As part of its commitment to solve the global problems of energy poverty and climate change, in March the World Bank co-sponsored a conference in London to consider global energy options, and launched the Carbon Fund for Europe (CFE) together with the European Investment Bank. Meanwhile a recent World Bank report reveals an alarming rise in its financing for oil and gas fuel operations and fails to disclose performance on environment or poverty indicators.
The CFE trust fund aims to help European countries meet their commitments to the Kyoto Protocol and the European Union’s Emissions Trading Scheme through the purchase of greenhouse gas emission reductions through the Kyoto Protocol’s project-based mechanisms Joint Implementation and the Clean Development Mechanism. At the same time the Bank has been upbeat about keeping its commitment to increase renewable energy and energy efficiency funding by 20 per cent since 2005. This claim has been seriously challenged given that only four per cent of this funding actually went to renewable energy projects like wind, solar, and geothermal production (see Update 53).
This increase in renewables and energy efficiency funding is also seriously undermined by the Bank’s increasing support for fossil fuels. This is revealed in analysis by US-based Bank Information Center (BIC) of the Bank’s recent implementation report on the Extractive Industries Review (EIR) for 2006, which comments on the Bank’s compliance with certain reform measures agreed to in its 2004 management response to the EIR. BIC’s analysis finds that World Bank Group extractive industry operations have increased substantially — between 37 to 44 per cent over the last financial year — and that the IFC’s private sector extractive portfolio for FY06 has increased by approximately 60 per cent ($508.9 m) since FY05 ($334.3m). Of this, nearly half is for oil projects, 37 per cent is for gas and 16 per cent for mining.
Daniel Mittler from Greenpeace International responded: "These figures deepen the gap between the billions thrown at fossil fuels and the crumbs that end up at the doors of the renewable and energy efficiency sectors. The same level of regulatory, political, financial and technical support that multilateral development banks have been giving to fossil fuels for decades should be apportioned to renewable energy to catalyse the necessary huge investments"
BIC’s analysis of the report also reveals that:
- some of the IFC’s most profitable projects are the same projects which have been accused of contributing to significant social, environmental and economic damage on the ground;
- the report fails to provide critical information on trends based on indicators such as poverty reduction, economic diversification, or improved social and environmental conditions;
- there are no specific examples provided on the criteria used to assess the level of community support for any extractive industry operation; and
- although it is generally believed that the Bank is making some positive progress in the area of revenue transparency the report fails to discuss any specific activities.
A two-day conference hosted in London, Financing clean energy: a framework for public-private partnership to tackle climate change hosted by the European Bank for Reconstruction and Development and organised in part by the World Bank brought together "public and private institutions to work together more closely to meet future energy needs and combat climate change". It aimed to make progress on the energy investment frameworks of the multilateral development banks as part of the Gleneagles process agreed at the G8 meetings in 2005 (see Updates 51). Tellingly the conference failed to fully involve renewable and energy efficiency companies and relevant civil society organisations involved in energy and development issues.