World Bank's Massive Fossil Lending Undermines Its New Climate Funds

by Peter Riggs

Solve Climate - Apr 14th, 2008

Original URL

When you want to quit smoking, do you call a tobacco company? That in essence is what civil society groups were wondering when they met last week to evaluate the climate-friendly announcements coming out of the World Bank.

World Bank leaders had convened in Washington DC -- abloom with cherry blossoms -- for their annual spring meeting, and announced plans to launch two new climate-change funds. One new pot of Bank money is focused on the development of clean technology, and the other pot earmarked for 'resilience'-helping countries adapt to rising sea levels, increased intensity of storms, drought, and other economic harms resulting from climate change.

These two new funds are in addition to the Bank's Forest Carbon Partnership Facility (FCPF), launched last year to put a bounty on 'avoided deforestation' in tropical rainforest nations.

Sound like good ideas, right? Clean technology, adaptation funds, valuing standing forests-what's not to like?

Plenty, as it turns out, because the Bank has another face - as an institution that simultaneously exacerbates the problem of global climate change. The Bank, you see, isn't working to dampen rising temperatures; rather, it's fanning the flames, despite these latest announcements.

The World Bank, is still the largest historic lender for fossil fuel projects globally. Since the 1992 Rio Summit, the World Bank has invested over $25 BILLION dollars in oil, gas, and coal projects, according to Daphne Wysham of the Sustainable Energy & Economy Network. That's the equivalent of two years of total global emissions over the lifetime of these Bank-funded projects.

The lead role the Bank plays in fossil fuel finance was highlighted again just this week when the Bank's private-sector arm, the International Finance Corporation, announced a $450 million investment to develop a massive coal-fired power plant in India.

So the climate change funds that the Bank proudly announced do not make up for its lending behavior, and, it turns out, the funds are also the focus of another concern: that they will operate outside of the framework of the UN Climate Change Convention.

Celine Tan of Third World Network:

The Bank's funds are top-down, donor-driven, and are in danger of creating parallel and contradictory structures financing climate change adaptation and mitigation.

So what?, one may ask.The more money thrown at the problem, the merrier, no?

Actually, no. The money is not being thrown at the problem, but loaned. Even though projects supported by the climate change funds will be labeled "Bank-funded," they really are not because ultimately the money will come out of the pockets of citizens in borrowing nations. Banks - and the World Bank is no exception - like to get paid back. Here's how Karen Orenstein from Friends of the Earth summed up the meaning of the Bank's new pot of money for "resilience."

The World Bank has the gall to suggest that developing countries pay for climate change impacts.

A similar flawed logic seems to motivate the World Bank's championing of a highly controversial program included in the Bali Road Map: REDD, or "Reduction of Emissions from Deforestation and Degradation." REDD aims to reduce the 20% of global emissions that come from deforestation, again, a very good idea, but not if the World Bank is the institutional home of the effort.

That's because the way REDD is structured, here is its message: "we in the industrialized north can continue to emit GHGs to our hearts' content, so long as we buy offsets from developing countries - which we can do through REDD by preventing them from using forest-resource assets for their own national development." Does that square with the UNFCCC's call to address climate change "on the basis of global equity"?

Scuttlebutt from inside the Bank says that those responsible for crafting the Forest Carbon Partnership Facility (FCPF) barely even consulted their own forest experts. If they had, they would have learned about corruption in the forest sector, secure land tenure for forest-dwelling peoples, and the workability of proposed offset schemes. But the Bank's own forest experts couldn't get a hearing within their own institution, so it's become pretty hard to believe the Bank's rhetoric that civil society groups and indigenous peoples will be "key stakeholders" in the FCPF.

So when civil society groups met last week to discuss the World Bank's new climate strategy, they reiterated a call, first voiced at the Kyoto COP a decade ago: they demanded that the Bank get out of the business of lending for fossil-fuel projects.

Until that happens, NGOs argue, the Bank simply has little credibility in talking about actions to address climate change - just like tobacco companies promoting stop smoking campaigns.

Read more... Sphere: Related Content