PRESS RELEASE

Sender: dwysham@seen.org 

For Release June 17, 1997 

New Study Reveals World Bank Subsidizing Climate Change 

G-7-based Oil, Gas and Coal Corporations Profiting from "Poverty Alleviation" Monies 

At a time when greenhouse gas emissions are rising rapidly around the world, a new report shows that oil, gas and coal projects financed by the World Bank, whose majority control rests with the "Group of Seven" industrial nations, plus Russia, will, over the life of these projects, release more carbon dioxide than is now being produced per year by the entire planet.

 "Changing the Earth's Climate for Business," a report by the Institute for Policy Studies and the International Trade Information Service (U.S.), in coalition with the Halifax Initiative (Canada) and Reform the World Bank Campaign (Italy), examines fossil fuel projects financed by the World Bank since the Climate Convention was signed by most of the world's leaders in Rio in 1992. The report's findings show that the World Bank Group has not heeded the warnings of Rio: Instead it has financed fossil fuel projects around the world whose cumulative emissions contribute at least 36 billion tons of carbon dioxide into the Earth's atmosphere; current annual emissions of carbon dioxide for the planet are now about 23 billion tons. 

"It is the pace of World Bank financing-- about 7 billion tons of carbon dioxide per year--that is most shocking," said report co-author Daphne Wysham, coordinator of IPS's Sustainable Energy and Economy Network. "This is not only environmentally unsustainable--it is the height of hypocrisy for an institution entrusted with poverty alleviation, sustainable development, and climate change mitigation." 

The World Bank is the world's largest development institution; it is also home to the only global institution thus far established to mitigate climate change, the Global Environmental Facility (GEF). The IPS study shows that the Bank spends over 100 times as much on fossil fuel development as on the entire GEF budget for projects that "avert" greenhouse gas emissions.

 The IPS research also shows that these same Bank-financed fossil fuel projects reflect significant G-7 involvement: 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. Climate change is expected to pose particularly difficult challenges for the poorest people living on marginal land in developing nations--whose standard of living World Bank lending is supposed to improve. 

The report's findings, while staggering, do not account for all World Bank-related greenhouse gas emissions--only those directly attributable to coal, oil, and gas projects financed since the Climate Convention was signed five years ago. 

The Climate Convention places no restrictions on developing countries' CO2 emissions, so that they may address the higher priority of poverty alleviation among their populations. Yet the IPS study shows that this loophole is being exploited for private gain by some of the world's most powerful corporations. Meanwhile, less than 9 percent of overall World Bank lending is devoted to addressing the energy needs of the 2 billion impoverished people in rural areas of the global South with no access to electricity or cooking fuels other than wood, crop waste or animal dung. 

This report, the result of a detailed investigation conducted by the Institute for Policy Studies, is being released jointly, with three other non-governmental organizations, The Halifax Initiative (Canada), the Reform the World Bank Campaign (Italy) and the International Trade Information Service (US), and is available in German, Italian, and Japanese; its release is timed to coincide with the G-7 Summit in Denver June 20-22, and at the UN General Assembly in New York, the five-year anniversary of the Earth Summit at Rio, June 23-28. 

For additional information, contact: 

Daphne Wysham, IPS. Phone: 202-234-9382, x208. Fax: 202-387-7915. e-mail: dwysham@seen.org 

Jim Vallette, ITIS, 207-244-3106. e-mail: itis@igc.apc.org 

Robin Round, Halifax Initiative, Ottawa, 613/241-4611.e-mail: sierra@web.net 

Francesco Martone, Reform the World Bank Campaign Phone: 39.6.24404212. Fax: 39.6.2424177. E-mail: fmartone@gn.apc.org 

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The full report is 134 pages. If you can read attached or binary files, please send a request by e-mail for the full report. Otherwise, please send a check for $10 ( $15 for Europeans to cover photocopying and mailing costs) to: IPS, attn: SEEN, 733-15th St., NW, Suite 1020, Washington, DC 20005. 

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The World Bank and the G-7: Changing the Earth's Climate for Business 

An analysis of World Bank fossil fuel project lending since the Earth Summit Key 

Findings: 

1. Since the Earth Summit, the World Bank has funded projects that will add carbon emissions to the Earth's atmosphere equivalent to more than ALL current annual GLOBAL fossil fuel emissions. 

Since the Climate Convention, designed to limit greenhouse gas emissions, was signed by most of the world's leaders at the 1992 Earth Summit in Rio de Janeiro, the World Bank Group{1} has helped finance fossil fuel projects which will, over their lifetimes, release the equivalent of more than the entire planet's current annual carbon emissions from fossil fuel burning. Our report details $9.4 billion in Bank commitments from FY1993 to the present which, we estimate, will contribute to the emission of at least 9.5 billion tons of carbon (or 36 gigatons of carbon dioxide) over their lifetimes. In addition, we examine pending commitments of $4.1 billion for projects that will release an additional estimated 1.4 gigatons of carbon (5.1 gigatons of CO2). These estimates are conservative, and do not attempt to include all Bank-financed projects (such as transportation loans or Russian coal mining); were we to do so, this figure could increase by 10 times or more. Total estimated global emissions of carbon from fossil fuel consumption-- the single greatest contributor to climate change -- were approximately 6.24 gigatons{2} in 1995 (28 billion tons of CO2). 

2. Although earmarked for development assistance and poverty relief, 9 out of every 10 World Bank fossil fuel investments actually end up enriching multinational corporations. 

The fossil fuel projects financed by the World Bank boost sales and profits by G-7-based{3} corporations: This report examines 51 Bank-financed fossil-fuel power plants, 20 oil and/or gas field projects, 10 oil or gas pipelines, four coal mining programs that involve more than 26 mines, and 2 oil refineries--for a total of 87 fossil fuel projects. G-7 corporations, among them some of the world's largest, like Exxon, Shell, Amoco and Westinghouse, are investors, suppliers, contractors, or customers in at least 71 of these projects. Of the remaining 16 projects, at least half are actively seeking foreign investors. 

3. The poorest one-third of the planet get less than one-tenth of the World Bank's energy investments while absorbing most of the environmental and social costs of fossil fuels. 

The World Bank-financed fossil fuel-intensive energy development is powering industrial expansion in developing countries, but bypassing the energy needs of the rural poor: About 78 percent of the World Bank's energy portfolio is devoted to oil, coal, and gas, most of which goes to power industry; while less than 9 percent of overall Bank lending is devoted to helping the 2 billion people in rural areas of the global South with no access to electricity or cooking fuels other than wood, crop waste or animal dung.{4} Although the World Bank's mandate is to reduce poverty and promote sustainable development, many of the Bank-financed fossil fuel projects significantly degrade the environment and leave the rural poor worse off. Indigenous peoples and others living subsistence lifestyles are particularly hard-hit by this fossil fuel-intensive development model.

4. The World Bank invests 100 times more money in promoting climate change than in averting it. 

The Bank spends over 100 times as much on fossil fuel investments than it does on the entire GEF budget for projects that "avert" greenhouse gas emissions. The budget for the World Bank-housed Global Environmental Facility --the key global institution charged with financing projects that reduce greenhouse gas emissions -- is dwarfed by the Bank's own fossil fuel investments. 

5. The World Bank and the G-7 are undermining the spirit--if not the letter--of the Climate Convention for profit. 

The Climate Convention allows developing countries unrestricted use of fossil fuels in order that they might address the overriding priorities of economic and social development and poverty eradication. However, this loophole is being exploited by multinational corporations, Northern governments and banks who are continuing in a "business as usual" fashion--emitting greenhouse gases and polluting local environments, while failing to address the energy and economic needs of the poorest. 

FOOTNOTES******************************** 

{1} The World Bank Group includes several institutions which provide loans, credit, equity, guarantees and risk insurance for various projects. These institutions include the International Bank for Reconstruction and Development (IBRD), commonly called the World Bank, the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). 

{2} International Energy Outlook April 1997, p. 138. 

{3} The G-7 is a group of seven of the world's most powerful industrial economies. These are Canada, France, Germany, Italy, Japan, the U.K. and the U.S. Russia has become associated with the G-7 this year. 

{4} "Energy for Rural Areas and the Urban Poor: A Strategy for Developing Countries," April 1995, Power Development, Efficiency and Household Fuels Division, Industry and Energy Dept., World Bank, p. 59.

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