By Jonathan Allen NEW DELHI, Jan 23 (Reuters) - The world's biggest fund for environmental projects is investing for the first time in a non-renewable, polluting fuel -- coal -- in what it says is a new pragmatic approach to the energy needs of the developing world. The Global Environment Facility, managed by the World Bank and United Nations agencies, said on Tuesday it was putting $45.5 million towards an overhaul of some of power-hungry India's ageing coal-fired plants to make them more efficient and less polluting. Monique Barbut, the facility's CEO, said there had been long debates about whether it should be funding a "polluting" coal project, in what would seem to be a departure from its aim of weaning the world off carbon as a fuel supply. In the end, she said, the pragmatic approach won out. "We cannot cover the planet with wind turbines," she told reporters at a New Delhi press conference. "We do argue that renewable energy is the best ... but at the same time India is clearly not going to develop for the next 20 years without coal. We have to cooperate with that." She said modernising India's coal plants was the most direct way for the country to reduce its emission of carbon dioxide -- a so-called greenhouse gas which many scientists believe contributes to global warming. The facility is working to bring a similar project to China. India burns more coal than any other country in the developing world, and depends on it for about 60 percent of its total energy capacity. Still, that total falls far short of its needs -- 44 percent of Indian homes are without electricity, according to the 2001 census. India, one of the world's fastest-growing economies, aims to get all households wired into the power grid by 2012. Upgrading coal-fired plants, most of which are owned by the state, will boost energy output a little, but it will only have a minimal impact on closing India's huge shortfall, said Alok Kumar, a director at the Ministry of Power. Beside the facility's grant, another $300 million in funding is coming from the World Bank and Indian commercial banks. In total, that is supposed to cover the cost of upgrading about one percent of India's coal-fired capacity over the next few years. "It adds power in an affordable way, but the most significant gain is environmental," said the World Bank's Rajesh Sinha, an adviser on the project.
