World Bank proposes funding curbs on coal-fired power plants

The World Bank will limit funding of coal-fired power plants the world over except in the very poor countries where there are no alternative sources of energy, according to the new rules proposed by the multilateral lender.

To be eligible to receive World Bank funding for coal-fired power projects, the poor countries also would have to prove they are very necessary and that no renewable or alternative energy sources are available to the country.

The new rules, proposed under pressure from green groups, however, do not limit funding to all fossil fuel projects, including oil and gas.

The World Bank, last year, faced severe criticism for approving a $3.75 billion loan to South Africa to build one of the world's largest coal-fired plants.

World Bank president Robert Zoellick has also been outspoken critic of the increasing dependence on coal and other fossil fuels and has been exhorting nations to move away from fossil fuels in order to combat climate change.

The proposed new rules, however, does not mean a wholesale shift from funding fossil fuel projects. It only means tweaking of rules whereby the World Bank will restrict financial support to mega coal-fired power projects, especially in emerging economies like India.