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World Bank Blamed for Fuelling Climate Chaos

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Issue date: 
June 12, 2011
Publisher Name: 
Indepth News
Jutta Wolf
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BONN (IDN) - Reflecting profound concerns of developing countries, a new report has strongly criticised the World Bank group for promoting false solutions to climate change, such as carbon trading, megadams, agrofuels and industrial monoculture tree plantations.

The report – 'Catalysing Catastrophic Climate Change' – also gives vent to anxieties of social movements, environmental and social justice organisations, and affected communities. It was tabled at a side event by Friends of the Earth International (FoEI) during the UN Climate Change Conference in Bonn that concludes on June 17, 2011.

The German city is the seat of the UN Framework Convention on Climate Change (UNFCCC), currently led by Christiana Figueres, a national of Costa Rica.

With 195 Parties, the UNFCCC has near universal membership and is the parent treaty of the 1997 Kyoto Protocol, which has been ratified by 192 of the UNFCCC Parties. Under the Protocol, 37 States, consisting of highly industrialised countries and countries undergoing the process of transition to a market economy, have legally binding emission limitation and reduction commitments.

The ultimate objective of both treaties is to stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous human interference with the climate system.

The Bonn negotiations follow the slow progress made at earlier talks in Bangkok in April 2011, and are essential for building momentum toward the Durban climate conference in November 2011 in South Africa.

The Bangkok talks focused on setting the agenda for the negotiations for the rest of the year but proved to be a setback because of divisions between countries over the scope of talks. Some rich developed countries insisted on limiting the negotiations to implementing the narrow range of issues agreed at the Cancun Conference in December 2010. However, most countries supported continuing under an agreed workplan from 2007, the Bali Action Plan.

"Despite the need to urgently slash global emissions through a just transition away from fossil fuel use, the Bank's energy investment portfolio is locking developing countries, including South Africa and India, into a high-carbon future," says the FoEI report, listing exact figures.

- The report shows that in 2010 the Bank hit a new record in terms of its fossil fuel funding, totalling US$6.6 billion, a 116 percent increase over 2009. US$4.4 billion of this total was invested in coal, also a record high, and a 356 percent increase over the previous year.

- The World Bank's private lending arm, the International Finance Corporation (IFC), approved investment of US$450 million for the Tata Mundra 4,000-megawatt coal-fired power plant in Gujarat, India, which is expected to emit an estimated 25.7 million tons of CO2 annually for at least 25 years.

- In April 2010, the World Bank also approved a massive US$3.75 billion loan, the overwhelming majority of which will finance the 4,800 megawatt Medupi coal-fired power plant being built by Eskom, South Africa's state-owned power utility. "The loan will lead to 40 new coalmines opening up to feed the Medupi plant and related projects. South Africa is currently responsible for 40 percent of all of Africa’s greenhouse gas emissions, and this loan will add to these emissions," says the report.

- The World Bank has been increasing investment in large hydropower since 2003, following a lull in such investment in the 1990s, despite that dams have already displaced 40-80 million people. The Bank funded the Nam Theun 2 dam in Laos, which is reported to have displaced 6,200 Indigenous Peoples and negatively affected more than 110,000 people downstream, damaging the river ecosystem.

- The World Bank's Climate Investment Funds (CIFs) include a Pilot Program for Climate Resilience (PPCR), which allows for loans for adaptation, unlike UNFCCC funds and the Adaptation Fund, which has recently led to protests in Nepal and Bangladesh.


FoEI's economic justice programme coordinator Sebastian Valdomir said in a media release: "The World Bank is part of the climate problem, not the climate solution. Its conflicts of interest, and appalling social and environmental track record, should immediately disqualify it from playing any role whatsoever in designing the Green Climate Fund, and in climate finance more generally."

The World Bank has been accused of having a conflict of interest with regards to serving as both the interim trustee of the Green Climate Fund (fiduciary function) and on the Technical Support Unit designing the fund (consultancy function). In effect, the Bank would be designing a fund that is meant to oversee its own activities.

The FoEI report says: "The World Bank's fossil fuel lending practices and propagation of false solutions to climate change, such as carbon trading and large dams, should lead to its exclusion from any role in designing the UNFCCC’s Green Climate Fund."

An agreement to set up the Fund was taken during climate talks at the Cancun conference in December 2010, one year after developed countries agreed at the Copenhagen climate conference in December 2009 to provide $100 billion annually by 2020 to developing countries to mitigate climate change.

The Cancun climate conference decided that the Fund will be governed by a board of 25 people, with half of the board coming from developed countries and the other half from developing countries. It was further agreed that the UN will manage the Fund, and not the World Bank. However, the World Bank will be the interim trustee of the Fund for the first three years after its launch, when it will then be subject to a review.

The FoEI is calling for climate finance that is derived from assessed budgetary contributions and other non-market-based innovative sources – like financial transaction taxes – that is commensurate with rich countries' disproportionate role in creating the problem of climate change.

Policy analyst at Friends of the Earth United States, Kate Horner, said in a media release: "The World Bank claims to provide leadership on climate change but, as shown in this report, it is a major funder of dirty fossil fuel projects, carbon trading and mega dams. These initiatives deepen poverty and push us closer to the brink of a global environmental disaster."

"The Bank's use of loans, rather than grants, is set to worsen the debt burden faced by poor countries and undermines the polluter-pays principle. This has led to recent protests in Nepal and Bangladesh," the report points out.


It adds: "The Bank is also driving the expansion of carbon markets, which are allowing rich countries to continue their unsustainably high levels of carbon emissions, ultimately threatening human survival. The Bank has played a key role in driving the establishment of these markets, and is providing direct support for carbon offset projects in the global South, even though they are harming local communities and the environment."

The report's author, Joseph Zacune, expresses concern that the Bank is playing a leading role in promoting new schemes that essentially privatise developing country forests in the process of generating carbon offsets.

"These schemes are characterised by the exclusion of affected communities and critical voices from relevant planning processes, and a failure to ensure the protection of community rights. There is considerable doubt as to whether these projects will even reduce deforestation," says Zacune.

Yet despite these negative trends, adds Zacune, the World Bank is trying to expand its role within the UN climate negotiations. The Bank has been facing strong opposition from many developing countries, social movements, environmental and social justice organisations, and affected communities, but managed to gain the position of interim trustee of the new 'Green Climate Fund' and in mechanisms to reduce emissions from deforestation and forest degradation (REDD).

The FoEI report says: "There are major concerns because of its undemocratic nature, its poor track record on the environment, social justice, and development, its increasing support for fossil fuel projects, and the fact that its existing funds and facilities are pre-empting the outcome of UN climate change negotiations in favour of carbon markets even though no decision on this has yet been taken." (IDN-InDepthNews/12.06.2011)


Extpub | by Dr. Radut