Climate profiteer

In 1994 Beacon Press published "Mortgaging The Earth: The World Bank, Environmental Impoverishment and the Crisis of Development", a scathing indictment of the World Bank's lending practices written by Bruce Rich. That book provided a thorough analysis of how the Bank has become a "seemingly unstoppable and often destructive environmental and political force." You cannot come away after reading this book without a strong sense that the World Bank has played a very specific role in financing destruction throughout the developing world.

Now a new report, "world bank: climate profiteer" by the Institute for Policy Studies questions the Bank's motives and strategies for addressing climate change.

"After years of waning global influence, the World Bank has attached itself to the climate crisis like a patient on life support. Facing a crisis of legitimacy over its failed economic policy prescriptions and long track record of boondoggle projects, the aging institution is attempting to give itself a makeover. No longer is it just the Bank whose “dream is a world free of poverty.” Now it is the Bank that can solve the climate crisis. The facelift includes a $2 billion portfolio of trust funds that channel carbon finance – money used to buy cuts in greenhouse gas emissions from projects in developing countries – from polluting industrialized countries in the global North to some of the most ecologically destructive industries in the global South.

This report exposes the World Bank for what it is – and names it as such – a “climate change profiteer.” The World Bank irresponsibly and recklessly continues to perpetuate the world’s dependence on climate-altering fossil fuels while profiting from carbon trading, which is a dubious remedy to climate change."

Environmental organizations are protesting a decision to designate the World Bank as administrator of a $500 million climate change trust fund. (GW)

Green groups to World Bank: Keep your money

By Lisa Friedman
ClimateWire
April 11, 2008

Environmental and humanitarian activist groups plan to formally ask the World Bank to back away from plans to create a $500 million trust fund aimed at helping poor nations cope with climate change.

The letter, which representatives of several organizations confirmed Thursday is being drafted and will be signed by more than 100 organizations, comes as the World Bank and International Monetary Fund launch their 2008 spring meeting, attended by finance ministers from across the world.

"Among many [non-governmental organizations], the feeling is that unless the World Bank gets it right ... they really have no business in administering these funds," said Ilana Solomon, policy associate with the poverty-relief group ActionAid International.

The dispute between aid organizations and the World Bank has been simmering for weeks.

At issue is the bank's proposed Strategic Climate Investment Fund. Officials describe the fund, launched earlier this year and still in the development phase, as a knowledge-gathering board that will create a strategy for "adaptation" -- that is, the building of flood barriers, the creation of farming alternatives and other projects that could help poor nations survive global warming.

According to the latest blueprint, the board would be composed of 10 countries, evenly split between wealthy donor nations and developing countries that are the recipients of the aid. Money would be given in the form of grants and loans to do pilot projects, and the information would ultimately be handed over to a U.N. body that has been established -- though it is not yet up and running -- to administer adaptation programs.

Yet as the World Bank executive board of directors plans to decide by July whether to move forward with the Climate Investment Fund, activists are telling bank officials to make fundamental changes or give up the efforts altogether.

Financing for coal-fired plant at center of concern

Many said they are wary the fund will give too much power to the wealthy, industrialized nations that spout the highest levels of emissions and have created the problems now faced in the developing world. Others said they object to the notion of loans for the same reason and worry that rich countries will impose conditions or use the fund as an excuse to decrease other aid.

Groups said their overarching concern, though, is the World Bank's fossil fuel-rich energy portfolio. The bank's approval this week of $450 million for a major coal-fired power plant in India, many said, undermines its attempts to go green.

"There's a lot of concern about the World Bank taking over of the [adaptation program] because of their ongoing funding of fossil fuel projects," said Steve Kretzmann, executive director of Oil Change International, a nonprofit group based in Washington that advocates for clean energy and against foreign aid to the international oil industry.

"It is not a credible institution for managing these funds, especially given its poor environmental track record," added Karen Orenstein, extractive industries campaign coordinator with the environmental nonprofit Friends of the Earth.

"If the World Bank is truly interested in being a leader in fighting climate change, they shouldn't start out by financing a huge mega-coal project," she said.

The International Finance Corp., which is a member of the World Bank, announced Wednesday it would help fund Coastal Gujarat Power Ltd.'s Tata Mundra project, a 4,000-megawatt coal-fired power plant being developed by India's top multinational company, Tata Power Group.

The plant, according to the IFC, will expand access to electricity in five western and northern India states, bringing affordable power to about 16 million domestic consumers. Bank officials noted in a press release that their aim is to "balance these energy needs with concerns about climate change."

IFC claims it will be India's most energy-efficient plant

IFC officials noted that about 400 million people in India have no access to electricity, and said the country needs to expand generation capacity by 160,000 megawatts over the next decade. They argued that while the Tata plant will emit 23 million tons of CO2, "its use of supercritical technology will make it India's most efficient coal-fired plant."

"With fossil fuels likely to remain a key contributor to the world's electricity needs, IFC intends to support only highly efficient coal-fired projects, such as Tata Mundra, that have a relatively lower carbon footprint than existing coal plants," the IFC said in a press release.

Green groups bristled at the contention that the plant is energy efficient, noting it will emit 700 million tons of carbon dioxide over its lifetime.

The power plant "is neither pioneering technology nor the best alternative for supplying power to the region," eight groups, including Friends of the Earth and the National Wildlife Federation, noted in a letter this week to the IFC.

"It is clear that India does have a great need for additional power, especially for millions of people living in under-served communities," they wrote. But, they argued, "there are scalable, economically-feasible alternatives to coal," including solar thermal power. At the same time, groups noted, the plant will be eligible for carbon credits under a Kyoto mechanism.

Others prefer smaller-scale technology transfers

Orenstein called it "the height of irony" that the World Bank approved the power plant just as it was trying to position itself on the Climate Investment Fund.

Neither the World Bank, officials with the IFC nor representatives from Tata Power returned calls for comment.

The Climate Investment Fund is the umbrella group that includes both the disputed money for adaptation and another, much larger, fund for technology transfer. That fund, the Clean Technology Fund, is now being eyed at $5 billion to $10 billion.

Not all groups are opposed to the World Bank's involvement in the adaptation funds. Angela Anderson, director of the global warming program for the Pew Environment Group, said she agrees that there are number of troubling questions about the bank's plan. And, she said, developing countries will likely be more comfortable seeing the World Bank help with technology transfer than with smaller-scale aid programs.

Still, she said, there is a role for the world's largest source of development assistance in fighting climate change.

"We're really going to have to use every tool in the toolbox," she said, "and the World Bank is an available tool."