Take the FaL-G Brick and Blocks project in India. Through its Community Development Carbon Fund (CDCF) the Bank contracted to buy emissions reductions generated when 200 small brick-makers switch from coal-fired bricks to self-hardening fly ash bricks. Sounds great for Indian enterpreneurs and for the climate, right?
But wait -- fly ash bricks are made from the waste of some of the dirtiest industries in India. Besides fly ash, which is a radioactive byproduct of coal-fired power plants laden with heavy metals, the bricks' ingredients include lime, a waste product of acetylene production, and gypsum, a byproduct that fertilizer companies in India are under increasing pressure to dispose of safely. Under the Bank's carbon-trading program these companies' pollution, which was once a liability, suddenly becomes an asset. New revenue streams opened up by World Bank carbon finance create perverse incentives, benefiting fossil fuel dependent power plants and factories.
What about the poor? Staff managing the CDCF implored citizen groups to understand that projects like fly ash bricks help the poor by bringing jobs to rural India, and, by applying social safeguards, help keep kids out of the workforce. When asked about the health risks posed to workers who will handle toxic chemicals, one Bank senior environmental specialist claimed not to have heard these concerns before. Is that an oversight or malign neglect?
Ultimately, the climate loses, too. Besides downplaying the serious health problems that fly ash can cause, the Bank also disregards the fact that the inputs for these bricks come from greenhouse gas emitting sources. The UN body that regulates North-South carbon trading requested the Bank include these emissions in the projects' carbon footprint, but the Bank declined to do so, responding that this was "outside the boundaries" of the project's scope.
Indeed, the World Bank's carbon-offset deals have produced meager results for greenhouse emissions cuts, a fact that has trust fund contributors scrambling for carbon credits before the first Kyoto Protocol commitment period expires in 2012. Donors that are worried about keeping their promises to reduce emissions have, with the help of the World Bank, shifted a portion of their money to "low hanging fruit" -- projects that yield cheap, easy and abundant emissions. But the bumper crop of cut-rate emissions reductions is undercutting the competitiveness of renewable energy and small-scale projects, which are already more expensive and pose higher investment risks.
The World Bank's plan to use its existing carbon-offset portfolio as the model from which to scale up to a "low carbon" economy should sound alarms for anyone seriously concerned about avoiding climate chaos. The Bank's foray into the carbon market paves the way for business-as-usual, while short-changing clean, renewable energy, the poor, and ultimately the climate. The Bank, on the other hand, stands to gain enormously.
Back in the windowless conference room in downtown D.C., one non-government organization staffer muttered under his breathe that the Bank's idea of "low carbon" alternatives -- "clean" coal, large hydropower plants, landfill gas recovery -- is unacceptable. The Bank representative wrapping up his PowerPoint presentation responded, "It's not your money."
But it's not the Bank's money, either. The money used for carbon deals, which the Bank is squandering on false solutions to climate change, is at least in part the money of Italian, Dutch, Spanish, and Danish taxpayers. And the land and labor of people in the global South, who are struggling for control over clean energy production and consumption, are being held by the Bank as collateral.
For those with a stake in real solutions to climate change (i.e. everyone), the question becomes: what are the alternatives to the current situation? Can the World Bank's climate policies, if not the institution itself, be reformed enough to trust the Bank to lead the way to a renewable energy future?
A first step would have to include pulling out of financing fossil fuels completely (as recommended by the Bank's own Extractive Industries Review in 2004). As a second step, the World Bank would need to calculate the greenhouse gas footprint of all its public finance, and private investments that run through the public institution, and weigh the costs of climate change in deciding which projects to fund. And finally, donors should have the amount of greenhouse gases produced from projects they support "debited" against any emissions they hope to claim through offsetting.
For many, it's clear that banking on the World Bank to solve the climate crisis is an exercise in self-destruction. Ultimately, the World Bank needs to halt its climate altering investments and get out of the carbon dealing business. The UN Framework Convention on Climate Change provides the best hope for transferring the resources needed for Southern countries to cope with the impending consequences of climate change, and encourage local control of energy production and consumption -- not the market. This is the institution that Northern and Southern governments must support in generating the political will and political space to transition to a truly low carbon, climate resilient future.
Article courtesy Foreign Policy in Focus
Janet Redman is a researcher at the Sustainable Energy and Economy Network, a project of the Institute for Policy Studies, and author of World Bank: Climate Profiteer, a report about the Bank's carbon-financing work.
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Albion Monitor April
23, 2008 (http://www.albionmonitor.com)
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