UK climate aid 'helps Walmart get cheap wind power'

WDM report, 'Power to the people?', details how money from the UK aid budget has been used by the World Bank to finance a Mexican wind park that provides cheap electricity to Walmart
Walmart is being helped by UK investment in a Mexican wind farm, a report has claimed. Photograph: Marc F. Henning / Alamy/Alamy

UK climate aid is being used to produce cheap electricity for the US multinational Walmart, according to the World Development Movement, prompting the UK government to respond that it had not seen "any evidence" to justify the claim.

A WDM report, 'Power to the people?', details how money from the UK aid budget has been used by the World Bank to finance the La Mata and La Ventosa wind park in the Mexican state of Oaxaca, one of the World Bank's flagship Clean Technology Fund (CTF) projects intended to develop low-carbon technologies. The UK government has provided £385m in capital to the CTF from its overseas aid budget, 14% of the CTF's total funding.

Electricity from the 67.5MW wind park is being sold at a discounted rate to Walmart, the world largest company and owner of Asda in the UK. This is achieved by exploiting a loophole in Mexico's energy laws, which allows Walmart to officially claim that it has produced the power itself. The company owns only a nominal stake in the wind park, which is 99% controlled by EDF, the world's largest electricity utility.

The Clean Technology Fund's objectives include poverty reduction, "but the wind park has done nothing to increase energy access among the seven per cent of Oaxaca's population who have no electricity", said the World Development Movement report. WDM called on the government to stop climate finance going to the CTF and said the case demonstrated the World Bank was not a good channel to handle climate aid.

WDM policy officer Murray Worthy said: "Developing countries urgently need finance to help them transition to a low carbon economy, but projects like the La Mata and La Ventosa wind park show the dangers of throwing public finance at multinational companies like EDF and Walmart".

But a spokesman for the Department for International Development (DFID), which oversees climate aid, said: "We have not seen any evidence to justify these claims. We are committed to ensuring all British aid benefits the world's poorest people and would investigate any inappropriate use of funds. The UK contributes to the Clean Technology Fund (CTF) to increase renewable energy in developing countries and help the poorest and most vulnerable, who are the hardest hit by climate change."

Dana Younger, chief renewable energy specialist in the infrastructure department at the IFC, a member of the World Bank Group, defended the project: "In Mexico electricity consumption is growing and future power generation is projected to be mainly based on coal, with greenhouse gas emissions projected to rise 230% by 2020 compared to 2008 if the Government of Mexico does not foster renewables. Under Mexican law, CFE, the national electric utility has a monopoly on electricity distribution and all the electricity generated by the project must be injected into the national grid."

Erica J. Jones, Walmart's international corporate affairs manager, said: "The Oaxaca wind farm is helping Walmart increase the amount of clean, renewable energy we use in our operations. We reduce greenhouse gas emissions by 137,000 tons a year through our purchase of wind energy from Oaxaca – that's equal to taking 21,000 cars off the road. Buying renewable energy is the right thing to do for our customers, our communities and our stores."

The report launch coincides with the UN climate talks currently underway in Durban, South Africa, where details of a new global Green Climate Fund, intended to replace temporary arrangements such as the Clean Technology Fund, are expected to be agreed.

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