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IFI governance

News

Activists oppose Bank ‘clean development’ credits for Brazilian forest plantation

21 July 2003

One of the first pilot projects using the World Bank’s climate change carbon trading programmes has come under fire from local groups for endorsing destructive tree plantations. The project in Brazil is intended to contribute to carbon dioxide emissions reduction and to more sustainable pig iron production. Campaigners counter that the project will harm the local environment and livelihoods and set a precedent for projects with dubious climate change benefits. In June the World Bank agreed to examine the allegations.

The Plantar project in Minas Gerais is the first carbon sink project seeking credit through the Kyoto Protocol’s Clean Development Mechanism (CDM). It involves planting 23,100 hectares of eucalyptus trees to produce wood for charcoal, which will then be used in pig iron production in the place of coal/coke, non-renewable fossil fuels. The project also aims to eliminate methane in the carbonization process, and reestablish native forests around the plantation area, claiming carbon sequestration credits for the trees planted.

The NGO CDM Watch, which monitors climate change initiatives, has slated the project saying: “acceptance of Plantar as a CDM project would massively erode the credibility of the validation and registration procedures of the CDM, see a large number of worthless carbon credits released onto the market, and undermine the effectiveness of the Kyoto Protocol”. The validator of the project, a Norwegian-based company called DNV, has said it cannot state that carbon will be stored permanently and therefore there is no guarantee of long-term climate benefit.

The project approved in April this year by the World Bank-managed Prototype Carbon Fund is providing capital for the company Plantar S.A. to expand eucalyptus plantations. The company claims the plantation is to be on pasture land, but has refused to provide local communities with maps outlining its holdings. The concern is that some of the replanting would simply replace low-yielding parts of Plantar’s holdings. This is not be permitted under the current CDM rules, which stipulate that only allow projects that involve tree planting on areas not covered by forests since 1990.

Two letters have been sent to the World Bank project manager and investors in the Prototype Carbon Fund challenging its assessment of the project. The most recent letter, sent to the Bank on 22 May by 66 Brazilian groups set out the results of two site visits by regional researchers. Representatives of the Federation of Social and Educational Organizations based in Espirito Santo, Brazil, and of the World Rainforest Movement, visited the area on May 15. The overall impact of the company’s operations was summarized by a local woman who said: “Plantar finished with all we had.” In the plantations, the only green things were the eucalyptus saplings and trees. The rest was brown, resulting from the widespread application of the herbicide glyphosate (more commonly known by Monsanto’s brandname, Round-up). The water had either dried up or had been contaminated, thus depriving local people of fish. Local fauna – which constituted an important element for people’s livelihoods – had also disappeared, making a mockery of the “hunting and fishing prohibited” sign posts.

The company had closed a public road, forcing people to travel a much longer distance to reach their homes. The alleged reason for the decision to close the road, adopted with no consultation with local residents, was to avoid the dust coming from the road affecting the plants grown in the company’s tree nursery. The project did not trigger the Bank’s Resettlement policy although communities in the Paiol region say they sold their lands after their water supply was contaminated or reduced.

The Bank’s document claims the plantation to be established in conjunction with the CDM project will be on land that has been used for grazing at least since 1989. Whilst the company argues that its plantations take away pressure from native forests, local people, however, give examples of forest clearing happening inside a Plantar area in December 2002. It is also possible that some of the trees felled before 1989 was caused by the Bank-backed Carajas Iron Ore project in the 1980s.

Participation or presenting acceptance?

The World Bank claims in its project documentation that “civic engagement, participation and community driven development” are among the aims of the project. It further asserts that “no objections have been given by all stakeholders”. However, campaigners wrote recently to the Bank complaining that only following their protests did Plantar seek input from the local communities. This was only with the aim of collecting signatures for documents in support of the ‘carbon sink’ project, failing however to explain its scope and context. They also accuse the company of threatening people that if they did not support this project, Plantar would not create any more jobs in the municipality. Plantar organized a party on April 4th for local communities in a rural educational centre at which community members were encouraged to sign a motion in support of the company.

The local organisations point out that “corporations like Plantar S.A. installed themselves in our states in the 1960s and 1970s during the military dictatorship, taking advantage of attractive tax incentives. They did not get proper legal land title.” They urge a comprehensive, detailed and independent study, done with local community involvement, to determine which lands should be given back to the rural people and be allocated for land reform, food production and reforestation, all Brazilian federal government priorities. The Movement of Small Peasants, one of the signatories of the letter to the Bank is developing an alternative reforestation project, using tree species with multiple uses.

The NGOs urge the PCF to show “some balance” on its website which only featured the company’s response to the Brazilian civil society letter, not the letter itself. “We think showing both sides of the coin is part of a democratic attitude essential for a more comprehensive and transparent debate.” After pressure from some of the PCF investors to rectify the imbalance, the PCF chose to take off the company letter rather than exposing the controversy by posting the full exchange.

The Bank claimed that Plantar’s plantation management practices are compliant with its standards. Plantar is one of the first Brazilian plantation owners to obtain Forest Stewardship Council certification, which was reconfirmed in June. But in the same month the World Bank put out a statement saying it was concerned about the allegations made by the Brazilian NGOs and was considering commissioning an independent investigation.

How the Prototype Carbon Fund works

The Prototype Carbon Fund (PCF) is one of three climate funds, for which the World Bank acts as trustee. The others are the BioCarbon Fund and Carbon Community Development Fund. Assessment of potential PCF projects is done by the Bank and the PCF website states that all Bank policies apply. The PCF will invest contributions made by companies and governments in projects designed to produce emission reductions fully consistent with the Clean Development Mechanism and other instruments under the Kyoto Protocol. These allow companies and governments to trade carbon credits, in effect buying themselves a license to continue polluting at homd. Contributors, or ‘Participants’ in the PCF, will receive a pro rata share of the Emission Reductions, verified and certified in accordance with agreements reached with the respective countries ‘hosting’ the projects.

Six government and 17 corporate investors have invested US$180 million in the Fund, including:

  • British Petroleum – Amoco
  • Deutsche Bank
  • Gaz de France
  • Governments of Canada, Finland, Norway, Sweden and the Netherlands
  • Japan Bank for International Cooperation
  • Mitsubishi Corp.
  • Norsk Hydro
  • Statoil

Other controversial carbon finance projects