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ENERGIA News Issue 4, October 1997

New Study Reveals World Bank Subsidising Climate Change

Daphne Wysham

G-7-based Oil, Gas and Coal Corporations Profiting from “Poverty Alleviation” Moneys

At a time when greenhouse gas emissions are rising rapidly around the world, a report released in June 1997 shows that oil, gas and coal projects financed by the World Bank will, over the life of these projects, release more carbon dioxide than is now being produced per year by the entire planet.

“Changing the Earth's Climate for Business”, a report by the Institute for Policy Studies and the International Trade Information Service (U.S.), in coalition with the Halifax Initiative (Canada) and Reform the World Bank Campaign (Italy), examines fossil fuel projects financed by the World Bank since the Climate Convention was signed by most of the world's leaders in Rio in 1992. The report's findings show that the World Bank Group has not heeded the warnings of Rio: instead it has financed fossil fuel projects around the world whose cumulative emissions contribute at least 36 billion tons of carbon dioxide into the Earth's atmosphere; current annual emissions of carbon dioxide for the planet are now about 28 billion tons.

It is the pace of World Bank financing - about 7 billion tons of carbon dioxide per year - that is most shocking’, said report co-author Daphne Wysham, coordinator of IPS's Sustainable Energy and Economy Network. ‘This is not only environmentally unsustainable - it is the height of hypocrisy for an institution entrusted with poverty alleviation, sustainable development, and climate change mitigation.

The World Bank is the world's largest development institution; it is also home to the only global institution thus far established to mitigate climate change, the Global Environmental Facility (GEF). The IPS study shows that the Bank spends over 100 times as much on fossil fuel development as on the entire GEF budget for projects that “avert” greenhouse gas emissions.

The Climate Convention places no restrictions on developing countries’ CO2 emissions, so that they may address the higher priority of poverty alleviation among their populations. Yet the IPS study shows that this loophole is being exploited for private gain by some of the world's most powerful corporations. In over 90 percent of the procurement contracts awarded by the Bank for work in developing countries, G7-based oil, gas and coal corporations have played a direct capital role.

Gender Implications

These lending policies have gender implications, partly because of their impact on poverty alleviation lending by the World Bank. About 78 % of all Bank energy lending goes toward fossil fuels, most being consumed by industry. Meanwhile, less than 9 % of all World Bank energy lending is devoted to addressing the growing and desperate energy needs of the 2 billion of the world's poorest (World Bank 1995, p.59). As a consequence, in some regions of developing countries, women (traditional energy managers in developing countries) are walking up to 15 miles in search of fuel wood - a time and energy drain for them that translates into reduced time for other critical tasks. Or they are using cow dung for cooking fuel - putting their health and that of their children at risk, while depriving the soil of a vital source of nutrients.

To address such gender issues, IPS has also recommended that the World Bank should incorporate the recommendations of the External Gender Consultative Group or another appropriate panel of gender and energy experts in incorporating gender analysis into its rural energy strategy to address the energy needs of the poorest in rural areas in a gender-sensitive manner.

The report is available in German, Italian, and Japanese; its release was timed to coincide with the G-7 Summit in Denver June 20-22, and the UN General Assembly in New York, the five-year anniversary of the Earth Summit at Rio, June 23-28.

References

• World Bank, Energy for Ruaral Areas and the Urban Poor: A strategy for Developing Countries, Power Development, Efficiency and Household Fuels Division, Industry and Energy Department, April 1995

For additional information, contact:

• Daphne Wysham, IPS, 1601 Connecticut Av. NW, Washington DC 20009, USA; Tel. + 202.234.9382 ext. 208, Fax +202.387.7915, Email dwysham@igc.apc.org;
• Jim Vallette, ITIS, USA; Tel. +207.244.3106, Email itis@igc.apc.org;
• Robin Round, Halifax Initiative, Ottawa, Canada; Email sierra@web.net;
• Francesco Martone, Reform the World Bank Campaign, Tel. +39.6.24404212, Fax +39.6.2424177, Email fmartone@gn.apc.org

The full report is 134 pages. If you can read attached or binary files, please send a request by Email for the full report. Otherwise, please send a check for $10 ( $15 for Europeans to cover photocopying and mailing costs) to:
IPS, attn.: SEEN, 733-15th St., NW, Suite 1020, Washington, DC 20005