The World Bank’s proposed Climate Investment Funds (CIF) are stirring controversy among governments and NGOs, largely because of the Bank’s record as the world’s largest multilateral lender for fossil fuels. NGOs are especially concerned that the top-down, donor-driven funds will conflict with and undermine parallel efforts under the auspices of the UN’s Climate Convention.

Bangkok statement on wbg climate funds

World Bank Climate Funds Primer From TWN

The US House of Representatives missed an important opportunity to end oil aid in a bill [Acrobat pdf] that will “re-authorize” the Overseas Private Investment Corporation (OPIC) – one of two agencies in the US government that uses taxpayer dollars to provide financing, insurance and guarantees to US businesses wanting to expand their operations in foreign countries.The bill’s report language “discourages” OPIC from providing any assistance “for projects that involve the development, extraction, processing or transportation of crude oil.” It also states that “limited public resources for foreign assistance should focus on the many critical needs of development countries” and “extractive industries have significant access to private capital markets and increasingly do not need OPIC assistance.” While these are important and significant assertions, unfortunately, the report language is non-binding, acting as guidelines to OPIC rather than legal mandates.

This year, the House could have taken an important step to close loopholes in OPIC statute which, despite restrictions on directly financing the surveying and extraction of oil, allow indirect financing of these activities and the provision of any type of support for other oil-related operations. For example, in 2005 alone OPIC provided $580 million in support for oil and gas projects, including direct financing for pipelines. In the past several years, OPIC has used public funds to subsidize the overseas operations of many oil giants such as Exxon, BP and Unocal/Chevron.

The OPIC Reauthorization Bill (H.R. 2798) [Acrobat pdf], passed by the House on Monday and now being debated in the Senate, not only fails to rollback subsidies to the international oil industry, but falls short when it comes to clear directives in other areas:

• While the House bill mandates that OPIC “establish a goal of substantially increasing its support of projects that use, develop, or other-wise promote the use of clean energy technologies” [emphasis added] it fails to clearly define a portfolio target, giving large discretion to OPIC to determine what is meant by a “substantial increase.”

• While the House bill require that OPIC notify Congressional committees 30 days before providing support to a project in the extractive industries, this only applies to projects in which OPIC assistance is valued at $10,000,000 or more. This is a seemingly high threshold.

• While the House bill requires that OPIC “gives preference to” a project in which both the investor and host country implement the internationally recognized Extractive Industries Transparency Initiative (EITI) principles, it only requires that either the investor or country meet EITI principles “or substantially similar principles and criteria.” As written, such a provision will do little to change the way OPIC currently operates.

It is disappointing that the House OPIC Reauthorization Bill could not make clear commitments around such things as a defined target for lending to renewable energy projects and phasing out support to oil companies which have adequate access to private capital. We can’t fight climate change and invest our public resource in clean, renewable energy technologies while, as the same time, continuing to subsidize the oil industry. While the US must carry the responsibility for lowering its own emissions, our public foreign assistance should be geared towards helping impoverished countries establish renewable energy infrastructure rather than following the current policy and creating an oil-based infrastructure that will result in these developing countries producing harmful greenhouse gases.

• See the entire bill: H.R. 2798 Overseas Private Investment Corporation Reauthorization Act of 2007. [Acrobat pdf] (See the end of the summary of Section 8, on page 20, for the language that “discourages” OPIC investment in oil operations.)

• See an IPS article on the bill: OPIC Extension Tied to Terror and Environment.

Today, over 30 U.S. environmental, development and faith-based organizations sent a letter to the U.S. House of Representatives (Acrobat .pdf) calling on Members to support the End Oil Aid Act.“The U.S. can play a critical role in fighting our addiction to oil, alleviating global poverty and combating climate change as we move toward a clean energy future. Using taxpayer dollars to support the oil industry undermines these goals, and Congress should end this international ‘oil aid.’”

The full text of the letter is below and a copy of the letter including a list of signatories is available here (Acrobat .pdf).

__________________________________________

June 5, 2007
Re: Cosponsor H.R. 1886, the End Oil Aid Act

Dear Member of Congress:

On behalf of the thousands of members of our organizations, we urge you to cosponsor H.R. 1886, the End Oil Aid Act. This bill, introduced by Rep. Hinchey (D-NY), would limit U.S.-funded international financial institutions and export development agencies from subsidizing the oil and gas industry’s overseas operations.

Each year, financial institutions including the World Bank, the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank (Ex-Im) provide billions of dollars to the oil sector. This “oil aid” subsidizes an already-profitable industry, including companies such as ExxonMobil, Halliburton, and Chevron, which have recently reported record profits.

Moreover, these subsidies contribute to significant social and environmental problems and can undermine the core purposes of development assistance. Oil projects have been shown to increase conflict and instability, exacerbate corruption and threaten the land and livelihoods of local and indigenous communities in many developing countries. Oil aid fuels global warming, creating impacts that will disproportionately harm impoverished countries which lack the systems and infrastructure to adequately adapt to droughts, severe weather events, and agricultural disruption. In addition, soaring oil prices undercut the benefits of debt cancellation by draining far more money out of impoverished countries than cancelled debts are able to contribute. Every country can choose to develop its own resources. However, scarce foreign assistance dollars should be used to fight poverty and help developing countries pursue clean energy pathways instead of promoting oil and gas projects.

H.R. 1886 would help meet these goals. This bill would limit U.S. support for the international oil industry by prohibiting OPIC and Ex-Im from financing oil and gas projects. Since 1995, these agencies combined have provided more than $20 billion in financing to oil and gas companies. The bill would also make it U.S. policy to oppose oil and gas projects financed by multilateral development banks such as the World Bank. While the World Bank’s own panel of experts concluded in 2003 that it should phase out its support for oil, the Bank provided over $800 million in financing for fossil fuel projects in fiscal year 2006 alone.

The U.S. can play a critical role in fighting our addiction to oil, alleviating global poverty and combating climate change as we move toward a clean energy future. Using taxpayer dollars to support the oil industry undermines these goals, and Congress should end this international “oil aid.” We urge you to cosponsor H.R. 1886, the End Oil Aid Act.