The World Bank and climate change

A roundtable discussion on forests, fossil fuels, and the Bank's climate commitments

16 April 2007 | Minutes

Graham Saul, Oil Change International

  • In Prague 2000, former bank president Wolfensohn launched the extractive industries review.
  • The Bank has taken messaging around climate change more seriously than ever.
  • Can the Bank deal with climate change and also support for fossil fuels?
  • These are serious contradictions, does the Bank see it this way?

Daniel Mittler, Greenpeace

  • Coal power plants are not part of the solution. It is a myth that such a thing as clean coal. A meeting in March of IFIs in London put forward “clean coal&rdqho;, but this merely prolong carbon development path.
  • IFIs say in their defence that southern governments are asking for the money for these investments, but this is a misconception. There is an energy revolution out there to be funded.
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  • Greenpeace’s recently launched report puts forward a conservative, industry backed plan.
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  • Though debates over the IEA predictions, an energy revolution is very definitely possible and the Bank should be funding this.
  • $300 billion a year is needed for it, and this is the same amount that the World bank gives to fossil fuels.

Tim Richards: General Electric

  • IEA is a neutral source of what is possible. Their technological perspectives move us from baseline scenarios to 2050, without having to compromise our quality of life.
  • The technology is largely apparent, though as the IEA says this will include nuclear, carbon capture and storage etc. But is more expensive. In China, it is less expensive to build a coal fired power plant than cleaner alternatives.
  • We need to bring the cost of these technologies down.
  • No company can afford to bring new technologies in if there is no market for it.

Kristalena Georgieva, World Bank

  • Conversation on climate change is growing within the bank.
  • They have been charged to come up with the solution.
  • Energy efficiency is number one priority.
  • They are very keen on renewables and offset their travel.
  • Need to think about the impact from coal, gas flaring etc.

Jamal Saghir, World Bank

  • Management response to the EIR did not say it would phase out.
  • Climate change is everyone’s agenda.
  • It is a reality that oil and gas will remain a major source of energy.
  • World Bank is the second highest financier of renewables, but it is not yet affordable.
  • Solar is also expensive compared to wind.
  • Renewable energy does include large hydro electric, this is clear and important for Sub-Saharan Africa.

Michael Levitsky, oil, gas and mining department, World Bank

  • The Bank spent three years arguing about phase out during the EIR does not want to go backwards and re-open this argument.
  • Their mandate is to promote economic growth.
  • The board overwhelmingly supported them.
  • Civil society should talk constructively with the governments of China, India, Africa and Latin America, they support fossil fuels.
  • The Bank provides better quality of investments.
  • Articles of Agreement say little about the environment.
  • They will support fossil fuel production for as long as the world demands it.

Adam Matthews, GLOBE

  • At the G8+5 meeting they reviewed conclusions from the recent legislators forum.
  • They reviewed the future IEA scenarios.
  • July 2006: A clear recognition that based on IEA options, fossil fuels will still be dominant by 2030. Looking for realistic, cost effective solutions.
  • Calling for a radical shift [that involves phase out] isn’t one that legislators will fall behind.
  • Bank can catalyse the move towards a low carbon economy.

Discussion and questions from the floor

  • It was agreed not to get into too much detail about the figures on renewables and extractives lending. This is a discussion that can be held later between the Bank and relevant civil society researchers.
  • Graham Saul referred to the Stern review which points out that the huge amounts of subsidies is an obstruction. Governments should stop this.
  • Heike Mainhardt Gibbs referred to the World Bank’s paper on the oil sector in Iraq which contains policies and contract models to further oil extraction. Also referred to Indonesia where the World Bank has failed to invest in geothermal, despite plenty of opportunities to do so and has continued to invest in natural gas.
  • Doug Norlen asked if there were any financial incentives within the Bank, such as salary increases to encourage staff to increase IFC profits.

Kristalena Giorgieva replied that the energy mix has to be better than what the world has today. They will look at the carbon intensity of their lending operations. The IFC’s incentive structure is aligned with that of the private sector, and is different from that of the Bank. World Bank staff are obliged to bring development outcomes. Appreciated the suggestion to have a sustainability based reward system. This is a huge development issue, and energy thinking is moving forward. We need political will.

Lucy Baker pointed out that in response to Mr Matthew’s assertion, an Early Day Motion in the UK was signed by approx 100 parliamentarians (including by members of GLOBE, his own network) asking the UK to stop funding fossil fuel projects via multilateral development banks. His claim that legislators would not support phase out is therefore a fallacy. Similar initiatives are also taking place in the US. She also challenged Mr Saghir’s assertion that hydropower will serve Africa’s renewable energy needs, when it fails to reach the majority of the poor who are not even connected to the electric grid, e.g the upcoming Bujagali project will only serve 5 per cent of Uganda’s population. The Stern review (welcomed in the World Bank’s clean energy investment framework) has said that the global energy sector needs to be 75 per cent decarbonised by 2050- a further contradiction in light of the World Bank’s current rhetoric and practices.

Bob Watson, World Bank welcomed the contradictions and the need to debate them. Asked the question of what makes a low carbon pathway. Said that we need to look at really good carbon capture and storage and our end goal. The Stern report’s assertion for 75 per cent decarbonisation by 2050 does assume a lot of carbon capture and storage.

Michael Levistsky Their dialogue on oil and gas is now all about good governance. They worked on the EIR, then EITI, then the petroleum initiative. It is all about laws and good governance. [Antonio Tricario asked which laws, and referred to the recent petroleum law in Iraq. Mr Levitsky said that he did not want to talk about Iraq]. They have launched oil funds for Sao Tome, East Timor and other places. We have to consider the perspective of the board of governors and the World Bank’s board.

Kate Watters from Crude Accountability welcomed the fact that there is increased governance and said that the oil funds are a good step but asked where does the money go. Anecdotal and field information is disregarded as non-statistical, but we must not forget that people are seriously impacted by this.

Cath Long, Rainforest Foundation

  • Forests are important for weather systems and carbon sinks.
  • Both deforestation and ensuing forest degradation contribute to climate change.
  • Even low impact logging has a serious impact.
  • The Bank’s 2002 forest policy reversed previous prescriptions on forest clearance.
  • The poor are frequently blamed for forest destruction, their rights are not recognised.
  • On governance and forests, Congolese civil society say that since 2002 the level of corruption and lack of transparency has been second to none.

World Bank

  • The World Bank does not want to compete with the private sector.
  • Carbon trading mechanisms are more programmatic.
  • It is important to have forests in the climate change arena.
  • Developing countries need to lead this debate.
  • Compensation through non-market mechanisms.
  • They are working with the global forest alliance.