Sustainable Development South and North

Sustainable Development South and North
Climate Change Policy Coherence in Global Trade and Financial Flows
Daphne Wysham
SEEN/IPS/TNI, 25 March 2003

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Press Release, 11 April 2003: World Bank Donor Nations Should be Debited for Carbon in World Bank Projects

As World Bank officials and executive directors gather in Washington for their spring meetings, a recent policy paper by the Institute for Policy Studies argues that World Bank donor countries, the majority of whom are from the wealthy North, should be debited for the carbon in World Bank-financed carbon-intensive oil, gas and coal projects under the Kyoto Protocol. The World Bank has financed over $25 billion in oil, gas and coal-related projects over the past 10 years. The paper makes the argument based on the rationale that the Kyoto Protocol allows for Northern countries that are signatories to the Protocol to earn "carbon credits" under the Clean Development Mechanism (CDM) for projects that are financed in developing countries.

However, while the CDM provides a "carrot" for investors to invest in clean energy projects, there is no "stick" to discourage investors from profiting from dirty, poverty-inducing development projects. As a result, public financial flows targeting clean energy projects in the global South are being overwhelmed by public financial flows toward carbon-intensive projects, including oil and gas pipelines, coal-fired power plants, and energy-intensive industries for export back to the North.

"Rather than steering developing countries down a sustainable development path and toward poverty alleviation, as it claims to be doing, the World Bank is locking developing countries into a dangerous and dirty path of fossil-fuel-based development," said Daphne Wysham, IPS Fellow and author of the recently released policy paper, Sustainable Development South and North: Climate Change Policy Coherence in Global Trade and Financial Flows. "The World Bank continues to finance dirty energy projects, claiming they are serving the 2 billion poorest without access to energy services, but the primary beneficiaries of these projects are corporations like Halliburton, Enron and Exxon-Mobil," said Wysham.

In order to fulfill the ultimate objective of the Climate Convention, global emissions must peak within the next 20 years. Given that the life span of most energy infrastructure exceeds 25 years, this means that public institutions like the World Bank should be assisting developing countries in accelerating the process of de-linking emissions from economic growth starting now if all of us are to escape the dire effects of climate change. Some developing countries have already made significant progress in improving energy efficiency but much of the investment in developing countries remains fossil fuel-intensive; the poorest in the developing world are predicted to pay the highest price as droughts, floods, and disease increase.