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Civil Society Statement on Debt and Climate Change

July 2005

We the undersigned call on the Group of 8 (G8) leaders to recognize and act upon the twin, interlinked crises of debt and global warming. Current G8 energy investments are fundamentally at odds with sound development practice. Ongoing public financing of the fossil fuel industry is increasing debt, poverty, and climate change. Urgent action is now required to substantially reduce emissions, reduce fossil fuel dependence, and protect people around the world, especially the vulnerable, the poor and disappearing nations.

Such urgent action requires that G8 nations make rapid, specific, substantial and sustained cuts in their domestic emissions of greenhouse gases. It also requires that G8 leaders cut the significant emissions that are resulting from their taxpayer-financed multilateral and bilateral lending agencies.

Export credit agencies and international financial institutions are leading financiers of oil, gas and coal projects around the world. The World Bank Group alone has financed over $25 billion in oil, gas and coal contracts (including fossil fuel-fired power plants) since the UN Climate Convention was signed by a majority of the world’s countries in 1992. The current and future emissions from all World Bank fossil fuel projects financed since 1992 is equivalent to almost two years’ worth of global greenhouse gas emissions.

While the World Bank is supposed to serve the world’s poor, it is the poor who are likely to suffer first and foremost from climate change, as they will not be able to take preventive measures to protect themselves. In addition, over 80% of all oil projects financed by the World Bank are designed to produce petroleum for export to the wealthy countries of the north. Along with most of the gas and coal projects financed by the World Bank, they do little or nothing to meet the growing energy needs of the poorest. Public financing, intended for poverty alleviation and sustainable development, instead ends up being simply another public subsidy to wealthy governments, consumers and corporations.

Other multilateral development banks and publicly financed export credit agencies (ECAs) follow a similar pattern of investment. U.S. export credit and investment insurance agencies alone have invested over $32billion in financing and insurance for oil and gas fields, pipelines and coal-fired power plants since 1992 without assessing their contribution to global warming nor their impact on the U.S. or global environment. Estimates suggest these U.S. taxpayer-backed ECA investments alone are releasing and will release over one year’s worth of global greenhouse gas emissions. Other ECAs have supported fossil fuel-based energy projects which produce or will produce as much as 20 times the amount of greenhouse gases as their own governments have committed to reduce under the Kyoto Protocol.

Meanwhile, the World Bank and the Global Environmental Facility, created
at the 1992 Earth Summit to act on climate change, combined have invested over 17 times more in fossil fuels and fossil fuel-driven power plants as they have in renewable forms of energy and energy efficiency projects. Carbon trading engineered by the World Bank Group in advance of the Clean Development Mechanism is resulting in few, if any, truly renewable energy projects. Instead, monoculture tree plantations, gas flare reduction and methane capture from waste dumps are gaining the lions’ share of financing­-while carbon credits as currently enacted enable dirty industry to continue with business as usual in the North.

Gas flaring and venting by petroleum corporations in Nigeria remains sub-Saharan Africa’s largest source of greenhouse gases, yet, the WorldBank is preparing to sell carbon credits for Chevron/Shell’s West-African Gas pipeline, despite the fact that overall greenhouse gas emissions due to flaring will not be reduced by this project. Such initiatives are misleading and provide no net progress toward climate stability and a net loss for local as well as global communities.

Thus, the public institutions entrusted with averting a climate catastrophe are dangerously exacerbating the problem. Such institutional corruption results in paltry funding for renewable energy, a growing energy deficit among the poorest in developing countries, and increased developing country debt.

The World Bank’s own Extractive Industries Review, a three-year study
commissioned by the World Bank’s president with involvement of government,
industry and civil society, came to the conclusion that, if the World Bank is serious about poverty alleviation and climate change, it should get out of coal immediately, get out of oil by 2008, and rapidly scale up its investments in renewable energy at the rate of 20% a year. Yet senior World Bank officials openly reject the report’s recommendations.

Thus, we call on the G8 nations to:

1) Halt the Northern financing of Southern coal-fired power projects immediately;

2) End aid financing for oil. OECD countries should end Northern
governmental subsidies for new oil projects in the South. Such projects
have not historically provided energy for the poor, and are proven to be
associated with a rise in poverty, public health problems, local
environmental destruction, conflict, corruption and debt, and to increase
the risk to the poorest from climate change. Thus, they cannot be
considered as “aid” for the poor;

3) Set up an international sustainable renewable energy fund,
independent of the development banks and export credit agencies, with
funding provided by the G8, that would set as a target the delivery of
small-scale, community-based, sustainable, equitable and appropriate
energy services and technologies, excluding large dams and nuclear power,
to the more than 2 billion poorest living in developing countries,
low-income areas of developed countries, and countries with economies in
transition within the next 20 years;

4) Work with developing countries, especially small island states and
Arctic regional local authorities, to build technological and
infrastructure capacity to assist them in developing solutions to mitigate
and adapt to the adverse effects of climate change;

5) Immediately cancel 100% of the remaining multilateral and
bilateral debt without requiring that debtor countries join the HIPC
(Heavily Indebted Poor Country) initiative as a precondition for debt
cancellation, nor accept any additional harmful economic conditions.

6) Concentrate development aid to oil-exporting countries on
helping them diversify their economies in order to minimize debt burdens
from excessive oil-export dependence and maximize income generation for
the population;

7) Commit by the next G8 Summit in 2006 to a global harmonization
of energy and development strategies in light of global warming, debt,
poverty, and the finite quantity of fossil fuels remaining in the ground
and the limited ability of our atmosphere to safely absorb additional
greenhouse gas emissions. These issues should henceforth be viewed as
inextricably woven together.

Signed,