October 19, 2007, Washington, DC. – More than 200 organisations from 56 countries are calling on the World Bank and other international financial institutions to end subsidies to the oil industry. In a statement released today, the groups refer to ‘oil aid’ as one of the most glaring barriers to fighting climate change and addressing energy access in developing countries. [1]

As the heads of the World Bank gather in Washington this week to discuss their energy lending and climate change strategy, the latest annual report of the International Finance Corporation indicates that little has changed in the institution’s approach. In 2007, the private-sector lending arm of the World Bank provided more than $645 million to oil and gas companies. This is an increase of at least 40 per cent from 2006. [2]

“The World Bank’s approach to climate change and energy is inconsistent and contradictory,” said Jennifer Kalafut of NGO Oil Change International. “Despite commitments to cut global greenhouse gas emissions, it continues to increase support for oil extraction projects around the world.”

In 2006, the World Bank increased its energy sector commitments from $2.8 billion to $4.4 billion. Oil, gas and power sector commitments account for 77 per cent of the total energy sector programme while ‘new renewables’ [3] account for only 5 per cent. [4]

“The oil industry includes some of the most profitable companies in the world,” said Petr Hlobil of the CEE Bankwatch Network based in the Czech Republic. “Why is the World Bank using development assistance earmarked for poverty reduction to subsidise oil, when investment is desperately needed in renewable energy sources?”

“Investing in renewable electricity will save 10 times the fuel costs than if we stayed on a ‘business as usual’ course with fossil fuels,” said Daniel Mittler from Greenpeace International. “We can cut global CO2 emissions by 50 per cent by 2050, while addressing issues of energy access for the poor and maintaining global economic growth.”

The Bank’s support to the oil sector is also highly inequitable. While the majority of its oil projects are designed for export to wealthy countries, 1.6 billion people, including 500 million in sub-Saharan Africa, still lack access to electricity.

“By funding these oil projects the World Bank is undermining its own goals of fighting energy poverty and reducing greenhouse gas emissions. It is also perpetuating problems of conflict and human rights violations often associated with extractive projects, as in the case of the Chad-Cameroon pipeline,” said Korinna Horta from Environmental Defense, a U.S-based NGO.

The hundreds of groups and affected communities that have signed this statement are demanding that the World Bank and other public financial institutions stop financing oil projects. They assert that development assistance should be tackling the issue of energy poverty and building clean energy pathways rather than subsidising big oil.

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[1] The Global Call to End Oil Aid is endorsed by more than 200 organisations from 56 countries. It is available in English, French, German, Spanish, Portuguese and Russian at www.endoilaid.org/globalcall.

[2] In FY06 the International Finance Corporation (IFC) provided $454.4 million in financing to fossil fuels. See statistics [Microsoft xls.] generated by Bank Information Center. The IFC’s FY07 Annual Report is available on the IFC’s website.

[3] ‘New renewables’ is a term used to cover renewable energy such as wind, solar, and mini-hydro. It does not include large hydropower (>10 MW) nor energy efficiency.

[4] Energy to reduce poverty: the urgency for G8 action on climate justice [Acrobat .pdf], page 7, Practical Action, 2007.

Contacts:

Jennifer Kalafut, +1 202 415 4047 (in Washington, D.C.)
Daniel Mittler, +49 171 876 5345 (in Washington, D.C.)
Petr Hlobil, + 420 60 315 4349 (in Prague, Czech Republic)
Korinna Horta, +1 202 431 9406 (in Washington, D.C.)

On October 15, in the Hague, the World Bank Campaign Europe held a public hearing on the World Bank in cooperation with the Permanent Peoples’ Tribunal. The hearing looked at two “cases” regarding economic conditionality and financing for fossil fuel projects.

Expert witnesses included Charles Abugre (Development Economist, Ghana), Maartje van Putten (African Development Bank, Netherlands), Marcos Arruda (Policy Alternatives for the Southern Cone, Trans National Institute), Francesco Martone (Senator, Italy) and Medha Patkar (National Alliance of People’s Movements, India).

Drawing from the testimonies and its own experience and analyses, the Panel’s draft statement includes recommendations that:

a. There is a need and urgency to build upon local resistances and alternatives to the dominant economic free-trade and growth oriented paradigm, in order to strengthen alliances and movements, while confronting World Bank culture and ideology, challenging its political and economic role;

b. Commons are for the common good and not for corporate profit. Therefore, the Bank should abstain from supporting the privatisation of the commons and of life-supporting resources;

c. Socio-economic audits of the World Bank should be undertaken and supported through similar Hearings and Tribunals. In cases of conflicts generated by World Bank projects or policies, a moratorium might be established to enable fair and informed resolutions of the conflicts;

d. The concepts of social and ecological debt should be further developed and operationalized by organizing a session of the PPT on the historical, social, ecological and illegitimate debt;

e. Parliaments and governments should initiate independent debt audits in order to identify historical responsibilities, and the social, economic and environmental , as well as juridical implications of debt for peoples’ rights and self-determination.

For more information, see www.worldbankcampaigneurope.org.