Tension coupled with urgency is gradually mounting on World leaders to come up with some sort of climate agreement. Governments are looking into tough choices of cutting down emissions and cope with rising climate temperatures. In addition, the world bank and the energy sector is having an emerging crisis to solve.

The World Bank received a letter in December from the U.S. Treasury Department giving the Bank guidelines and conditions for financially supporting new coal projects in developing countries.

This triggered unrest and anger from several other shareholders in the World Bank. The letter also stated that the World Bank's responsibility is to build a financing framework that ensures mitigation of greenhouse gas emissions and strengthens the developing countries economies against climate change.

In response to the letter, nine of the world bank executive directors representing a total of 90 nations called the U.S. plan "inequitable and unacceptable." And accused America of "bulldozing" other countries by taking the proposal directly to the world bank without first discussing it with them.

"We are very concerned about these developments as they indicate an unhealthy subservience of the decision-making process in the Bank to the dictates of one member country brought about in an opaque and non-inclusive manner," the executive directors wrote.

According to reports, a spokeswoman for the U.S treasury said that, the recommendations do not rule out lending for new coal plants. But the guidelines insist that the World Bank should try to identify cleaner alternatives when a fossil fuel plant is proposed. She added that, the bank should find ways to help cover the cost difference between the dirty and clean projects.

The World Bank had ealier announced its investment in coal and released a draft Energy Strategy to guide its energy and partner institutions for the next 7 to 10 years, noting that coal is not only an acceptable fuel, but also a resource that should be developed with international funding. According to reports, experts believe that,this controversy may spark off international diplomatic storms if developing countries decide to challenge the contents of the letter. India and China and other developing countries rely on coal as their primary power generation source. These countries are looking to develop and expand their coal-fired generation in order to boost economic growth while looking to mitigate carbon emissions by gaining access to clean technology through an international climate deal.

China has coal reserves and India intends to bring cheap electricity to its people. International financing institutions do have a responsibility in ensuring that the projects are environmentally sustainable and also contribute to cleaner economic growth of the country. Cutting off the power generation projects would affect the economic growth of the local people. The solution to the rising carbon emissions is not as simple as forcing developing countries to move to renewable energy sources for meeting their basic needs like power generation.

Critics arguably say that, coal is detrimental to renewable energy. And the World Bank strategy notes that in some countries, electricity from coal is significantly cheaper and the bank could use its financing instruments to support client countries to develop new coal power projects under certain conditions. The Bank Information Center found out that bank funding for coal had increased almost 200 percent between 2007 and 2009.

It may be cheaper at first but each newly constructed coal plant has a life of about 50 years, during which it will emit carbon which cancels out any hard-won gains on cutting emissions.

Why coal?

According to the U.S. Energy Information Administration, coal is the most carbon-intensive of the fossil fuels and the fastest growing carbon-emitting energy source. Coal's share of world carbon dioxide emissions is projected to increase to 45 percent in 2030. Mining has devastating effect on the environment. It exposes mankind and property to the toxic chemicals. Coal is also said to be harmful for public health. An environmental defense fund study estimated that between 6,000 and 10,700 annual deaths can be attributed to the 88 coal-fired power plants and companies receiving public international financing.

Renewable energy-

American council of Renewable Energy (ACORE), Renweable energy is a term used to describe energy that is derived from resources, like the sun and the wind. These are resources that are always available all over the world. We never run out of them. Using them does not inflict any material damage on the environment.

China, India and other countries have started reacting as they argued in a letter that the World Bank's first priority is alleviating poverty. To that end, increasing access to coal-fired energy is very important. "The Bank should be concerned about climate change only to the extent it impinges upon the efforts of the developing countries toward achieving poverty alleviation and economic growth," the directors wrote.

They also pointed out that, the United States produces 26 percent of the world's total coal-fueled electricity generation.

"If the U.S. had indicated its intention to retire its coal based power plants for replacement by renewable energy to free up space in the global commons to enable developing countries set up coal-fueled power plants to access cheaper electricity, the developing world would have welcomed such an initiative," the directors wrote.

More reports show that an e-mailed statement was sent from Treasury Department spokeswoman, Natalie Wyeth, stating that the U.S. executive directors at each of the multilateral development banks (MDBs) are "in the process of reaching out to both MDB managements and shareholders to explain the motive and substance and its effects on MDB's operation. "We welcome feedback from all stakeholders on our guidance and look forward to discussions on how it can help to effectively and responsibly encourage sustainable development," she wrote.

An source pleading annonymity said - "Lending for fossil fuel projects is a sensitive issue within the World Bank. Green groups had always persuaded the World Bank to stop lending for dirty fuel projects. But, many of the arguments of its developing country shareholders resisted it".