- Jon Sward, Environment Programme Manager, Bretton Woods Project
- Fiza Qureshi, Manager Program Implementation, Indus Consortium
- Dean Bhebhe Bhekumuzi, Campaigns Lead, Power Shift Africa
- Aaron Pedrosa, Co-Chair, Energy Working Group and Head, Legal Team, Philippines Movement for Climate Justice
- Stephane Guimbert, Director, Operations Policy & Country Services, World Bank
Watch the session recording here.
Jon (Moderator): The World Bank (WB) Paris alignment process has been part of a complicated discussion of IFI (International Financial Institution) reform more broadly, in the context of Bridgetown and the Evolution Roadmap process.
WB referred to context, increasing fragility, etc… so this moment is good to reassess the current development paradigm. Many countries need help to get them back on track to SDGs (Sustainable Development Goals), and the Paris alignment goals.
Commodity dependence is becoming more severe, as indicated by the UNCTAD (United Nations Convention on Trade and Development) report, and there are serious questions about how to address this.
We were meant to have a decade of action, but now climate goals are at risk. In 2017, the World Bank Group (WBG) and other multilateral development banks (MDBs) committed to align to the Paris Agreement, but there has been no formal process of consultation yet.
Stephane: He explains the Paris alignment approach of the Bank in the context of the roadmap. All projects submitted to the board will be aligned from 1 July this year.
The Bank’s method of doing this alignment: MDBs defined overarching principles with other MDBs and a couple of weeks ago they released their methods, distilling principles into tools used by the Bank.
Those tools will be translated across all sectors in which they will be operating. Nothing assessed not be Paris-aligned will go to directors. There are three methods for doing this:
- Review a country’s own plans and other existing research that might exist to ensure consistency with the project.
- Recognise MDGs are a work in progress, as countries are expected to revise them every 5 or 10 years. Assess risk on the mitigation and adaptation side; for mitigation it’s really about impact of a project on a country’s own decarbonisation pathway, does it make it easier or more difficult for a country to achieve its development pathway? On the adaptation side, it looks at physical climate risks that could impact the development impact of the project.
- The Bank will be very systematic in how it is addressing Paris alignment, and this will be very well documented. There will also be a disclosure policy, which will form a strong feedback loop, to learn how the bank is doing in terms of assessments and how the bank does it.
Every single team will make these assessments, 3000 staff are already trained at the Bank already. This will be part of the DNA of how the Bank does its projects. It will be learning by doing. The Bank will learn from everyone’s feedback.
This evolution is predicated on the fact that the world is not on track for SDGs or climate goals.
There is a recognition that climate is impacting people and planet, and many indicators are already in crisis. The Evolution Roadmap recognises all of these things.
Jon: Civil society is still grappling with different elements of Paris alignment work.
Dean: In March, the WB announced it would be committing to gas development in Mozambique.
We need a holistic approach of how climate justice issues are dealt with. Droughts and floods are already hitting Africa hard. Water and gas are being used as transition fuels. Water is scarce in many areas, and gas is not a green energy source.
Gas is a political issue, because it doesn’t foster local ownership. Its extraction favours corporate fossil fuel companies…
This is a gendered and equality issue, as there are few women on these energy companies’ boards. Also, the Senegal gasline project is majority foreign owned.
The WB mandate seeks to end extreme poverty in Africa, but 73 per cent of Mozambiquans have no access to electricity, even though there are gas projects there. 35,000 are already homeless because of gas exploration already; further investment would have further negative effects.
Paris alignment needs to be considered in a holistic way, in terms of environmental and social impact: But how can we do that if we view gas as a clean transition fuel? The renewable sector needs to be massively grown.
Structural adjustment programmes must be ‘decolonised’ – 85 per cent of the world is a minority, Global North (GN) votes in WBG have much more weight than Global South (GS) votes… Africans are not enfranchised. Africans need to be recognised for the value of their experiences.
Structural Adjustment Programmes (SAPs) made Africa exploitable through import/export markets…
The Bank needs to take a holistic approach to the green transition.
Fiza: The catastrophic 2022 floods in Pakistan are climate-induced. The emergency response is still continuing, even though the floods hit on Aug 22; some areas are still underwater, and some people are still in camps.
Pakistan is the 7th most vulnerable country to climate change, but its climate footprint is 0.8 per cent of historic emissions, so this is the impact of the GN on the GS. There are also heatwaves, in which temperatures go up to 51 C.
Of Pakistan’s $88.8 billion debt, $42.4 billion are multilateral loans. There is also WBG and IMF debt. Pakistan needs millions to rehabilitate 33 million flood affected people. But the WBG announced only a $2 million loan for rehabilitation. Where is the climate justice?
The Paris agreement goals are legally binding, and there is also the evolution roadmap. But Pakistan received loans that must be paid back by flood affected people… is this really climate justice?
Asian Development Bank (ADB) and WBG gas projects affect Pakistan’s villages. Do hydro projects offer clean alternatives? Mega hydro projects ruined the Indus delta. Areas have been claimed by the sea because of these mega projects, which stop water flow and sedimentation. Mega hydro dams are now recognised as destructive.
The Indus delta is literally dying, and lakes are drying up in the Delta. The left bank outfall drains districts of Sindh into the sea, but let seawater infiltrate and much land has been lost to the sea because of the scheme’s poor design. This cost $800 billion, it is 102 km long, with a 400 cusecs (cubic feet per second) capacity but flooding reached 1100 cusecs in both 2010 and 2022. Four districts were flooded and drowned because of the drain. She asks the WB, as a responsible bank, aligned with the Paris Agreement, to take responsibility. The WBG developed a remedy, the project, but it didn’t work… The WBG should bear responsibility under the Paris Agreement if negative impacts of its projects are continuing.
Aaron: There is an incoherence in the Evolution Roadmap. But more to the point, we don’t have time for evolution! Science dictates urgent action. Where is the sense of urgency?
The Philippines are in the top ten countries for climate impact. This has impacted negatively on the country’s resources; 2 per cent of GDP are the projected losses to extreme weather events, but this is projected to be up to 7 per cent of GDP by 2030.
There are stronger typhoons, heavier rains, extreme and longer droughts … in 2015-6, El Nino caused hunger for farmers, and there were massacres of farmers requesting rice from the government. The Philippines also have a high degree of water stress. The Pacific ocean is the Warmest of oceans; fish catches are declining, by up to 50 per cent by 2050. Sea levels are also rising fast, at double the global average. The Philippines very vulnerable to sea rise, by 2030 70 million Filippinos will be affected by sea level rise.
Paris alignment means there should be no detours, no debt creating mechanisms. This should pull the plug on climate finance – there should be a phaseout and retreat.
Ambitious and urgent climate action should not be business as usual. Especially for the IFIs (International Financial Institutions) and MDBs that funded fossil fuels. And there should be an end to debt creating mechanisms! Why should countries drown in debt in response to a climate crisis they did not cause? There are currently 29 fossil gas projects in the pipeline in the Philippines because of support from MDBs.
Stephane: The Bank doesn’t have a fossil fuel policy as such, but there is an energy and extractive note that explains how aspects of these projects will be handled.
The Bank agrees with Aaron in the sense of the emergency he flagged.
The Sustainable Development Goals (SDGs) are slipping, food insecurity is growing, and this is also an urgent matter. The Bank is looking at renewables, 90 per cent of energy investment is to finance renewables. 0.2 per cent of the portfolio of the Bank is supporting fossil fuels.
In terms of overall country support, the Bank wants to make sure countries get the energy sources they need, and decarbonise. There are some cases when renewables are not sufficient.
As for climate justice and debt, a paper makes the case for concessionality, ie. not commercial debt. There should be a link between development and climate. Projects are being financed today based on scientifically-assessed risks.
Questions & answers:
Greg Hauber: There is a need to overhaul economic assumptions of project analysis, eg. gas, esp. out of country there are lots of uncertainties, inputs, anything denominated in foreign currency is a risk to that country. Because of the ultra high volatility of Liquid Natural Gas (LNG) prices, Pakistan lost LNG shipments to Europe when it was in short supply.
Fossil fuel investments have a 25 year lifespan, so that takes us to 2050. Some losses are expected as a normal cost of business, from leaks of gas, etc… but they are not accounted for in terms of decarbonisation. They are only now just being thought about and taken into account. How will the Bank keep up with better information coming in? There is too much uncertainty, and coal plants’ lifespan can be expanded to 70 years plus… this sways the decision in the wrong direction.
Christian Donaldson, Oxfam: Will project assessments be made public? Will a full assessment be disclosed for each project? What will the format be?
Climate finance is an important aspect of Paris alignment. Loss and Damage should be part of Paris alignment, but there is no clarity in what the Bank considers to be loss and damage. Paris alignment methodology is important and needs to be clear.
Stephane: In the economic assessment of projects, yes, Paris alignment will go over into that; it is clear that a number of projects not economically viable without a long payout time won’t be Paris aligned, because it could affect a country’s decarbonisation path.
WB commitment is to have documentation to allow Civil Society Organisations (CSOs) to reach their own conclusions.
Fran Witt, Recourse: She is grateful for the strides the WB has made, but is hoping to see greater ambition in that pathway as soon as possible.
Climate change is having a huge impact in many countries, irreversible climate change; and there is a time limit to act.
DPF allows support for projects if they are in line with long-term decarbonisation plans.
Alice Pauthier, Institute for Climate Economics: It is important that efforts be made for Paris alignment, but this needs to be above and beyond the normal, not just for projects but all activities that can support Paris alignment.
Stephane: Policies should think through the whole project cycle to see the whole impact. Country ownership is important, and many countries develop their own pathway now; so this depends on country documentation and WBG analysis, which is a significant bar to pass for Paris alignment.
Every part of engagement with countries will be determined by engagement with Country Climate and Development Reports (CCDRs).
Dean: If they are to value development and energy exclusion, this needs to be clear: Don’t gas Africa.
Fiza: Nearly all men can stand adversity, but if you want to test a man’s character, give him power… Abraham Lincoln. IFIs must be responsible and support the GS in real development, to escape from poverty, malnourishment and debt.
Aaron: Any roadmap that sets timeliness oblivious of climate science is a roadmap to disaster. It makes no sense to do business on a dead planet… not evolution, but revolution is needed.
Jon: Civil society is not always considered a valuable partner in development finance… Sometimes it is, but sometimes it’s really not. CSOs and communities need to be included and considered.