World Bank Doesn’t Belong at the Green Climate Fund’s Drawing Table

The UN climate talks held in Cancun late last year paved the way for a new Green Climate Fund to channel money for developing countries to build resiliency, protect forests, and bring low-carbon technologies and practices into mainstream use.

That marked a critical victory for developing countries, but the biggest fights have yet to come. In the coming year, a committee of 40 government representatives (25 from developing and 15 from developed countries) will be working furiously with the UN and other institutions, as well as finance, gender, community participation, and other experts, on making this fund a reality. They must do everything from creating a management structure to forging a global definition of “clean energy.”

This ambitious task is meant to result in a Green Climate Fund that can handle the tens, if not hundreds, of billions of dollars a year developing countries will need in the coming decades to combat climate change and at the same time continue their fight against poverty.

It’s fundamentally disturbing, however, that the World Bank — the planet’s leading cheerleader for a growth-without-limits development paradigm — is elbowing its way to the front of the line to help design the new fund, almost guaranteeing itself a permanent role in its management.

More than 90 environment, development, human rights, and anti-debt organizations from around the world conveyed this concern in a letter to the Secretary of the UN Framework Convention on Climate Change (UNFCCC) and the convener of the first fund design meeting.

In the letter, civil society leaders called for strictly limiting the World Bank’s role in the design on the Green Climate Fund for the following reasons:

First and foremost, the World Bank continues to finance dirty coal, oil and gas projects. According to a World Bank Group Energy Sector Financing Update prepared by the Bank Information Center, the global lender supported fossil fuel projects to the tune of $6.6 billion in 2010, a 116 percent increase from the year before. That included $4.4 billion for coal power projects, more than it spent on all new renewable energy and energy efficiency projects combined for the year ($3.4 billion). So while the World Bank is undeniably increasing it renewable energy financing, the volume is still dwarfed by its fossil fuel lending.

Bobby Peek, director of groundWork/Friends of the Earth South Africa, an environmental justice group in Durban, South Africa, that endorsed the NGO letter, noted, “Only a year ago the World Bank made its largest loan ever to dirty energy, signing $3.75 billion over to the Eskom energy company to build a 4,800MW coal-fired power station in South Africa.” He asked, “Is this the institution we want to put in charge funding the solutions to the climate crisis?”

Bank officials say that the Eskom power plant — and similar coal projects in other countries — are important for bringing access to electricity for energy-poor families. But environmentalists and local activists argue that the project will benefit large mines and smelters, not the local community.

In fact, in an independent review of the Bank’s 26 fossil fuel loans in 2009 and 2010, Oil Change International found that none of these clearly identify access for the poor as a direct target of the project. The Bank agreed that not a single coal or oil project could be classified as improving energy access.

To the World Bank’s credit, it may be about to change course to a degree. A leaked draft of its new 10-year energy strategy revealed plans to move away from supporting new coal projects in middle-income countries. But environment and development groups argue that the language used in that draft document is riddled with loopholes. The energy plan also includes a massive scale-up of hydropower mega-dams that threaten to displace communities, destroy fisheries, and release their own greenhouse gases.

The Green Climate Fund should remain fully independent from the World Bank. Its design committee should engage experts from UN agencies and all regions of the world. Experts on gender, sustainable development, poverty alleviation, renewable energy and efficiency technologies, indigenous peoples, human rights, and social and environmental safeguards should weigh in, too.