Financing
Climate Change
 Climate change is a threat to all of humanity. Its effects can be seen around the globe with rising temperatures, irregular rainfall patterns, rising sea levels, extreme weather conditions and melting ice caps. It is said to be a truly a global challenge which requires a global response, however a closer look at the systemic causes of the problem especially with regards to the global debt crisis shows that while the actions of the developed world are causing climate disaster in poor countries, it is the poor that will bear the costs both ecologically and financially.
We will only be successful in mitigating the effects of climate change if we understand and acknowledge the processes that have exacerbated the physical production of excessive amounts of greenhouse gases.
An unsustainable market-based approach to development which focuses on growth through exports has vastly increased global carbon emissions. Policies encouraging the exploitation of non-renewable resources and energies — in many cases pushed by institutions like the World Bank — have led to expansion of extractive industries, more intensive use of land for agro-export, and forest clearing to make way for "export land" and the export of wood.
These processes have further been exacerbated by the economic conditions applied to Southern countries in order for them to access further credit (which in many cases they need to repay original loans), or to receive “debt relief”.
|
The World Bank and Climate Change
Despite claims to the contrary, the World Bank remains heavily committed to investments in carbon-intensive energy projects and reforms in energy sectors that focus on large-scale, privatised energy provision without corresponding safeguards to ensure universal access.
For decades, the World Bank has helped open developing countries’ fossil fuel sectors in order to satisfy the growing energy needs of the Northern industrialised countries.
In 1981, under pressure form the Regan administration, the US Treasury Department reviewed the Bank’s energy lending program and argued that the Bank should play a lead role in the "expansion and diversification of global energy supplies to enhance security of supplies and reduce OPEC market power over oil price".
Since then, the World Bank Group has been implementing these directives. From 1992 through to 2004, the World Bank Group approved US$11 billion to 128 fossil fuel extraction projects in 45 countries — all of which contributed over 43 billion tons of carbon emissions.
The result has been worsening social, political and economic imbalances in developing countries and pollution of the global environment. Despite huge financing in dirty energy projects, 2.4 billion of the world’s poorest people still lack access to efficient, clean cooking and heating fuels, and 1.6 billion are still without electricity.
|
|
| |
Examples of conditional policies pushed on developing countries that have exacerbated climate change:
- Financial and trade reforms which often destroy small-scale agriculture, leaving affected countries more reliant on exports, meaning more intensive farming and more transportation.
- Increasing access for foreign investment (See Under the Influence, Jubilee Australia report 2007, demonstrating the links between IFI conditionality and the increase in deforestation in Indonesia and PNG).
- Decreasing restrictions and regulation around foreign investment, giving states less legal potential to protect the environment.
- Downsizing state agencies through privatisation and imposing cuts on public spending, thereby reducing the ability of Southern countries to gear up investment in mitigating technologies/ alternative energies and reducing their ability to deal with the environmental devastation and other impacts of climate change.
|
|
|
Unless there is a significant shift in these policies, the World Bank should leave climate change policy to institutions with a less problematic record in the issue.
Concern as Australia supports World Bank involvement in Climate Change funding
Following the United Nations Bali Climate Conference in December 2007, the World Bank, together with other Regional Development Banks, began a series of consultations to lobby for the establishment of a portfolio of "Strategic Climate Investment Funds", which would be institutionalised with the approval of the G8 leaders.
In June 2008 ministers of the G8 countries met in Japan and agreed to the “G8 Action Plan for Climate Change to Enhance the Engagement of Private and Public Financial Institutions”. In their final statement, ministers supported the launch of the new Climate Investment Funds (CIFs) by the World Bank, which will work alongside existing bilateral and multilateral efforts until a post-2012 framework under the UN Framework Convention on Climate Change (UNFCCC) is implemented.
In July the World Bank Board gave approval to the CIFs and on 26 September Australia was one of 10 donors to pledge a combined US$6.1 billion.
The Climate Investment Funds proposed by the World Bank include:
i) The Clean Technology Fund
ii) The Forest Investment Fund
iii) The Adaption /Climate Resilience Pilot Fund
iv) Strategic Climate Fund to deliver donor financing for climate mitigation and adaption projects
The proposed targeted climate investment funds will mean a projected US$7 to $12 billion coming through donor contributions to the respective World Bank trust funds, implemented in collaboration with the regional development banks.
Australian statement
The following joint NGO Statement explains in more detail why Jubilee Australia is urging the Australian Government not to support the launch of the World Bank initiative.
| |
October 2008
TO THE AUSTRALIAN GOVERNMENT
We, the undersigned representatives of civil society groups in Australia, raise the following serious concerns about CLIMATE INVESTMENT FUNDS managed by the World Bank and other regional development banks, in response to the global climate crisis:
|
|
| |
1. The CIF initiative undermines the already sufficient Adaptation Architecture under the UN Nations Framework Convention on Climate Change (UNFCCC)
The Garnaut Report, released this year, gives clear support for the existing UNFCCC Architecture to manage and distribute funds for climate adaption.
The US, Canada and Japan are trying to undermine the UNFCCC by supporting processes outside of the UN [including World Bank Climate Investment Funds] that are unnecessary and waste valuable time. Professor Garnaut’s report clearly rejects the approach of these countries, and their attempt to use the World Bank mechanism to divert funds from the already functioning UNFCCC Adaption Fund.
In general, World Bank policies in the past, many of which are continuing today, have been responsible for exacerbating the climate crisis. Until the World Bank demonstrates that its approaches have helped contribute to climate stabilisation, it should not be involving itself as a leader on climate policy.
2. The CIF initiative does not provide "new and additional financial resources" as agreed to under the United Nations Framework Convention on Climate Change (UNFCCC)
The substantial part of the climate investment funds will be counted as "official development assistance" (ODA) by donor countries, which means there will not necessarily be additionality in the overall development financing to developing countries.
This goes against existing commitments under the UNFCCC which states that developed countries should provide new and additional financial resources to meet the agreed full costs incurred by the developing countries in meeting their climate change commitments.
Given that the global climate crisis has been largely created by industrialised countries of the North, there is no justification for diverting much needed funding away from existing and future social and economic development and poverty alleviation programs in developing countries.
3. The World Bank has given insufficient attention to the grave concerns expressed by developing countries
As mitigation of climate change is a global concern, it is vital that proposals to address it are opened to wide ownership and engagement from civil society and developing countries. Under the UNFCCC it was agreed that multilateral funding for climate adaption should ensure developing country ownership and build international trust.
Developing countries have already expressed grave concerns. At the plenary sessions of the UNFCCC’s ad hoc working group on long term cooperation in Bangkok, the G77 and China criticised the CIF initiative. Individual developing countries have also expressed alarm that the Bank initiative would undermine their efforts in the UNFCCC.
While we recognise that efforts have been made to improve the original proposal, we are alarmed that the World Bank has offered a minimal public comment period, in English only, on an issue of global significance.
4. The CIF initiative means that countries affected by climate change, but not responsible for it, will be made to pay for its impact
It is currently proposed that the Pilot Program for Climate Resilience will offer loan finance for adaption. This is grossly unfair. Today’s climate crisis and the resultant sufferings of the poor countries have been largely created by industrialised countries of the Global North. Why should recipient countries be made to pay for dealing with a problem that has been caused by developed countries?
Further, given that the public indebtedness of developing countries has, over recent decades, exacerbated the climate problem (see point 5 below), extending finance in the form of loans is will be counterproductive in the effort to promote the shift to sustainable, clean, safe and low carbon technologies in developing countries.
5. The World Bank Group is STILL a major funder of carbon-intensive projects — divesting itself from these projects would be a FAR more effective way for the Bank to address climate change
Despite claims to the contrary, the World Bank remains heavily committed to investments in carbon-intensive energy projects and reforms in energy sectors that focus on large-scale, privatised energy provision without corresponding safeguards to ensure universal access.
The prime investment of the World Bank and other multilateral banks is energy; exploration of fossil fuel and exporting to the countries of the North.
From the 1992 Earth Summit through to late 2004, the World Bank Group approved USD 11 billion to 128 fossil fuel extraction projects in 45 countries — all of which contributed over 43 billion tons of carbon emissions.
For decades, the World Bank has helped open developing countries’ fossil fuel sectors in order to satisfy the growing energy needs of the Northern industrialized countries. In 1981, under pressure form the Regan administration, US Treasury Department reviewed the Bank’s energy lending program and argued that the Bank should play a lead role in the ‘expansion and diversification of global energy supplies to enhance security of supplies and reduce OPEC market power over oil price’. Since then, the World Bank Group has been implementing these directives. The result has been worsening social, political and economic imbalances in developing countries and pollution of the global environment. Despite huge financing in dirty energy projects, 2.4 billion of the world’s poorest people still lack access to efficient, clean cooking and heating fuels, and 1.6 billion are still without electricity.
A similar case can be made regarding Forestry Policy in several developing countries (see Under The Influence, Jubilee Australia Report 2007).
Overall, international financial institutions invest 17 times more to fund projects and policies that aggravate climate change, than in financing the energy efficient sector. The inconsistencies emphasised by civil society groups between the World Bank’s rhetoric on climate change and its operational policies and practice should not be dismissed.
We urge the Australian government not to support the launch of the World Bank initiative until and unless the above concerns are fundamentally addressed.
Signed:
* JUBILEE AUSTRALIA
* ASIA PACIFIC PROGRAM, AUSTRALIAN CONSERVATION FOUNDATION (ACF)
* RESULTS Australia
* AID/WATCH
* AUSTRALIAN FAIR TRADE AND INVESTMENT NETWORK (AFTINET)
* GLOBAL TRADE WATCH
* COLUMBAN MISSION INSTITUTE Centre for Peace Ecology and Justice
* EDMUND RICE CENTRE
* HOUSEHOLDER’S OPTIONS TO PROTECT THE ENVIRONMENT (HOPE) INC.
More reading
- World Bank: Corporocracy and Carbocracy, by MD Shamsuddoha and Rezaul Karin Chowdhury, Equity & Justice Working Group, Bangladesh 2008.
- Political Economy of Bali Climate Conference: A Roadmap of Climate Commercialization, by MD Shamsuddoha and Rezaul Karin Chowdhury, Equity & Justice Working Group, Bangladesh 2008.
- Under The Influence: How IFIs Fund Deforestation in Asia Pacific, by Jubilee Australia 2007.
- Australian Action on Climate Change: A Guide for Garnaut and the Government, Make Poverty History 2008.
|
|
|
