UPDATE 2-World Bank approves funds for Indian coal-fired plant

(Adds quotes, details on research)

By Lesley Wroughton

WASHINGTON, April 8 (Reuters) - The World Bank approved financing for a $4.2 billion coal-fired power plant in India on Tuesday despite calls by environmental groups to wait for further analysis of the costs and environmental impact.

The World Bank board approved $450 million in loans by the International Finance Corp. (IFC), its private sector lending arm, for the Tata Mundra project, a 4,000 megawatt coal plant, which will expand access to electricity in five states in western and northern India.

The IFC said the plant would use "super-critical" technology, making it India's most efficient coal-fired plant. The plant's volume of carbon emissions is expected to be 40 percent less than that from existing coal-fired plants in India.

"This is an important project because we believe it will encourage other developing countries to make responsible choices, using best available technologies and applying higher environmental and social standards," Rashad Kaldany, IFC director for infrastructure, said.

In a letter to the United States' representative at the World Bank, Whitney Debevoise, environmental groups argued that the global institution could not effectively fight climate change while also funding big polluters.

"The IFC has not demonstrated that this project is an appropriate and cost-effective solution that merits the investment of scarce international funds," the groups said.

The IFC said its funding was responding to India's enormous need for more and affordable electricity, while also supporting new technology that reduced emissions.