Should Northern groups campaign to stop fossil fuel funding in the South?
western civil society, it seems, has decided to go global and represent the world without any effort to understand what constitutes democracy and fairness from the point of view of poorer countries. Several Northern groups are now urging their governments to use their influence on international financial institutions, and stop funding for fossil fuel projects in the South as a means of climate change mitigation. A petition to this effect, was submitted by the Washington dc -based World Resources Institute ( wri ) to the Group of 8 ( g8 ) industrialised countries at their annual summit held this July in Okinawa, Japan. wri urged the countries "not to undermine their (viz. industrialised countries') commitments to reduce the threat of global climate change by continuing to finance new projects that increase greenhouse gas emissions in developing countries " (emphasis added).
To Southern groups familiar with the delicate and often duplicitous politics of international climate change negotiations and the resulting Kyoto Protocol, this position is an anomaly. Industrialised countries do have commitments under the Kyoto Protocol to reduce greenhouse gas emissions ( ghg ), but these are industrialised country commitments presumably to be met by them domestically . The protocol certainly does not have any provision for the g 8 to force developing countries to take on ghg reduction activities by making this conditional for energy loans.
If g 8 countries accept the wri demand they will not be doing so with any powers vested in them by the Kyoto Protocol, as the wri seems to suggest. In fact, they will only be using financial muscle against weaker countries. Any section of the global civil society interested in global democracy should find the use of financial clout reprehensible for more than one reason.
To begin with, of course, developing countries do not have commitments under the Kyoto Protocol . They have contributed little to the global warming problem historically, and need time, and 'ecological space' to develop. They will take on commitments at a later stage. Meanwhile, industrialised countries, having contributed most to the problem, must take the lead in cutting ghg emissions. So far, none of the g 8 countries has shown that they are willing to take responsibility. Instead, countries like the us have toed the industry line and made their action on climate change conditional to the 'meaningful participation' of developing countries. The us industry wants developing country participation because they fear that if the us has emission limits and a country like India does not, then polluting companies will move to India, giving India an economic advantage. So in effect us ngo s are blindly pushing the interests of their industry at the cost of global democracy, when they ask that reductions in ghg emissions be thrust on developing countries by using the aid lever.
Vice-presidential candidate for Democrats in the upcoming us elections, Joseph Lieberman, for instance, is keen that World Bank projects in developing countries are evaluated for ghg emissions, and the information obtained from lending institutions is used to demonstrate that developing countries are moving down the path of meaningful participation. "We can make real progress in this area before countries sign commitments under the Kyoto Protocol, which would be an important way to get around the impasse in our country regarding developing country participation," he says.
Hypocrisy number 1: Rather than critiquing this retrograde, undemocratic and inequitous position taken by their government and industry, us ngo s, in particular, seem to have taken it upon themselves to deliver developing country participation to the us senate by hook or by crook.
In fact, the ngo s are actually actively encouraging the use of aid, loans and trade as patently unfair mechanisms to bully developing countries into participation. Several ngo s from North have vetoed the use of lender-power to ensure the participation of developing countries. The Institute of Policy Studies ( ips ), Washington dc , has been critical of the World Bank's 'carbon hypocrisy'. It accuses the bank of 'fuelling climate change' after the 1992 Earth Summit, through projects that contribute carbon dioxide to the Earth's atmosphere.
Criticising a us $330 million loan for a coal project in China in 1998, an ips press release stated that "China's fast-growing ghg pollution is emerging a major stumbling block in negotiations on the global warming treaty drafted last December in Kyoto, Japan". Does the ips really consider it fair to bully China to stop investing in coal projects before the country has commitments? Or should they focus their wrath on the us senate and industry, for not accepting equal rights for all human beings to the Earth's atmosphere?
wri also has a project on international financial flows and the environment, to "harness the potential of the international public financial institutions to promote national policy reforms in borrower countries". This once again amounts to leveraging aid to push for action on climate change in least developing countries. In May this year, wri produced a report condemning export credit and investment insurance agencies, which facilitate private investment from the North to developing countries, for funding fossil fuel projects. The wri analysis "suggests a reform agenda for (export credit authorities), and actions that might help to align trade and investment policies with climate commitments". Whose commitments? To be carried out where ?
It has been often pointed out in the pages of this magazine that aid and trade are not democratic levers for compliance, because they cannot be used by developing countries against industrialised countries. T here is already a fair chance that industrialised countries will default once again. Developing countries will not have any funding or aid that they can withdraw as a punishment.
Hypocrisy number 2: Northern groups are advocating the use of unfair and undemocratic measures, such as aid and loans, to force developing country participation .
Developing countries, meanwhile, have a genuine need to increase their power generating capacities. If international funding organisations begin to lay down conditions to make developing countries invest in more expensive technology, recipents of aid and loans will end up paying the price for industrialised countries' past development orgy Unless industrialised countries invest to make the non-fossil fuel path technically and commercially viable, and to use their greater wealth to show the way to a more sustainable path through example, they have no right to force costs and restrictions on developing countries that might compromise their development.
Hypocrisy number 3: Groups from North are denying developing countries the right to development by forcing these countries to halt the use of fossil fuel technologies without providing a framework for the world to move towards a renewable energy future .
The World Bank has reacted to pressure from Northern groups by pointing out that its "lending for energy is in response to the funding requests from its client countries, who will develop their lowest cost energy resources with or without the bank's involvement". But in June 1997, with several cooperating institutions, it conducted a 'carbon backcasting study' to explore the impact on project costs, types and selection, if the damages associated with global climate change are integrated into previous energy lending to developing countries. The study evaluated the effects of a 'carbon shadow price', ranging from us $5-40 per tonne of carbon emitted, on 40-80 bank loans. It assessed low-carbon alternative investments to determine whether they become economically viable alternatives when a carbon shadow price is included. This effectively means forcing developing countries to pay for their carbon emissions by exploiting the dependence of poor nations on international finance institutions for their development. Energy prices would go up in least developed economies, while once again, the major defaulters go free.
In November 1998, the World Bank subsequently produced a paper called Fuel For Thought: An Environmental Strategy for the Energy Sector stating that it would support investments in the energy sector of countries which have shown a commitment to improving sector efficiency through policy reform and/ or sector restructuring.
With the committed support of ngo s in diverting attention on developing country participation rather than industrialised country performance, fossil fuel companies in the North can freely engage in double-speak when abroad. Lee Raymond, chair of Exxon, supported industry advertising campaigns in 1997 urging the us not to sign the global warming treaty unless countries like China and India agree to reduce their ghg emissions. But during the same year, he told the World Petroleum Congress in Beijing that fossil fuel use in China "is essential both for economic growth and for the elimination of poverty, which is the worst polluter".
Unfortunately, very often even the groups from South cannot see through the North's industry-driven agenda. An Indian magazine, Adovocacy Internet , brought out by the National Centre for Advocacy Studies in Pune, India, published an article by Daphne Wysham of ips critiquing World Bank funding for coal-based projects in Orissa because they fuel climate change. The reason for this, of course, could be partly because Southern civil society lacks access to information on international environmental politics. But to protect the interests of their constituencies, which obviously are not safely represented by ngo s from North, groups based in South will have to keep a watchful eye on the global in future.
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