Economy

Brilliant Plans to Destroy the Planet: The World Bank Tackles Climate Change

The World Bank's new Climate Investment Funds will do nothing to help the climate; they'll just give the bank more clout.
President Bush and other leaders of the industrialized world managed to produce a masterfully vague, loophole-ridden statement on climate change at a Group of 8 summit held at a secluded resort on the banks of Lake Toyako in Japan this week.

Meanwhile, thousands of delegates from grassroots movements transformed tranquil Odori Park in downtown Sapporo into the central nervous system of a bottom-up response to ecologically destructive development policies. On the opening day of the G8 summit, activists from every continent joined Japanese environmental and global justice groups in the streets brandishing banners, flags and megaphones. Their message was unambiguous: "Climate Justice, Yes! World Bank, No!"

Their boiled-down slogans were in response to a communiqué released on the second day of the official summit that endorsed the World Bank's newly created Climate Investment Funds. The $6 billion pledged by the United States, the United Kingdom and Japan to these funds will do nothing to help the climate. Instead, they will give the World Bank an even larger -- and completely inappropriate -- leadership role on climate change.

Large developing countries, such as China and India, have clearly stated their opposition to climate funds being channeled through the World Bank. More than 130 developing nations issued a statement at climate talks in Germany in June that the United Nations, not the World Bank, should have control of any funds contributed for weathering climate change. If given to the World Bank, they argued, these funds should not count toward countries' obligations under the international climate change convention. By ignoring their unified position, the G8 support for this expanded World Bank role in climate funding jeopardizes efforts to bring developing countries to the table for a global climate deal.

Also offensive to developing countries is that the World Bank is asking the countries least responsible for causing climate change to take out loans to help pay for adapting to the inevitable impacts. According to the G8 statement, rich country "donations" to the Strategic Climate Fund will count toward those nations' obligations for development aid, stretching an already pitiful sum impossibly thin.

Piling more debt onto many already heavily indebted nations will mean less money for climate-related disaster preparedness, emergency services and food shortages in the future.

World Bank Climate Hypocrisy

The World Bank's effort to reinvent itself as the global climate crusader is a dangerous charade. With $2 billion already spent on coal, oil and gas projects this year, the World Bank continues to be among the world's largest multilateral financiers of greenhouse-gas-emitting projects in the developing world.

The new Climate Investment Funds proposed by the United States and others will house the Clean Technology Fund. Donations from rich countries will ostensibly be used to bring low-carbon technologies to developing countries, and clean energy access to their poorest citizens. But environmental groups have taken to calling the Clean Technology Fund the Slightly Less Dirty Technology Fund because of the bank's outright support for slightly more efficient coal power.

Predictably, the G8 highlighted its support for market mechanisms, such as carbon trading, as key instruments in fighting climate change. The World Bank has long favored carbon trading. The institution's zeal for this approach is not surprising: A recent report by the Institute for Policy Studies found that on average, the bank rakes in a 13 percent overhead on the emissions deals it brokers.

The inconvenient truth behind carbon trading is that while companies in industrialized countries continue to pollute at home, they "outsource" their emissions cuts to countries with no caps. In other words, for every incrementally less-polluting coal plant generating carbon credits in a developing country, a dirty coal plant can be built next door. This accounting system may be profitable for carbon brokers like the World Bank, and less costly for Northern polluters, but it does nothing to avert climate disaster.

U.S. Role

Fiery protest in Japan was matched by a chilly reception among some members of the U.S. Congress to the Bush administration's request for a $2 billion donation to the World Bank's new funds. Barney Frank, chair of the House Financial Services Committee, pointed out at a recent committee hearing on a U.S. contribution that the "World Bank is not seen as an institution friendly to the environment" and that it seems to "spend one day a month protecting the environment and the other 29 days destroying it." Still, it's likely that Congress will authorize the money.

It remains to be seen if U.S. taxpayers can match the vigor of global civil society groups gathered in Japan, or whether they will simply sit back as Congress prepares to throw $2 billion of their money out the window at a time of rising oil prices and economic downturn. People in the developing world hope, this time, they are paying attention.
Janet Redman is a researcher for the Sustainable Energy and Economy Network at the Institute for Policy Studies in Washington, D.C., where she provides analysis of the international financial institutions' energy investment and carbon finance activities. She is the author of the recent report "World Bank: Climate Profiteer."
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