Chart of World Bank fossil fuel and extractive industry lending 2005-2008

Wed. June 25, 2008

HILL BRIEFS

Bush-Backed Energy Fund Stalled By Frank, Pelosi

Citing concerns by House Speaker Pelosi that an international Clean Technology Fund backed by the Bush administration might be used to build coal-burning power plants, House Financial Services Chairman Barney Frank postponed a markup on the bill Tuesday.

The administration’s proposal to contribute $2 billion over three years to the fund, which would be managed by the World Bank to help developing countries adopt cleaner forms of energy, had been approved by the Financial Services Monetary Policy Subcommittee despite strong opposition from environmental activists and some panel members.

Environmentalists say the World Bank has a history of supporting so-called “clean” technology for coal-fired plants that are a big source of global warming emissions.

Frank removed the bill from the full committee’s agenda Tuesday, saying that Pelosi wants to first have discussions about it with Treasury Secretary Paulson.

But US contributions are far from assured, and will not be appropriated until Spring 2009, at the earliest, making us suspect that the approval was rushed through in order to be able to present this during the upcoming G8 Summit.

See Reuters article:

world-bank-approves-climate-funds-before-g8-summit-tue-jul-1.doc

Bangkok statement on wbg climate funds

World Bank Climate Funds Primer From TWN

“As governments debate how best to fight climate change, they continue to pour billions into the oil industry”, said Steve Kretzmann, Executive Director of Oil Change International.

“The World Bank, aid agencies, and other institutions have better things to do with their money than support wealthy oil companies. The sad fact is that Northern aid agencies are encouraging exactly the same industries that have caused climate change, while neglecting support for clean renewable energy. They are still funding more of the problem than the solution”.

The new report, called “Aiding Oil, Harming the Climate,” reveals that the U.S. is the #1 provider, with at least $15.6 in oil aid distributed. However, European countries collectively, provided $16.5 billion. Of the multilateral institutions, the World Bank Group is the largest, with about $8 billion, mostly in loans, since 2000.

In 2004, Dr. Emil Salim, the Eminent Person who headed up the World Bank’s Extractive Industries Review, wrote: “The World Bank Group should phase out investments in oil production by 2008 and devote its scarce resources to investments in renewable energy resource development,”

Max Christian, Advisor to the Ecuadorian Government in Bali at the Climate Convention’s 13th Conference of Parties, stated that “International financing is needed for developing countries who are oil exporters, but that financing is best directed to preserving cultural and bio-diversity, protecting ecological integrity and leaving oil in the ground.”

At the World Bank’s annual meetings several months ago, more than 200 groups from 56 countries signed the Global Call to End Oil Aid.

The database and report are available online at http://oilaid.priceofoil.org

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.)

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.