World Bank Projects May Increase Global Warming

"Changing the Earth's Climate for Business," the new study, published by the Institute for Policy Studies (IPS) and the International Trade Information Service (ITIS), looks at the role of the World Bank and multinational corporations in the Group of 7 (G-7) major industrialized countries that have won the contracts for these power projects.

The authors of the new report, Daphne Wysham of IPS and Jim Valette of ITIS, say that over the past five years, the Bank has loaned $9.4 billion for oil, gas, and coal projects as well as for power projects involving these three fossil fuels. Another $4.1 billion in Bank loans for similar projects is pending.

The approved projects will add 36 billion tons of carbon dioxide to the world's atmosphere over their lifetimes, compared with the current annual global output of 27.6 billion tons of carbon dioxide emissions, the study says. Pending projects will add another 5.1 billion tons of carbon dioxide, according to the study.

A senior World Bank environment department official, who wished to remain anonymous, said that the study shows "absolutely no appreciation for the fantastic energy demands in countries like China and India."

"We are doing all we can, but you have to understand that we have a very painful dialogue with these countries who say that they have the right to get rich...like the United States or Europe," he added.

The report has been released exactly five years after the Earth Summit in Rio de Janeiro, Brazil, when leaders from almost every country in the world came together to sign accords on two key environmental issues: climate change and the preservation of biodiversity.

Governments at the summit pledged to raise billions of dollars to reduce global warming and protect biodiversity through a new institution called the Global Environment Facility (GEF) that would be based at the World Bank.

Even though the GEF is up and running, activists today say they feel betrayed by the Bank, because it has been quietly increasing support for projects that contribute substantially to global warming.

"The left hand of the Bank finances climate-friendly activity to the tune of $110 million a year, while the right hand of the Bank finances climate change-enhancing activity to the tune of $2 billion to $3 billion a year," say Wysham and Valette.

"In over 90 percent of the procurement contracts awarded by the Bank for work in developing countries, G-7-based oil, gas, and coal corporations have played a direct capital role, profiting immensely off of monies intended for 'poverty alleviation' and 'sustainable development' in the Third World," they add.

The study, published just a week before the G-7 Summit in Denver, points out that some 84 percent of the Bank's power loans go to industry. On the other hand, it says, less than five percent of the World Bank's energy budget is devoted to rural electrification; less than three percent of the its energy lending is devoted to renewable energy; and about two percent goes to fuel wood lending.

This, despite the fact that the Bank's primary mission is theoretically devoted to helping the two billion people in rural areas of the Third World with no access to electricity or cooking fuels other than wood, crop waste, or animal dung.

The authors point out that their figures are extremely conservative and that if other Bank projects are included, the total increase in greenhouse gas emissions could easily top 10 times the current annual global greenhouse gas emissions.

For example, the report's estimates do not include the carbon dioxide emissions that would be emitted from Russia, where the Bank is supporting private coal mines. The emissions generated over the life of these mines alone will be 311 billion tons of carbon dioxide, or more than 10 times the current annual global greenhouse gas emissions.

Nor do these figures include greenhouse gases generated as a result of transportation loans made by the World Bank, or to such energy-intensive industries as steel, aluminum, and cement plants.

In addition, the report focuses exclusively on carbon dioxide, ignoring methane -- an even more potent greenhouse gas -- that is released in coal, oil, and gas extraction, transportation, and burning.

A study produced in 1994 by the U.S.-based Environmental Defense Fund and the Natural Resources Defense Council concluded that only two out of 46 electricity loans examined were consistent with these policies.

The new study bolsters a 1996 World Wildlife Fund report which showed that only three of 56 energy projects examined actually complied with Bank energy efficiency guidelines.

The World Bank environment official admitted that the Bank was not happy with the implementation of their new policies.

"Those two reports have caused an acrimonious debate within the Bank," he said. "But at the same time, you have to realize that in countries like China, where demand increases by thousands of megawatts a year, alternative energy solutions simply don't work. There are no renewable energy technologies that can meet this kind of demand."