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.

—————————

[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.)

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.

A coalition of about 30 U.S. development and environmental NGOs called on President Bush today to stop standing in the way of a landmark deal on climate change at the upcoming G8 Summit in Heiligendamm, Germany.The coalition, which includes Oil Change International, Friends of the Earth U.S., Oxfam America, the Sierra Club, Action Aid USA and many others, argued that U.S. intransigence is an obstacle to international efforts to avoid dangerous climate change and a threat to global efforts to fight poverty.

In an open letter to President Bush, the coalition argued that: “Over the past century, the United States and other wealthy countries have been and continue to be responsible for a disproportionate amount of the greenhouse gas emissions that cause global warming.

With only five percent of the world’s population, the United States emits about 25 percent of greenhouse gases generated by human activity. Over the course of history, its responsibility is even greater. The G8 nations, which have emitted the greatest volume of greenhouse gases, have a unique responsibility to take action now not only to reduce their contributions to global warming, but also to provide assistance to help address the consequences that developing countries are increasingly facing.”

Among other things, the coalition argued that: “The world’s wealthiest countries should end domestic and international subsidies to oil and other fossil fuels and support the development of sustainable energy alternatives in developing countries.”

The coalition also argued that roughly $50 billion dollars a year would be needed to help developing countries deal with the impacts of global warming if action is not taken immediately, and that those most responsible creating the problem, such as the United States, should take responsibility for providing these funds.