Earth to World Bank: Stop Funding Climate Change!

Economic Justice News Online - Vol. 9, No. 1
September 2006

by Daphne Wysham and Sameer Dossani
Sustainable Energy and Economy Network and 50 Years Is Enough Network

Recent attempts by the World Bank to further greenwash its image fall far short of the meaningful changes in the development paradigm needed in order to cut greenhouse emissions and reverse the effects of global warming.

In April of this year, the World Bank’s board approved a paper entitled Clean Energy and Development: Towards an Investment Framework. From the title, one might think that the World Bank intends to do something about its long track record of investing in extractive industries and fossil fuel burning energy projects – both of which frequently have disastrous environmental and social consequences. Instead, and disappointingly, the World Bank’s paper is creating a self-fulfilling prophecy of business as usual.

A major investor in fossil fuels, the World Bank is completely unqualified to give advice on clean energy policy. Since the World Bank is very influential in setting the agenda of global development, it is unlikely that its advice on clean energy would in any way hurt its investments in energy and mining projects, or those of its private sector lending arm, the International Finance Corporation (IFC), which works directly with oil companies among its many private sector clients.

The World Bank is not a disinterested party in evaluating energy policy. The Bank is the largest public broker of carbon trades, i.e. buying and selling licenses to pollute. With over $1 billion in their carbon trading portfolio, making up to 10% in commissions on all of the carbon trades it brokers, what interest does the World Bank have in envisioning a world of renewable energy?

It is perhaps not surprising, therefore, that the projections the Bank makes on the subject of greenhouse gas emissions would be disastrous for the earth. The “reference case” or baseline scenario in the paper is a 60% global increase in greenhouse gas emissions by 2030. As those who have seen Al Gore’s popular documentary An Inconvenient Truth will know, such an increase would mean that by 2030 there may be hundreds of millions of “environmental refugees”; possibly larger numbers of people at risk of starvation due to crop failures; and 1.3 to 3 billion people at risk of drinking water shortages. The alternative case discussed in the paper is half of this increase (30%), a number which should still be seen as unacceptable for those concerned about global warming.

When one looks at the specifics of the paper, one is shocked by how many recommendations perpetuate business as usual in the place of genuine change. “Business as usual” for the Bank can be summed up as a) a bias towards big, expensive projects, and b) a bias towards those projects that benefit the private sector either directly or indirectly. Unproven technologies which would use fossil fuels in a less carbon emitting way are favored over cleaner alternatives that do not involve fossil fuels (and are often more tested). In such a way, the large companies doing the extracting of coal (in this case) would not be affected.

Another somewhat amusing bit of advocating “business as usual” is the Bank’s endorsement of nuclear power while simultaneously advocating the complete phase out of subsidies for power generation. Nuclear power is so costly that it is unlikely that nuclear power plants can ever be built without a huge subsidy component.

Despite the failures of these policies globally, the Bank still provides blanket endorsement of privatization and deregulation. Corruption is only one of the problems associated with these projects (think Enron). Despite claims to the contrary, there is no evidence that these policies lead to less emissions of greenhouse gasses. On the contrary, these policies may make regulation more difficult.

Ironically, the report promotes the protection of environments such as mangrove forests and other natural barriers to coastal areas, in spite of the Bank’s own track record financing exploitative projects such as shrimp aquaculture that have destroyed many of these barriers to large storms, in favor of “diversifying” economies.

Whatever gloss the World Bank would like to paint them with, the facts are clear. The World Bank is hugely invested in business-as-usual, and business as usual will lead to the destruction of billions of dollars worth of property, and the fragile global ecosystem in which we all live. If the Bank is serious about addressing these problems, it must be willing to prioritize lives over profit. Its record so far should give us no cause for optimism.

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