Banking on carbon

in a crowded corner of the busy corridors at the venue for round four of the climate negotiations in Buenos Aires, a ballot box was being crammed with votes. This was an 'election' of a novel type. Participants attending the conference, ngo s and negotiators alike, were asked to cast their verdict on the fossil fuel projects funded by the World Bank.

Ninety-three per cent of the voters disapproved of the bank playing a key role in jump starting the global carbon market while spending billions of dollars on fossil fuel development projects. The World Bank, on its part, was making an all out effort to keep its proposal on a Prototype Carbon Fund ( pfc ) for carbon trading a hush-hush affair. It is known that, so far, the pfc has secured advance commitments of at least us $130 million from 13 companies and five coun-tries. The bank, however, has refused to pro-vide any other information about the pfc .

But, the bank's strategy has been made public in a detailed report prepared by the Washington-based Institute for Policy Studies ( ips ), after a five-year assessment of the wb 's role in fuelling climate change. The report shows that:

l The wb has spent 25 times more on fossil fuel projects than on renewable energy since the 1992 Earth Summit;

l In the next 20 to 50 years, wb -financed projects will add carbon emissions to the atmosphere equivalent to 1.3 times the amount emitted by countries worldwide;

l Less than 10 per cent of all World Bank projects are being calculated for their impact on the climate;

l Nine out of 10 wb fossil fuel projects benefit transnational projects based in the wealthy g -7 countries, many of whom are members of a us -based lobbying group, the Global Climate Coalition, that actively opposes any action on climate change.

Criticism of the bank's performance on the environmental front has been growing over the last few years. The organisation, whose prime role isto tackle poverty and promote sustainable development, has shown that it is not interested in doing either or in promoting a less carbon-intensive future.

At the cop -3 held in Kyoto in December 1997, emission reduction targets were set for 38 industrialised nations (Annex- i ) which is to be met by 2008-2012. At that time, the wb unveiled its proposal for setting up a pcf . The idea was "to pool funds from governments and companies in countries with commitments and invest them in emis-sion reductions in economies in transi-tion and developing countries." It is estimated that such trading could generate profits for the bank to the tune of us $100 million on a trading volume of up to us $2 billion by 2005. More importantly, it will help indus-trialised countries meet emissions targets without taking any action on the home front.



Who stands to gain?
The United States, as wb 's largest contributor, has the most influence over the bank's policies. It is no surprise, therefore, that us businesses would profit the most under global emissions trading. A preliminary study commis-sioned by the us Business Round Table and faxed to the us delegation at climate talks in Buenos Aires was "accidentally discovered" by an ngo . The study states that costs could be reduced by 75 per cent or more if the us is able to purchase permits to cover 80 to 90 per cent of its reduction target. It further states that us gdp losses would exceed us $60 billion a year from the year 2010 under any other scenario. us agricul-ture, chemicals and other energy intensive industries risk losses in sales of up to five to 10 per cent in 2010. Even in a trading scenario involving other industrialised countries, the us would suffer losses of two to four per cent.

The study's contents expose the United States' intent to pre -serve its own interests by pushing for emissions trading. It dis- closes that participation in global trading actually puts develop -ing countries at a competitive disadvantage, because their economies are more energy-intensive than industrial countries. Therefore, through the pcf , the World Bank will only serve us interests at the cost of developing countries.

It is apparent that the bank has chosen to become the largest public financier of carbon-emitting projects in developing nations. The immediate consequence would lock developing countries into a fossil fuel energy path. And the ultimate consequence is rapid, per-haps irreversible, global climate change.

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