Public Policy

Ending oil aid can happen through a number of different policy vehicles. At the national level, governments can take action to end bilateral support for the oil industry. In addition, international bodies, such as the World Bank and the Organization for Economic Cooperation and Development (OECD), can establish policies which limit or prohibit their support to expanding oil operations in countries around the world. Following are key examples of how public bodies are working toward ending oil aid.

The End Oil Aid Act in the United States

On April 17, 2007, U.S. Congressman Maurice Hinchey (Democrat, New York) introduced the End Oil Aid Act (H.R. 1886). This bill would limit the use of foreign assistance funds to subsidize the overseas operations of oil and gas companies. Specifically, the bill would make it U.S. policy to oppose oil and gas projects proposed by the World Bank and other multilateral development banks. In addition, the bill would prohibit U.S. export development agencies – the Overseas Private Investment Corporation and the Export-Import Bank – from providing any financing for oil and gas field development projects.

Resources:

Media coverage on the End Oil Aid Act:

The Early Day Motion in the United Kingdom

Early Day Motion 1200 (22 March 2007) calls for an end to aid for oil companies in developing countries provided by the UK government Department for International Development. To date this year 50 MPs have signed EDM 1200.

Plan B, a coalition of UK non-governmental organization urging DFID to stop using development aid to fund oil and gas companies, have asked DFID to make a strategy statement on energy and climate change.

An Early Day Motion is a petition signed by MPs. The Motions seldom end in parliamentary bills, but they are useful in that MPs supportive of their ends are ‘flushed out’.

Last year’s Early Day Motion, EDM 407, on similar lines was signed by 137 UK MPs, well above average.

EDM 1200
DEPARTMENT FOR INTERNATIONAL DEVELOPMENT’S STRATEGY ON CLIMATE CHANGE AND ENERGY
22.03.2007
Sponsored by Michael Meacher MP
That this House notes that the Department for International Development (DFID) provides both financial and political support for oil companies in developing countries through multilateral organisations; further notes that this support is inconsistent with its mandate to alleviate poverty and help mitigate the effects of climate change in those countries, and that increasing access to low carbon energy is critical to achieving the Millennium Development Goals; and calls on DFID to produce a strategy on energy and climate change which contribute to overall reductions in carbon dioxide emissions by phasing out support for oil and gas projects, massively increasing support for renewable, decentralised energy supplies, and reporting regularly to Parliament on the impact of its energy and climate change strategy on carbon dioxide emissions and poverty alleviation as part of its duties under the International Development (Reporting and Transparency) Act 2006.

World Bank Group Extractive Industries Review

The World Bank Group (WBG) announced in 2000 that it would conduct a comprehensive review of its activities in the extractive industries (EI) sector (oil, gas, and mining production), in response to concerns expressed by a variety of stakeholders, primarily environmental and human rights organizations. The review included an independent evaluation of WBG activities in EI, a CAO report, and a separate independent stakeholder consultation process (Extractive Industries Review) headed by Dr. Emil Salim, concluded in January 2004.

Among its final recommendations, the EIR expert panel urged the World Bank to phase-out support for oil by 2008. Unfortunately, the Bank’s management did not accept this recommendation in its response. In fact, from FY05 to FY06, the Bank’s support for fossil fuel projects, including oil, increased by 93% from $450 million to $869 million. (See data compiled by Bank Information Center.)

European Parliament on the WBGs Extractive Industries Review

On March 31, 2004, the European Parliament drafted legislation to endorse the Extractive Industries Review’s report because its findings concern “concern European banks, the EIB and the EBRD, because many operations are jointly financed by the International Finance Corporation and the European banks and there are also implied consequences for the export credit agencies of the member countries.” The EU Parliament calls on the Commission, Council and Member States to support notably the following demands of the EIR and to bring all their influence to bear with the aim of their full implementation to align the WBG’s energy sector priorities with its environmental and social mandate, and simultaneously increase its investments in renewable energy projects that can help meet the energy needs of the world’s poor,

The legislation notes that it represents almost 30% of the vote on the Board of the World Bank and the International Monetary Fund. The legislation concedes that the “EIR report concludes that there is a role for the World Bank Group in the oil, mining and gas sectors, but only when the right conditions are in place to promote poverty reduction and sustainable development.”

The Parliament calls on the “Commission to adopt a process in order to reflect the spirit of the EIR recommendations in the EU environmental and social guidelines for economic and development cooperation and notably in its cooperation with the IMF, the World Bank, the EIB and the EBRD. Furthermore, it calls for oil companies to comply with the Extractive Industries Transparency Initiative and for steps to be taken to ensure that national oil companies are subject to the same levels of transparency as regards payments and revenues as private companies.”