Prospect of profits is making more MENA governments see 'green', says World Bank
23 August 2007
A recent article by the World Bank applauds governments in MENA for increasing investment in environmental protection. While the World Bank is encouraging MENA countries to decrease their carbon emissions, it continues to finance extractive industry projects in the region. This apparent contradiction is just one of several reasons to take a closer look at the Bank's recent coverage of the 'greening' of MENA.
On August 16, the World Bank issued a feature story titled “Environment Makes ‘Quantum Leap’ in Middle East and North Africa,” which commends governments in the region for increasing investment in environmental protection. According to the story there are four main factors that contributed to this newfound interest in environment among the countries of the region:
- World Bank research put a price tag on the cost of failing to invest in natural resources;
- technical assistance from the World Bank in the environment field has paid off;
- climate change has become a 'hot' topic; and
- the global carbon market is booming.
The headline of the Bank's story? The prospect of profits and savings is providing governments with an incentive to pursue environmental measures. But not all view this market-led 'greening' of the region as an unqualified good.
The carbon market – in which the World Bank is the major broker – allows developing countries that have ratified the Kyoto Protocol, but that do not have emissions caps or mandated reduction targets of their own, to receive payments (credits) for investments that reduce carbon emissions. Developed countries that are not able to meet their own emissions reduction targets under the Kyoto Protocol, or other emission regulation schemes, purchase the carbon credits generated from projects in developing countries. Critics of this market say that it actually discourages the rich countries from transitioning faster to a non-fossil fuel-dependent economy, and puts the burden of reducing carbon emissions on the shoulders of the poor countries.
Eight years ago, when the pre-Koyoto U.N. Framework Convention on Climate Change was working on the design of this carbon market, confidential documents from the World Bank were leaked to the Institute for Policy Studies (IPS), a progressive think tank in Washington, D.C. In those documents, the World Bank appointed itself as broker between the sellers and the buyers in this new market. The documents also suggested that the World Bank could make significant profits by charging a 5 percent commission on transactions. According to IPS, this commission is reportedly now closer to 8 -10 percent.
Four projects involving emissions credits are operational in Egypt and Tunisia. There are more projects in the pipeline for Jordan, Algeria, Morocco, Iran and Saudi Arabia.
According to critical observers like IPS, there is an “institutional schizophrenia in World Bank operations. The World Bank is a carbon trader and fossil-fuel financier at the same time.” The World Bank Group is one of the largest sources of public funding for the fossil-fuel industry. Most of the financing has gone to projects that export oil back to wealthy countries. The International Financial Corporation (IFC) of the World Bank Group has invested approximately US$239 million in the mining and extractive industry in MENA since 1995, out of which US$ 47 million were invested in Egypt and US$17 million in Tunisia, the two countries where the World Bank is engaged in carbon trading projects. A large percentage of this amount is invested as equity for IFC.
For more information
projects in MENA involving emissions credits trading
List of mining and extractive projects financed by IFC in MENA