Contradictions - World Bank Investment in Fossil Fuels
Despite its varied commitments in recent years, the World Bank has had an uneven track record with regard to climate change and energy policy. Although the World Bank clearly states that “efficient, affordable and clean energy supply is key to poverty reduction and economic growth,” it continues to promote development models largely based on prolonged reliance on fossil fuels that will only exacerbate global climate challenges. World Bank Group fossil fuel lending has increased by 59% over the last three years. The IFC has recently invested in gigantic coal thermal plants, such as the Tata Mundra project in India, with plans for further such investments in the future. The WBG is currently in talks to lend $5 billion over five years to South African electricity public utility, Eskom, for new power plants, with about 90% of the power likely to come from coal.
During its 2008 fiscal year, the World Bank and International Finance Corporation (IFC) increased funding for fossil fuels by 102% compared with only 11% for new renewable energy (solar, wind, biomass, geothermal energy, small hydropower). On average, fossil fuel financing by the Bank is still twice as much as new renewable energy and energy efficiency projects combined and five times as much as new renewable sources taken alone. During the last three years, the Bank spent 19% more on coal than on new renewable energy. Bank lending to coal projects will make a low-carbon transition difficult given that coal emits almost twice as much CO2 as natural gas per unit of energy. A low-carbon economy will never be reached if fossil fuel growth is not drastically curtailed – it certainly cannot continue to be on par (or sometimes exceed) growth in new renewables.
Furthermore, the World Bank has not been transparent in acknowledging the degree to which WB-financed projects have impacted climate change. A closer examination reveals that the WBG’s annual CO2 emissions from FY08 funding are approximately equal to the country of Iraq’s or Greece’s energy sector emissions and exceed Portugal’s and Austria’s. The project lifetime CO2 emissions from this one year of WBG financing represents approximately 7% of the world annual CO2 emissions from the energy sector or more than twice as much as all of Africa’s annual energy sector emissions.
Indigenous Peoples and Climate Change
The scenario is truly inequitable; those communities who played the smallest role in greenhouse gas emissions and the resulting climate change will feel the effects of climate change first and most severely due to their dependence on the land for survival. They have often been excluded from policy decisions and negotiations that have, in turn, adversely affected livelihoods.
Women and Climate Change
The relationship of gender and climate change is often overlooked as one of the many important dimensions of the issue. Climate change will disproportionately impact the world’s most impoverished and within that group, women will suffer to the highest degree due to loss of natural resources and livelihood, existing barriers to information, social constraints and financial disparities between genders.
Improving Energy Sector Data
In addition to the recommendation that the World Bank develop more comprehensive accounting surrounding its energy sector lending, it is important to produce an independent assessment that would include a closer review of financial intermediaries, policy lending, and technical assistance, including developing a methodology to account for GHG emissions stemming from various types of Bank assistance. Other types of projects lacking details for GHG emissions estimates include expansion of gas networks and fossil fuel exploration projects.