank and its clients recognise that sustainable hydropower is part of the solution for tackling the development challenges outlined in our mission, which is to eradicate poverty by 2030 and promote shared prosperity in an environment that is strongly marked by climate change.
Countries cannot eradicate poverty and share prosperity if many of their people remain trapped in energy poverty. Hydropower combines the virtues of being affordable, very clean and having limited greenhouse gas emissions. Many developing countries still have a large untapped hydropower potential.
We plan to enhance the support that we have been providing for the past ten years.
What is new in the World Bank's approach to hydropower?
What’s new is that the bank is now connecting hydropower more clearly to the global development and climate agenda, and is willing to support hydropower in a more diverse manner. Lending to hydropower projects will continue to be a main component of the bank’s strategy.
We have been funding about USD 1 billion on average over the past four or five years. This is only a couple of per cent of the worldwide money mobilised for hydropower development each year, but if you look at the poorest countries it becomes a lot more significant.
The level of funding we will commit to hydropower will depend on the needs of developing countries, and the types of projects they want our assistance on, and so will likely continue to vary year by year.
We will be working with our clients more and more to help them shape the hydropower sector in their own countries, and to help them prepare the right legal landscape and business environment for attracting other sources of funding.
We intend to work with our clients to help them make sure that when they decide to go ahead with a project, it is optimum from the point of view of responding to the challenges of energy and water security, and it is properly sized in accordance with the general interests of the country.
Are there any projects in the pipeline that you would like to highlight for their potential benefits, and is there any particular type of project that the World Bank will be funding?
Currently in the World Bank Group we have about 100 operations that have a hydropower component, of which about 40 have hydropower as a major component. This takes place largely in Asia, south Asia, south-east Asia, east Asia and Africa, and also central Europe to some extent, and central Asia.
We are very much attuned with the natural distribution of size and type of projects that happens in the world. The bank has very small projects in its portfolio and it also has large, several-thousand-megawatt projects.
Many of the future hydro projects, particularly the large ones, will be regional projects involving several countries."
It’s the same for the type of projects – we have reservoir multi-purpose projects, we have run-of-the-river projects, and we have pumped storage projects. We also support a mix of new hydropower development and rehabilitation of existing facilities.
These are projects of special significance, potentially with very high transformational effects on the host countries in terms of sustainable development. One example is the Nam Theun 2 project in Laos, which the bank supported.
Now we have more projects of that nature in the pipeline. Regional projects are also of special significance. The bank has more than100 offices across the world, and it historically has this ability to bring countries together to cooperate, which is not always a natural tendency.
Many of the future hydro projects, particularly the large ones, will be regional projects involving several countries. Whether this is on transboundary rivers, or whether it is projects designed to generate electricity which will be traded between countries on a regional scale, the bank can play a critical role in enabling those projects by bringing people around the same table.
The last type of project – which is very important, and the bank has quite a few of them in its portfolio – is rehabilitation and upgrading, which directly links to the sustainability aspect of hydropower. We are financing rehabilitation projects in DR Congo and Ukraine for instance, and increasing the capacity of existing projects in Pakistan and elsewhere.
Talking of the Congo, what is the status of the Inga III project and are the bank’s activities likely to be affected by the recent US decision on large hydropower projects?
The Inga 3 project has the potential to improve the lives of millions of Africans. This project could be totally transformational for DR Congo, as well as energy scarce countries across the region, such as South Africa. We postponed presenting to our Board a technical assistance package related to the design of the project’s operation, but the project has not been cancelled and our commitment to Inga 3 is unchanged.
The World Bank Group energy directions paper expresses our commitment to help countries develop responsible hydropower. We will work with the US to understand their view.
There are concerns about the impact of hydropower on communities in the developing world, particularly in Africa. What will the World Bank do to mitigate the impact of the projects that it is financing?
This subject is not new by any means, and we all know that if you create a reservoir, you change the hydrology of the river and you may have people who need to be resettled. There can also be an impact on biodiversity and other environmental and social impacts. So concerns about the impact of hydropower are very real, and we support them.
What we will do in the future is put more emphasis on the actual implementation of the project, and also post-construction monitoring."
This is fully acknowledged not only by the World Bank, but by the whole sector. I think we also have to recognize that we’ve learned much over the past two decades about how to deal with those issues.
The World Bank has a very robust set of safeguards – conditions, in effect, which have to be satisfied by the country which borrows money from the bank to cope properly with those social and environmental impacts. Meeting those safeguards is a condition for the bank to finance the project.
What we will do in the future is put more emphasis on the actual implementation of the project, and also post-construction monitoring. I think we’ve been good at setting up the programmes upstream, but there is a need to do more on how those programmes are implemented and how they improve the livelihoods of the affected people many years after construction.
We have to remember that when people have to be displaced it’s not a question of mitigation; it has to be an opportunity for those populations to live a better life.
From this point of view the Hydropower Sustainability Assessment Protocol is a very good tool to have in measuring the social and environmental performance of those projects.
What impact do you think the International Hydropower Association has had over the past ten years?
The bank cannot work alone on these issues. We will be working closely with those who are actively involved in the design, construction and operation of hydropower projects, as they are represented in IHA membership: consulting companies, equipment suppliers, contractors and operators.
Strengthening the relationship between the World Bank Group and IHA is a very good way for us to learn about the latest thinking of the hydropower community, and to share experiences in developing sustainable hydropower.
The work IHA is doing on sustainability demonstrates how the sector has made progress in addressing the social and environmental issues. In turn, it has probably played a role in making the bank more comfortable today in saying we support hydropower development when it is done properly.