Victory for public health and the environment! The International Finance Corporation (IFC) withdraws from the proposed investment of USD 40 million for four waste incineration plants in Gujarat, India.

SOLIDARITY PRESS RELEASE

February 21, 2025 – In a major victory for communities, environmental groups, and civil society organisations (CSOs) who have been fighting against the proposed toxic and polluting Waste-to-Energy (WTE) incineration projects in Gujarat, India, the International Finance Corporation (IFC), the private lending arm of the World Bank has decided to not invest in it. The IFC proposed a loan of USD 40 million on May 13, 2024, to support Abellon Clean Energy Limited (ACEL) to build four WTEs in Rajkot, Vadodara, Ahmedabad, and Jamnagar which would cumulatively burn 3,750 tons of unsegregated municipal solid waste every day.  

The communities affected by the project, activists in Gujarat, and CSOs including the Centre For Financial Accountability (CFA) and International Accountability Project (IAP), wrote a letter to the World Bank’s Executive Directors on June 26, 2024, highlighting the project’s negative effects on communities, such as air and water pollution, health problems, climate impacts, undermining sustainable waste management practices, and how it violated Indian laws and IFC’s Performance Standards. They also raised complaints with IFC’s Stakeholder Grievance Response Team and presented the project’s impacts through an online meeting at the Tuesday Group, a civil society meeting with the US Treasury in July 2024. Another collective letter written by the communities, and activists from Gujarat along with IAP, CFA, Global Alliance for Incinerator Alternatives (GAIA), and Break Free From Plastics (BFFP) was sent to the IFC Executive Directors reiterating these concerns on August 21, 2024, which was signed by 174 CSOs and activists in India and globally. CFA and Recourse also discussed the harms of the proposed WTE incinerators with the World Bank EDs in person and handed over the collective letter at the World Bank Annual Meetings in Washington DC in October 2024. Through these submissions, a clear demand was presented that the World Bank board should not only reject the proposed investment but also cease all funding for WTE initiatives, prioritizing environmental protection and community well-being over unsustainable energy solutions. 

Following nine months of strong community resistance,multiple follow up letters sent to World Bank Board members and continuous advocacy by communities, activists, and civil society organizations (CSOs), the World Bank board’s decision on the Abellon project was delayed twice in July 2024 and again in September 2024. In January 2025, the project disclosure page was removed from the IFC website. Finally, on February 17, 2025, in response to an access to information request regarding the status of the project, the IFC confirmed its withdrawal from the project.

Abellon’s operational WTE incinerator plant in Jamnagar had already led to significant negative impacts on the 25,000 people living in its vicinity by causing air pollution, noise pollution, and health problems such as skin ailments, asthma, eye irritation, etc since it began its operations in November 2021. The Gujarat Pollution Control Board(GPCB) issued a “show cause notice” on December 15, 2021, to the company based on an inspection of the factory premises. “We were initially informed that all garbage would be transformed into power, but after operations began, we observed that the plant emitted many pollutants. We filed complaints with the Gujarat Pollution Control Board, the Municipal Commissioner, and the District Collector, yet the communities continue to suffer. The IFC’s withdrawal from the project is an important victory for the locals harmed by the plant. Still, nothing short of a complete shutdown of the plant will bring relief to the affected communities.” shared Ker Jayendrasinh, who has been supporting the local communities in Jamnagar.

CSOs involved in the campaign had also alerted that the due diligence done for this project by IFC was not adequate as meaningful consultations were not organised with impacted communities and waste workers. The Environmental and Social Impact Assessments for the project were flawed as they failed to capture the irreversible and cumulative impacts of these WTE incinerators. This incomplete due diligence led the IFC to give this project a lower risk rating of B and justify this project as being important for waste management and energy recovery in Gujarat. This campaign, however, presented very important evidence as to how WTE incinerators are a false solution that are only aggravating environmental pollution in countries like India and are destroying existing waste segregation and decentralized waste management systems built by the informal waste sector.

Research by the CFA raised critical questions about the financial feasibility of ACEL, which has been undergoing losses and seems to be heading toward bankruptcy. ACEL is struggling financially, with rising losses and debts. Its net profit dropped from $1.28 million in 2021 to a $2.18 million loss in 2023. Earnings Before Interest, Taxes, and Amortization (EBITDA) also turned negative, falling from $345,332 to -$1.84 million. ACEL is unable to cover its loan interest payments, with the shortfall increasing from 1.5 times the required amount in 2022 to 14.11 times in 2023.”Despite receiving a slew of benefits from the government in the form of Viability Gap funding, beneficial electricity prices, revenue from the sales of carbon credits plastic credits, and an aggregate processing fee from the Urban Local Bodies (ULBs) the WTEs in India are financially unviable and continue to operate primarily because of government subsidies. The Essel infra projects which had about 15 WTE incineration projects across different locations in India worth about USD 287 million – USD 345 million, has filed for bankruptcy now. And Abellon Clean Energy Limited seems to be on a similar trajectory.” said Chythenyen Devika Kulasekaran of the Centre for Financial Accountability. 

Electricity generation from burning waste is not new and certainly not environmentally friendly and is considered to be dirtier than coal-fired thermal power plants. With over a century of experience with incinerators and understanding their financial, social, environmental, and climate impacts, the US and the EU which were once the pioneers in this technology are now closing them down and excluding them from any financial support, yet they are increasingly being promoted in the Global Majority countries. “IFC and other development finance institutions continue to display environmental racism by proposing to fund toxic WTE incinerators in India and other countries in Asia. While we welcome this move by IFC to not proceed with this investment for Abellon Clean Energy Limited to construct four WTE incinerators in Gujarat, India, we also hope they take these learnings ahead from this case in their ongoing review of the IFC Environmental and Social Performance Standards by including WTE incineration projects in their exclusion list and halt all funding to it globally,” said Vaishnavi Varadarajan from International Accountability Project.

“The alternative to debt-inducing and harmful techno-fixes to waste such as WTE incinerators already exists. IFCs withdrawal only shows the innate risks from WTE projects. Public finance should best support Zero Waste solutions such as waste avoidance,  segregation, collection, reuse, and safe and inclusive recycling systems. Communities all over the world have already demonstrated the successes of ZW solutions.”Mayang Azurin, GAIA Asia Pacific Deputy Director for Campaigns said.

This victory is a testament to the strength of collective action which pushed IFC to not proceed with this investment. By standing up for clean air, sustainable waste management, and protecting livelihoods, we can drive real change! As we celebrate this decision, we urge the World Bank Group and all development finance institutions to not invest in any WTE incinerator projects in the future and to support community-led Zero-Waste solutions.