Asia, the Multilateral Development Banks and Energy Governance
| Author | Smita Nakhooda |
| Date | 01 September 2011 |
| DOI | http://doi.org/10.1111/j.1758-5899.2011.00133.x |
| Published date | 01 September 2011 |
Asia, the Multilateral Development
Banks and Energy Governance
Smita Nakhooda
Overseas Development Institute
Abstract
The World Bank and the Asian Development Bank are key actors in global energy governance and in Asia, spreading
new ideas about technology, regulation, policy and service delivery as they invest in new energy infrastructure. They
have encouraged market approaches to energy around the world. They are increasingly being held accountable for
the environmental and social impacts of their investments. Many are looking to the Multilateral Development Banks to
leverage their financing and expertise to facilitate low-carbon development in Asia. Climate change is a growing
priority for these institutions, but energy security remains a primary concern for Asian member countries. A role for
the MDBs in climate finance has been controversial because of their governance, which is perceived to prioritize
developed country interests, as well as a poor record of consistently integrating environmental and social
considerations into their engagement. Efforts to reform MDB governance to give developing countries more voice,
however, do not guarantee greater transparency and accountability in energy governance, or the prioritization of
increasingly urgent environmental social issues. This article considers the implications of a growing role for Asian
countries in the governance of the MDBs.
Policy Implications
•The World Bank and the Asian Development Bank have been highly influential actors in global energy governance
and in Asia, spreading new ideas about technology, regulation, policy and service delivery as they invest in new
energy infrastructure.
•They have not always effectively reconciled competing environmental, social, economic and geopolitical dimensions
of energy governance, however. Their knowledge, technical expertise, finance and convening power can be better
harnessed to address these complex challenges. It remains to be seen whether the growing influence of Asian coun-
tries over the priorities of the MDBs will allow such opportunities to be seized.
•Investments in the leadership and staff of the MDBs to equip and incentivize them to make creative investments
that more effectively address issues of equity and environmental sustainability will be integral to strengthening their
role in the governance of energy.
•Reforms that make the MDBs more accountable to a diverse cross-section of stakeholders within member countries
through improved inclusiveness, transparency and accountability are also imperative. Such reforms are at least as
important as reforms aimed at giving developing country governments greater vote and voice in the governance of
these institutions.
The Multilateral Development Banks (MDBs) are unique
actors in energy governance as a result of their involve-
ment in both national and global policy processes. They
have propagated ideas about technology choice, regula-
tory policy and service delivery alongside their capital
investments in new energy infrastructure in developing
countries. Like many intergovernmental organizations
involved in energy policy, the MDBs have been signifi-
cantly affected by the trends identified throughout this
special issue: increasing multipolarity, particularly the rise
of China and India as globally influential powers; grow-
ing contestation over the appropriate roles of states,
markets and citizens; and the growing importance of cli-
mate change concerns as constraints on energy policy
options. These trends are mediated by the workings of
MDBs’ internal bureaucracies.
This article considers how the World Bank and the
Asian Development Bank (ADB) have influenced energy
policy choices in their member countries, and how they
have been influenced by these major trends. It focuses
on their engagement in the electric power sector. First, it
considers the key sources of influence that shape how
the MDBs wield influence, specifically country govern-
ment influence exercised at board level, citizen pressures,
Global Policy Volume 2 . Special Issue . September 2011
ª2011 London School of Economics and Political Science and John Wiley & Sons Ltd. Global Policy (2011) 2:SI doi: 10.1111/j.1758-5899.2011.00133.x
Research Article
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