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A few well-written words can convey a wealth of information, particularly when there is no lag time between when they are written and when they are read. The IPS blog gives you an opportunity to hear directly from IPS scholars and staff on ideas large and small and for us to hear back from you.

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Entries tagged "World Bank"

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World Bank Energy Lending Still Veering in Wrong Direction

April 11, 2014 ·

(Flickr/Claudio Schwarz)More than one billion people around the world still lack access to modern electricity.

At this week’s spring meetings, discussions between environment and development civil society groups and the World Bank highlighted tensions between those who seek to tackle energy poverty using every energy option available, and those advocating for the Bank’s financing to focus on clean, sustainable solutions for these developments.

In 2013, the World Bank released a report describing how the institution’s energy sector activities have shifted — except in special circumstances — away from coal and toward renewable energy and “lower carbon” fuels.

But analysis of the World Bank’s energy investment tells a different story. Oil Change International points out that the Bank spent $1 billion last year alone financing oil, coal, and gas exploration projects.

Vijay Iyer, Director of the World Bank’s Sustainable Energy Department, argued on a panel at the spring meetings that energy lending must focus on reliable access to affordable modern energy at volumes that cover people’s needs. According to Iyer, fossil fuel options — particularly expansion of greenhouse gas-emitting natural gas — must stay on the table in order to keep power affordable. He cited the relatively high up-front investment needs of renewable energy installation as a barrier to clean energy access for the poor.

But Oil Change International managing director Elizabeth Bast, also on the panel, underscored that despite the Bank’s rhetoric on reaching the poor, only 8 percent of the Bank’s energy portfolio is actually focused on energy access.

If the World Bank were serious about bringing energy access to the poor, it would dedicate the majority of its lending to do so. For the rural poor, that means providing small and medium-sized businesses the capital — and investors, the guarantees — to build mini- and off-grid renewable energy systems.

The Tata Mundra Coal Plant: A Test for Presidents Obama and Kim

September 12, 2013 ·

The Tata Mundra coal plant in India (Joe Athialy/Flickr)In June 2013, President Barack Obama announced that he was “calling for an end to public financing for new coal plants overseas.” Within weeks of this announcement, World Bank President Jim Kim announced the Bank would phase out its support for most forms of coal. However, what World Bank President Kim and President Obama left unsaid was how both presidents would treat current public financing of coal-fired power plants, particularly plants that are violating the policies set by the World Bank. 

President Kim may soon have to tackle just this issue.  A case in point is the Tata Mundra coal-fired power plant in India. The International Finance Corporation (IFC), the World Bank’s private sector lending arm, in 2008 provided $500 million in financing to back this massive coal-fired power plant in Tunda-Vandh village near Mundra, a town in the Indian state of Gujarat. The complex of five 800-megawatt supercritical boiler plants was supposed to cost $4.14 billion to build and be owned and operated by Coastal Gujarat Power Limited, a special purpose vehicle owned by India’s largest private multinational corporation, the Tata Group.

The IFC isn’t the only powerful public international financial agency backing the Mundra power project:  The Asian Development Bank, The Japan Bank for International Cooperation (JBIC), and the Korea Export Insurance Corporation are also involved.

The project now faces a whopping 270% in annual debt, and its CEO has stated the project is financially unviable unless electricity tariffs are drastically raised, effectively passing on the costs of Tata’s poor planning and misleading calculations to the Indian people. This negates one of the primary justifications the IFC presented in financing this project: that it would bring cheap electricity for the energy-deprived and energize the local economy.

Furthermore, the project also faces mounting debt which must be paid back in dollars, not rupees, at a time when the Indian rupee is dropping in value.

This power plant is burning about 13 million tons of coal a year, emitting nearly 40 million tons of CO2.  It also generates tons of toxic fly ash and other toxic byproducts and radioactive elements due to coal combustion. This Tata Mundra plant, plus two others nearby, burn a total of 30 million tons of coal per year and emit about 88 million tons of CO2 annually—more than the combined total annual emissions of Bangladesh (a nation of 150 million people), Nepal, Sri Lanka, Bhutan and the Maldives.

The Mundra plant is situated on the Gulf of Kutch, with ready access to ports and coal that is being imported from Indonesia and Australia. What once was a region with abundant fish, farms, and pastoralists is now a region contaminated by pollution, with tens of thousands of fisher-folk and pastoralists losing their livelihoods.

In June 2011, community groups asked the IFC’s Compliance Advisor Ombudsman (CAO) to investigate environmental and social violations of the contract Tata signed with the IFC. The CAO  full audit report and the IFC management’s response are expected this week. A report produced by an independent fact-finding team found numerous violations of IFC policies.

So now the question becomes: Does the IFC remedy the Tata Mundra violations, or simply cancel its support for the project, given President Kim’s and President Obama’s stated opposition to public financing of coal-fired power overseas? To do otherwise is to allow Tata to not only violate IFC policies, but to mislead its investors and then pass on the costs of its boondoggle to the very people whose poverty the company is theoretically alleviating.

What the Tata Mundra case should make clear to President Kim and others around the world is: Coal is a bad investment—for the poorest, for those consuming the power, for the Bank, and more broadly, for all of us. As a recent study of a dozen of 2012's wildest weather events found, man-made greenhouse gas emissions from coal burners like Tata’s are increasing the likelihood of about half of the wild weather events we lived through in 2012, including Superstorm Sandy; estimates suggest Sandy alone cost $68 billion.

We can’t afford to keep subsidizing these boondoggles. We can and must use public funds to invest in clean, renewable energy alternatives, with a primary focus on energy for the poorest.

Winning the Fight Against Coal Financing

July 18, 2013 ·

Child in India Tries to Get Water from Flyash-Polluted RiverWhen President Obama made his climate speech at Georgetown University in which he urged an end to almost all public financing of coal, Jim Vallette, former research director of the Sustainable Energy & Economy Network at IPS, dropped me an e-mail and we reflected on how many years it had taken us to get to this point.

The first visit I made to a World Bank-financed coal mine in India in 1996 is still etched in my mind. Traveling for miles by train, bus and then taxi to get to the site, I saw first-hand what our "poverty alleviation" funds were doing. It was a moonscape, black, grey, with nauseating smoke billowing out of perpetual fires, deep underground. A child covered in flyash, was standing next to a black river, desperately trying to get a drink of clean water.

I later learned the wells had all run dry; the coal plant had used it all for its cooling towers. And the river was black with flyash, dumped by the World Bank-financed Talcher coal burner directly into the Nandira River. The only way this child could get a drink of water was to try to dig a hole in the sandy riverbed and hope that would filter out the pollutants.

I came back to Washington in 1996, and Jim and I got fired up to fight the public financing of coal, much of it being done in the name of poverty alleviation and sustainable development.

When we released a series of reports examining public financing of fossil fuels, starting with the World Bank, then on to the EBRD, then, in 1999 on OPIC and Ex-Im, we didn't know when these banks we had set our sites on would finally be forced out of coal. But we knew it had to come.

That day came on June 25, when we finally heard the following words uttered by President Obama:

"Today, I'm calling for an end of public financing for new coal plants overseas unless they deploy carbon-capture technologies, or there's no other viable way for the poorest countries to generate electricity. And I urge other countries to join this effort."

Were these words to be believed? On July 16, the World Bank approved a new energy strategy which would effectively phase out the Bank's institutional support for coal. The paper "affirms that the World Bank Group will 'only in rare circumstances' provide financial support for new greenfield coal power generation projects, such as 'meeting basic energy needs in countries with no feasible alternatives.'"

Then, on July 18, we got the following news: The US Export-Import Bank had rejected a coal plant in Vietnam. It was the first rejection of a coal burner since Obama's climate speech of several weeks ago. 

This day came too late for that child and others in that community in India, who were forced to drink poisoned water. And I'm not pleased with the caveats Obama placed on his pledge. Nor am I pleased with the possibility that the World Bank, Ex-Im Bank and others may simply switch from coal to gas, especially if that gas is derived from “fracking,” which can be worse for our already unstable climate than coal.

But hopefully, this is the dawn of a new day, when public financing of coal mines and power plants around the world is no longer acceptable. It's not enough, of course, but after 16 years of persistent pressure from IPS and other groups, our government seems to finally be listening.

Is the World Bank turning up the heat?

December 6, 2012 ·

Daphne Wysham on Al Jazeera discussing the World Bank and climate change:

"It was 1992 when the World Bank was asked at the Rio Earth Summit to begin to marshall the funds to address the climate crisis, to help the developing world move away from fossil fuels, and they have done the exact opposite."

Daphne Wysham is a fellow at the Institute for Policy Studies and works with the Sustainable Energy and Economy Network. See the interview on Al Jazeera's website here.

An Appeal to Canada to Stand with El Salvador, the First Nation to Halt Gold Mining

November 14, 2012 ·

I paid a visit this week to the Canadian Embassy with colleagues from the Institute for Policy Studies and other environmental and public policy organizations to deliver a letter to the Canadian Ambassador to the United States. We are demanding that his government tell Pacific Rim — the Vancouver-based mining company — to stop bullying the people of El Salvador.

John Cavanagh, IPS Director, speaks with Canadian Ambassador to discuss how Canadian company Pacific Rim is bullying El Salvador.

Our letter was co-signed by Greenpeace, Sierra Club, Public Citizen, Friends of the Earth, Earthworks, the Center for International Environmental Law, and others. We wrote:

“Given the severe environment and human rights implications associated with Pacific Rim’s investment in El Salvador and the gold mine and cyanide leach-water processing plant it is proposing, we urge the Canadian government to alert Pacific Rim that its investor-state claim against the Salvadoran government for enforcing its own environmental laws and striving to protect its water and communities tarnishes the image of the Canadian mining industry.”

Salvadoran community leaders tell us that, since 2009 when they came to Washington DC to receive the Letelier-Moffitt human rights award from IPS, Pacific Rim has been trying to transform itself from victimizer to victim. This behavior is reprehensible. Some have lost their lives due to anti-mining activities, such as Marcelo Rivera, the brother of one of those who received the awards, who was assassinated for speaking out about the perils of gold mining.

This is the effect of free trade agreements.

Despite the prospect of major environmental damage, Pacific Rim says it has the “right,” under the investor–state regime allowed by investment rules in free trade agreements, to reap the profits that would have been brought by gold mining. In pursuit of these so-called lost profits, Pacific Rim is demanding up to hundreds of millions of dollars in compensation at the International Centre for Settlement of International Disputes (ICSID), an unaccountable World Bank tribunal that operates behind closed doors.

The Sierra Club “opposes trade and investment agreements that allow foreign corporations to attack environmental and public health protections in secret trade tribunals,” says  Ilana Solomon, trade policy expert at the Sierra Club. “This lawsuit by Pacific Rim, which threatens the health and safety of communities in El Salvador, is a case in point for why we oppose these secret tribunals." 

Using large roll-out maps of El Salvador watersheds that he brought along, IPS director John Cavanagh explained to the First Secretary of the Canadian Embassy that, though there is always danger from the mining and processing necessary to extract gold, Pacific Rim’s activity in El Salvador is particularly threatening given that El Salvador is the second most water-starved country in our hemisphere. A full 98 percent of El Salvador’s surface water is contaminated, some of it from mining activity halted decades ago. Yet Pacific Rim stands to exacerbate El Salvador’s water problems, threatening the river that supplies water to over half the population. 

There is a broad consensus in the department of Cabañas and throughout the country that opening a mine in the Lempa River watershed presents a dangerous risk that El Salvador cannot afford. Polling shows that the people of El Salvador oppose gold mining and the government supports this mandate.

Pacific Rim claims that those who oppose gold mining are “certain,” “rogue,” and “anti-developmental” organizations. But hundreds of environmental organizations in the United States, Canada and globally stand firm to defend the right of the people of El Salvador  — the first nation to halt gold mining — to defend their environment and to implement public policies to this end. Yesterday we asked the embassy official to notify his government that we expect an escalation in worldwide protests demanding that Pacific Rim drop its suit at the World Bank’s ICSID, and leave El Salvador.

In addition to environmental concerns, Pacific Rim’s project has caused divisions and severe human costs. As our letter states:

“We are deeply troubled by the human rights abuses associated with the Pacific Rim mine. Already, four environmental activists have been assassinated and many more have been threatened, including journalists who operate a local radio station.”

No company should have the right to threaten a country like this.

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