Banking on Renewables criteria for public investment in renewable energy – with case studies from Asia and Africa

The energy transition demands a huge flow of public finance away from fossil fuels, towards the expansion of clean energy systems around the world. 

Public finance providers, including the multilateral development banks (MDBs), will have a huge role to play in the energy transition, as they provide billions of dollars annually to shaping countries’ energy policies, initiating energy projects, and funding the private sector.

Five MDBs approved $22.66 billion for what they classify as renewable or clean energy in 2023, but much of it is missing the mark for climate, for people and for nature. The World Bank is the biggest player, approving $16 billion. 

Through the Banking on Renewables campaign, civil society organisations around the world are calling on MDBs and other public finance institutions to:

• Power people and protect the planet
• Ditch fossil fuels and false solutions
• Invest in 100% renewable energy systems
• Put people’s rights and needs before profit
• Bank on renewables that do no harm.

The MDBs talk about investing in energy transition and addressing climate change, yet continue to pump public money into fossil gas infrastructure and harmful extractive projects. We are watching them, and assessing whether their policies and practices are truly powering people and protecting the planet. Read our statement, sent on 16 October 2024. 

Banking on Renewables criteria

Criteria 1: Finance a transition towards a new 100% renewable future

Public investments in renewable energy must actively support the phase out of fossil fuels by establishing a fully sustainable and 100% renewable energy system, avoiding false solutions and the lock-in of carbon intensive infrastructure.

Criteria 2: Ensure a democratic energy system for all

Projects should stop prioritising private profit as the main objective of renewable energy investments, and instead prioritise benefits for women, Indigenous peoples and other marginalised groups, youth, farmers, and local businesses. Public finance should focus on creating more diverse energy systems with increased local ownership and more decentralised energy systems.

Criteria 3: Put people and nature at the heart of energy transition

All investments must centre the role of civil society and communities, including women, Indigenous People, and youth, as active stakeholders in decision making, respecting the right of Indigenous peoples to Free, Prior and Informed Consent, while minimising harmful social, environmental and human rights impacts of the energy system.

Banking on Renewables case studies

Our report sets out these criteria, alongside some real-world examples of renewable energy projects in the Global South. These examples from India, Indonesia, Kenya, Tanzania and Rwanda, demonstrate two sides of the story: the enhanced development outcomes of engaging communities in the design and implementation of renewables projects, as well as the damage that can result when communities are excluded.

The African Development Bank (AfDB) was a ‘financial matchmaker’ for an onshore wind farm in Kenya – bringing in Dutch, British and Scandinavian investments for a mega-scale renewable project which has eroded Indigenous livelihoods and lands without bringing employment or energy access for the local people. Case study by Bhekumuzi Dean Bhebhe, Power Shift Africa

The World Bank’s fixation on mega-scale solar parks in India has also come at the expense of local communities’ livelihoods and environment. Communities were not consulted or told the truth about certain projects – some farmers even sold their lands on the promise of jobs which never came to light.

There is an alternative: Community-based rooftop solar systems are offering a sustainable, decentralised and affordable solution which allows even the poorest households access to clean energy. These systems are already powering people in the capital city, Delhi, and in small villages like Rampura in Uttar Pradesh, where they are managed by local citizen committees. Case study by Anitha Sampath, Centre for Financial Accountability

There are lessons for the World Bank and  the Asian Development Bank from the Indonesian experience of large-scale hydro power projects which have displaced local indigenous communities and disrupted iconic animal species. Local people have not benefited from jobs or better energy access.

In contrast, small-scale hydropower plants are powering – and empowering – local communities and Indigenous Peoples with clean energy. These plants are managed and owned by communities, who take care to minimise harm to the river and local ecosystems, while bringing benefits for everyone involved. However, they need further technology transfer and training for communities to be truly self-sufficient. Case study by Beyrra Triasdian, Trend Asia

The case studies celebrate two African success stories which the World Bank and the African Development Bank have supported over a number of years, implementing renewable energy transition at a national scale, with active community level engagement. 

Rwanda has moved from only 16% of the population with access to electricity in 2013 to 74% electrification through on and off grid electrification. Tanzania aims to have similar levels of electrification by 2033, including by deploying decentralised solar solutions and mini-grid systems in rural areas. 

While energy access is expanding in many African countries, millions of people still lack electricity, many of them women, Indigenous peoples and rural communities. Case study by Karabo Mokgonyana, Power Shift Africa