In the aftermath of the third- and fourth-most devastating hurricanes in Atlantic basin history, people are beginning to talk about the connections between extreme weather events and global warming. But connecting the dots between flooded New Orleans, Beaumont and the World Bank Group’s eadquarters in Washington DC seems too big a leap for most people to make. It shouldn’t be. Here’s why.
In August of 2004 the World Bank’s board of directors rejected a proposal from a consultant it had hired. This consultant was not some wild-eyed radical — he was the former environment minister of Indonesia under Suharto, Emil Salim. Among Salim’s suggested proposals — drawn up after three years of global consultations with business, civil society and government officials — was a recommendation to stop investing in coal immediately, and phase out of oil by 2008. Salim reasoned that these fossil fuels are among the most carbon-intensive of fuels, and contribute significantly to climate change, which as we see in New Orleans just as we see in Bangladesh or Sudan, threaten the poorest the most.
After rejecting this straight-forward advice, a truly surprising thing happened at the meeting of the Group of Eight (G8) industrial countries in Gleneagles, Scotland in July: The World bank was asked by the G8 “to lead the way around a new framework on climate change.”
The World Bank’s legacy of hypocrisy and inaction when it comes to addressing the problem of climate change within its own institutional walls is astonishing. But the G8 either hasn’t noticed or doesn’t care.
At the G8 meeting in Scotland in July, new World Bank President Paul Wolfowitz, former architect of the Iraq War at the Pentagon, announced that on climate management, the Bank has been asked to create a new framework for mobilizing investment in clean energy and development. And at the World Bank’s annual meetings in September, it was clear that this new initiative has garnered a lot of staff time and attention internally.
Suddenly the Bank is joining the U.S., Australia and others who continue to subsidize fossil fuels while short-changing renewables in calling for a new framework outside the multilateral framework endorsed by a majority of the worlds countries under the United Nations Framework Convention on Climate Change. The correct institution to lead the way forward is the UN — a multilateral body, not a group controlled by economic interests.
In addition to climate change as a final, deadly consequence of fossil fuel combustion, studies show investing in the extractive industries in developing countries only fosters corruption, poverty, human rights abuses and environmental degradation — all the things the Bank claims it is fighting while doing nothing to deliver energy to the two billion poor living in rural areas the Bank claims to serve.
But this is only one of an array of hypocritical acts by the World Bank. The Bank trumpets its commitment to increase its renewable energy lending by 20 percent per year. But read the fine print: this 20 percent claim is from its lowest baseline ever. Meanwhile, Bank financing for fossil fuels outpaces renewable energy financing by 17 to 1. This skewed set of priorities continues to send the wrong market signals to the renewable energy industry that it’s a bit player on the global energy scene while underwriting one of the most heavily subsidized industries on the planet.
Another thing to note: according to the World Bank’s web page on this new initiative, they are engaged in a new commitment to energy efficiency for the fossil fuel sector. Yet, those who know the World Bank’s history know if it had simply implemented its energy efficiency guidelines laid down in 1993, rather than continually downgrading them and making them non-binding, these past 12 years would have seen a reduction of global greenhouse gases.
Finally, the World Bank is positioning itself to profit handsomely from the so-called “carbon trading” business, charging upwards of 5 percent on all transactions it arranges between countries or industries. Few World Bank carbon trading projects are more than a green sheen on business as usual. And business as usual includes not just fossil fuel investments but also projects clearing forests, developing highways, and subsidizing private transport and energy-intensive industry in the developing world all of which destabilize the world’s climate even further.
World Bank-watchers have seen how poorly the Bank has done in carrying out any sincere efforts to diminish its own significant climate impact. In fact, the Bank has yet to calculate the full — and significant — global warming impact of its own investments, though it can tell you down to a ton of carbon how much it is saving through its paltry renewable energy portfolio.
Unfortunately, if they gain any power as a result of this G8 mandate, it could spell disaster for the old U.N. framework which has taken ages, thanks to the U.S. and the oil industry that holds U.S. politicians purse strings, to inch toward climate stability. Placing climate change, the world’s most urgent problem, in the hands of a bank that is profiting from financing fossil fuels is like telling an alcoholic to create a framework for sobriety.
If the World Bank is sincere about taking any leadership role on climate change, it should follow the recommendations laid down a year ago by its own consultant, and get out of financing fossil fuels. Anything else is a lot of hot air.