A World Bank scheme to bring electricity to the world's poor is short-sighted and won't curb climate change or help the people it's aimed at, environmental groups said on Sunday.

The Bank released a progress report on Sunday looking at ways to fund cleaner energy projects in some of the world's poorest regions and drive economic growth in those areas.

The report, entitled Investment Framework on Clean Energy and Development, says an estimated 1.6 billion people do not have access to electricity.

Environmental groups said the Bank was missing a huge opportunity to promote the use of renewable energy by instead backing conventional fossil-fuel based generation.

"We certainly agree that renewable energy is a very good way to reduce energy poverty," said Peter Bosshard of International Rivers Network. "We just wonder why the World Bank doesn't do more of it," he said in Singapore.

The idea of fresh cash for cleaner energy was first raised in April by British finance minister Gordon Brown, who called for a seed fund of $20 billion for alternative energy.

The World Bank has now prepared a draft of two proposed funds and these are being presented to its members in Singapore during the IMF-World Bank meetings that end on Sept. 20.

The Clean Energy Financing Vehicle proposal consists of low-interest loans and the Clean Energy Support Fund grants.

The proposed Clean Energy Financing Vehicle calls for an initial capitalization of $10 billion and both ideas endorse low-carbon technologies and carbon emission reductions.

The World Bank says it has invested $1.4 billion, or nearly three times as much as planned, in energy efficiency and renewable energy since 2004.

CLEAN BUT NOT SO GREEN

Green groups said the Bank should do more and issued their own report on Sunday in response to the global body's draft energy framework.

"The Bank continues to invest $2 billion and $3 billion a year in greenhouse gas-producing energy projects, which fuel climate change and fail to help the world's poor," said the report, which is backed by groups such as Friends of the Earth and the Institute for Policy Studies.

"Financing for renewable energy projects makes up less than 5 percent of the Bank's overall energy financing in fiscal year 2005," it added.

That placed the Bank in a confusing position, one activist said.

"You can't actively subsidise fossil fuels and effectively fight climate change at the same time. The institution is working at cross purposes with itself," said Graham Saul of Oil Change International.

But Jamal Saghir, the Bank's director of Water and Energy, believes the world will still be heavily reliant on fossil fuels for energy for decades to come and that the Bank's energy framework was practical and the way to cut poverty.

"In South Asia, 670 million people don't have access to electricity," he said on Sunday during a panel discussion. In sub-Saharan Africa, it was more than 500 million.

"In Sub-Saharan Africa, basically we see stagnation. The annual rate of connection is less than one percent."

He pointed to the importance of providing reliable electricity supplies to clinics, schools and businesses to reduce poverty and to do this, further funding and attracting private sector cash were crucial.

Even cleaner energy for cooking could improve people's lives he said, adding that indoor air pollution caused by use of wood and other biomass for cooking was responsible for more than 1.5 million deaths a year. (Additional reporting by Gilbert Le Gras in Singapore)