Global Green Deal Better Alternative to World Bank

by Mark Hertsgaard

So says the Bank's president, James Wolfensohn. Since assuming his post in 1995, Wolfensohn has cultivated a public image as a compassionate, fresh-thinking leader. He has acknowledged the Bank's previous mistakes and promised it would do a better job of serving the world's poor and respecting the environment.

Nevertheless, Wolfensohn was the target of protesters last week in Washington, where the World Bank and its sister organization, the International Monetary Fund (IMF), are holding their semi-annual meeting. Thousands of environmental, labor, human rights and anti-poverty activists from across the country converged on the capitol, building on their protests against the World Trade Organization in Seattle last December.

Why is it that environmentalists are so riled up about the Bank? After all, the Bank's mission is to alleviate poverty and promote sustainable development. In nations where private capital is too cautious or greedy to tread, the Bank is supposed to step in and fund basic development: water and sewage systems; ports, roads and transportation infrastructure; electricty and communications networks; health and education facilities -- the foundations of a modern economy. Helping the poor while respecting the earth: surely that's the kind of work the activists, social justice types all, should applaud.

The problem is, the Bank often has not lived up to its lofty rhetoric. Time and again, it has financed gargantuan, ill-conceived projects whose anti-poverty effects are indirect at best and whose environmental consequences are downright disastrous. Like the IMF, the Bank often attaches conditions to its loans that force countries to reduce badly needed social spending in order to repay banks in the wealthy North. Likewise, Bank-funded projects often do more to subsidize Northern corporations than to fight Southern poverty.

Right now in the western African nation of Chad, the Bank is trying to fund the development of a vast oil field and pipeline that will extend 650 miles through Cameroon to the Atlantic Ocean, ravaging the ecosystems and human settlements in one of Africa's great remaining rainforests. The Bank is loaning or guaranteeing some $540 million of the project's $3.5 billion total cost, but the profits will go to its private partners, Exxon-Mobil and Chevron, and the notoriously corrupt governments of Chad and Cameroon.

The Bank claims that the project's environmental impact will be minimal and the wealth generated will lift living standards of the local poor. But the Dutch government has twice rejected the Bank's environmental impact assessment as unconvincing. The Bank's "Revenue Management Plan" to keep kleptocrats in Chad and Cameroon from pocketing its loan money has been ridiculed as naive and unworkable by Harvard Law School's Human Rights Project. Perhaps most disturbing are the parallels between this project and Royal Dutch Shell's operations in neighboring Nigeria. As in Nigeria, where Shell's development of oil in the south overwhelmingly benefitted the nation's more prosperous north, leading to protests that resulted in the execution of activist Ken Saro-Wiwa, the Bank's project in Chad will extract oil from the south without delivering benefits to the local community. Thus the Economist's "Intelligence Report" estimates at fifty-fifty the odds that the project will re-ignite civil war between northern and southern Chad.

The Chad project is, in short, corporate welfare at its most naked, and it makes about as much environmental sense as incinerating nuclear waste. This is all the more true considering that the project's purpose is to bring to market more oil that humanity can't afford to burn anyway -- not because of prices at the pump, but because of rising temperatures and fiercer weather around the world. Our longstanding fossil fuel use has already begun changing the global climate, so doesn't environmental prudence suggest that the Bank should be leading the transition away from fossil fuels and toward solar and other non-carbon energy sources?

The Bank agrees -- at least on paper -- that better energy efficiency and deployment of solar power are the best ways to deliver electricity to the estimated two billion humans who still live without out it. Nevertheless, the Bank remains one of the world's leading financiers of climate change. In the six years since the Earth Summit of 1992, the Bank spent twenty-five times more funding fossil fuel development than promoting clean and renewable energy sources, according to a study by the Institute for Policy Studies, a Washington-based research group. The IPS study, "Changing the Earth's Climate For Business," found that between mid-1992 and 1998 the Bank spent $13.6 billion to fund development of oil fields, coal mines and fossil fueled-power stations in developing nations and the former Soviet bloc; most of the money went to developing oil in Russia and coal in China. Over the course of their thirty to fifty year lifetimes, the Bank's projects will release a staggering thirty-six billion tons of carbon dioxide. That is substantially more carbon dioxide than the twenty-four billion tons the entire world annually emits. And although the Bank's funds are ostensibly devoted to aiding the world's poor, nine out of ten of the projects subsidized such giant corporations as Exxon, Chevron, and British Petroleum.

To paraphrase Cheever, what do you do with a Bank like that, oh, what do you do? By allowing its laudable public purpose to be hijacked by private interests, the Bank has forfeited its claim to the moral high ground and invited the wrath of environmental and development activists the world over. Yet the Bank is too important a potential force for good in the world to write off as irredeemable. Its battered reputation might still be restored, if it is ready to undergo a comprehensive reform of its attitudes and behavior.

Imagine what the Bank could accomplish if it diverted the $540 million it wants to spend subsidizing Exxon in Chad to genuinely sustainable development initiatives. It could provide solar panels and cookers to villages throughout the region. Or, in keeping with the Bank's preference for macro-solutions, it could provide the financing needed to bring industrial-scale solar power to market. A recent study -- led by British Petroleum experts, no less -- found that photovoltaic solar power would be competitive with coal and oil-fired electricity tomorrow, if only someone built a photovoltaic solar factory large enough to capture the economies of scale that come with mass production. BP likes to talk green, but it has declined to build that factory, presumably because it prefers to keep solar off the market in deference to its core business of oil production. But the World Bank could finance that factory, whose projected cost happens to be approximately $540 million.

Bringing photovoltaic solar on line while increasing energy efficiency could be the single biggest step humanity could take to fight both poverty and climate change, for it would allow developing nations to increase energy consumption without relying on the coal and oil they now use in such abundance. A Global Green Deal would pursue these kinds of technological transformations not just in energy but agriculture, transportation, construction and all facets of civilization. Such global environmental retrofitting would generate an enormous amount of economic activity. Best of all, this activity would be labor-intensive; investments in energy efficiency yield two to ten times more jobs as investments in fossil fuel and nuclear power. In a world where over one billion people lack gainful employment, creating jobs is essential to fighting the poverty that retards environmental progress and wounds human dignity.

Consider China, the world's largest consumer of coal and second largest producer of greenhouse gases. With its huge population and grand economic ambitions, China could doom the world to severe global warming if it keeps expanding coal use. But China would use fifty percent less coal if it simply installed the energy efficiency technologies -- better lights, motors and insulation -- now available on the world market.

Under the Global Green Deal, the World Bank (as well as governments in Europe, America and Japan) would help China buy these technologies, rather than promoting further coal development. This approach would reduce the ghastly air and water pollution now responsible for nearly one of every three deaths in China but without sacrificing the energy consumption needed to fight poverty. Northern governments would also benefit, for they could address climate change while creating jobs and profits for their own workers and companies; they would also learn the advantages of adopting similar principles at home -- a good thing, for the Gobal Green Deal cannot be credible or successful unless both North and South participate. For its part, the Bank would have the satisfaction of finally matching its rhetoric with concrete achievements on the ground.

James Wolfensohn says he wants his institution to put smiles on poor children's faces, but at the moment it's the executives of Big Oil who are laughing all the way to the bank. If Wolfensohn truly wants to change that, he should direct his bureaucrats to stop funding abominations like the Chad-Cameroon oil pipeline and get behind the Global Green Deal. Either that, or get used to more demonstrations like last weekend's.