Bank Blamed for Fuelling Climate Chaos
(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
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
- 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
- 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.
PART OF THE CLIMATE PROBLEM
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
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
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
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
"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.
EXCLUSION OF AFFECTED COMMUNITIES
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
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
"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."
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