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World Bank Invests $400 Million in Indonesian Geothermal Energy

The World Bank has announced $400 million in funding to help double Indonesia's geothermal energy capacity. It says the investment is an effort to assist developing countries produce clean energy and reduce carbon emissions.

Indonesia, with its numerous volcanoes and hot springs, has some of the largest geothermal energy reserves in the world.

Geothermal energy is produced from heat stored below the Earth's surface. Indonesian officials estimate the country has about 28,000 megawatts of geothermal capacity, the equivalent of about 12 billion barrels of oil.

Clean, reliable but more expensive

The World Bank says it will invest $400 million in co-financing to develop Indonesia's geothermal energy. The World Bank's Tim Brown says the money will help Indonesia reduce the growth of its greenhouse gas emissions by 26 percent in the coming decade.

"In this case Indonesia's power sector is growing in coal, right, moving to coal away from oil in the last, say 10 years. And geothermal is an untapped resource but geothermal is riskier than coal, it's more expensive than coal. And so this funding allows Indonesia to make the decision to promote geothermal without incurring as much of the extra costs," he said.

He says while geothermal energy is clean and reliable, it can cost between up to $40 million just to find the right location. "You have to drill holes to find it. And the hole itself costs several million dollars and you might have to drill like five holes or 10 holes before you get the confirmed amount of steam you need to build a power generation plant around it," said Brown.

The World Bank says currently only 65 percent of Indonesians have access to electricity. It estimates this funding will help bring electricity to 90 percent of the population by 2020.

Greenhouse gases come from a variety of sources, among them burning carbon fuels such as oil and coal. Climate scientists say the gases contribute to climate change.

The Indonesia project is part of a $40-billion World Bank initiative to develop low-carbon growth projects worldwide. The bank also funds projects in Colombia, Kazakhstan, Egypt, Mexico and several other countries to increase mass transportation, and solar and wind power.

Environmental groups support the geothermal energy projects but are concerned that the World Bank also may fund some more traditional energy projects, such as a coal-fired plant in South Africa. They are pressing the World Bank to fund only clean energy projects.