On a carbon market mission
While steaming ahead with new carbon market initiatives, the World Bank attracted further criticism and suffered potential setbacks on agriculture and on the Green Climate Fund (GCF) at the UN climate negotiations in Durban.
As the UN’s Framework Convention on Climate Change (UNFCCC) summit opened in Durban in November last year, the Bank’s climate record came under renewed scrutiny. People from all over the world joined the Global Day of Action and other protests to voice their concerns about the Bank’s involvement in climate finance during the summit. A group of civil society organisations, including the BASIC South Initiative and the Sierra Club, launched the report Unclear on the concept: How can the World Bank Group lead on climate finance without an energy strategy? It argues that the Bank should finally agree a low-carbon energy strategy that ends funding for dirty energy and promotes access to clean energy. The report states that, in the last four years, nearly half of the Bank’s energy lending went to fossil fuels, and less than 10 per cent went to promote energy access for the poor. It also notes the Bank’s heavy involvement in establishing and promoting carbon markets.
Weakened role in the GCF
A major outcome of the summit was the adoption of the GCF (see Update 78, 76, 74). The Bank’s role in the GCF has come under criticism from developing countries and civil society organisations. While the Bank will hold the interim trustee position for the first three years, civil society groups, such as Friends of the Earth, broadly welcomed that the GFC’s permanent trustee will be selected through an “open, transparent and competitive bidding process”, thus avoiding making the World Bank the ‘default’ GCF trustee. A hard-won victory for developing countries was the inclusion of a no-objection procedure, which lets designated country authorities put limits on the private sector’s direct access to GCF funding.
While the US pushed for the interim secretariat to be hosted by the Bank, resistance from developing countries led to a shared arrangement between the UNFCCC and the Bank-housed Global Environment Facility (GEF, see Update 8). However, many civil society groups did not think the agreement went far enough. Lidy Nacpil of Jubilee South said: “the fund is being hijacked by the rich countries, setting up the World Bank as interim trustee and providing direct access to money meant for developing countries to the private sector”.
A new report released in December by UK NGO World Development Movement questions the Bank’s direct financing for private entities in climate finance. Power to the people? How World Bank financed wind farms fail communities in Mexico claims that electricity produced under the Bank-housed Clean Technology Fund (CTF) in Oaxaca, Mexico, will not contribute to increased energy access among the state’s population who have no electricity. Instead, the electricity will be sold at a discount rate to the world’s largest company, Walmart.
Still pushing for carbon markets
The Bank’s push for forest and agricultural carbon markets (see Update 77, 74, 73, 59) was confirmed by the launch of the third tranche of the BioCarbon Fund during the summit, set up to enable access to carbon markets for the least developed countries with a focus on reforestation and agriculture projects, such as REDD+ and soil carbon. The Bank also launched the new Carbon Initiative for Development to enable least developed countries to tap into carbon markets through carbon-credit-generating projects (see Update 78). The manager of the Bank’s carbon finance unit said: “If one thing was achieved in Durban, it is that market mechanisms are very likely to be part of the future.” Furthermore, the IFC is pushing for private equity (see Update 79) as an “untapped” climate finance source in a new report. Accelerating the growth of climate related private equity investment argues that private-equity and venture-capital funds are “uniquely suited to financing climate friendly investments,” calling on multilateral financial institutions to help accelerate their growth in emerging markets.
During the summit, the Bank continued its efforts to drum up support for “climate-smart agriculture”, which includes a controversial proposal to produce carbon credits from storing carbon in the soil (see Update 78, 77). Concerned by the Bank’s activities, over 100 civil society groups, including ActionAid and Kenyan organisation African Biodiversity Network, signed up to a letter asking African negotiators to reject soil carbon markets. Teresa Anderson of the Gaia Foundation said “the World Bank’s aggressive push for a ‘mitigation programme of work on agriculture’ [...] is a Trojan horse to bring in carbon offsets based on farmers’ soils. Soil carbon offsets will promote a new spate of African land grabs, and put farmers under the control of fickle carbon markets.” This was echoed by Simon Mwamba of the East African Small Scale Farmers’ Federation, who said: “Climate-smart agriculture is being presented as sustainable agriculture – but the term is so broad that we fear it is a front for promoting industrial, ‘green revolution’ agriculture too, which traps farmers into cycles of debt and poverty.”
Despite the Bank’s push, no work programme on agriculture was agreed in Durban. However, a compromise text was reached that requests the UNFCCC’s scientific and technological advisory body to consider issues related to agriculture at its next session in May, meaning that agriculture is now on the official UNFCCC agenda.
Reducing Emissions from Deforestation and forest Degradation (REDD+, see Update 78, 76, 75) also continued to attract critique and the outcomes of the negotiations, including decisions on safeguards and financing, were met with disappointment by indigenous peoples groups. A new coalition formed during the summit, the Global Alliance of Indigenous Peoples and Local Communities against REDD and for Life, called for a moratorium on REDD+ until their concerns have been addressed, arguing that their very existence is under threat. Tom Goldtooth, Director of the Indigenous Environmental Network, said: “At Durban, CDM and REDD carbon and emission offset regimes were prioritised, not emission reductions. All I saw was the UN, World Bank, industrialised countries and private investors marketing solutions to market pollution. [...] I fear that local communities could increasingly become the victims of carbon cowboys, without adequate and binding mechanisms to ensure that the rights of indigenous peoples and local forested and agricultural communities are respected.”