Table of Contents

• Key Findings
• Acknowledgements
• About the Authors and Contributors
• Executive Summary
• Foreword
• The World Bank and the G-7:
  Changing the Earth's Climate for Business

  • A Conservative Estimate
  • Catalyzing Climate Change
    • Privatization: Fiscal Space or Fiscal Nightmare?
    • The Equity Argument: Crocodile Tears
    • Orissa: World Bank "Model of Privatization"
    • The World Bank's Self-Defense
    • The World Bank and Climate Change Policy
    • Not Enough Banking on Renewables
    • Shadow Carbon Tax
  • The G-7 and Climate Policy
• Conclusion and Recommendations
• Backgrounder on Fossil Fuels (Coal, Oil, Natural gas)
• Summary Tables of World Bank Financing of and Emissions from Fossil Fuel Projects

  • A. Methodology
    • Power plant emissions (Coal, Natural Gas, Oil)
    • Fossil Fuel Extraction and Distribution
  • B. Summary tables of greenhouse gas emissions by World Bank-financed fossil fuel projects, FY1993 to present
    • Plants financed since mid-1992; World Bank-financed fossil fuel fields and mines; Additional Fossil Fuel Financing
  • C. Grand Total Tables
• Inventory of fossil fuel extraction projects financed by World Bank Group, mid-1992 to present

  • ARGENTINA
  • ... through ...
  • ZAMBIA
• Inventory of greenhouse gas-emitting power plants financed by World Bank Group, mid-1992 to present

  • ARMENIA
  • ... through ...
  • ZIMBABWE
• Appendix One: G-7 corporate involvement in World Bank-financed fossil fuel projects

  • CANADA, FRANCE, GERMANY, ITALY, JAPAN, U.K. , U.S.
• Appendix B: World Bank fossil fuel contracts awarded to G-7 corporations, 1994-95
• Glossary of Common Terms

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 Group¹ 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 35 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 1.3 gigatons of carbon (4.7 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 gigatons² 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-based³ 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 their "business as usual"--emitting greenhouse gases and polluting local environments, while failing to address the energy and economic needs of the poorest.

Acknowledgements

The authors would like to thank the following individuals for their support and contributions to this report: Antonio Macedo, Mark Hertsgaard, Connie Murtagh, Dafna Laurie, Miho Tsujii, Andreas Strotmann, Carolyn Deere, Myriam Pemberton, John Cavanagh, Sarah Anderson, Jim Barnes, Alicia Korten, Ted Libbey, Peter Kornbluh, Richard Forrest, Ichiro Katsuki, Jon Coifman, Ruth Caplan, Lori Park, and Mimi Kleiner.

About the Authors

The Sustainable Energy and Economy Network, a project of the Institute for Policy Studies (Washington) and the Transnational Institute (Amsterdam), works in partnership with non-governmental organizations in the U.S., Europe, and Asia on environment and development issues. SEEN has produced two prior reports on the World Bank: "The World Bank's Juggernaut: The Coal-Fired Industrial Colonization of the Indian State of Orissa" and "Consultative Group to Assist the Poorest: Opportunity or Liability for the World's Poorest Women?" Network coordinator Daphne Wysham is co-editor of a book of essays on the World Bank, Beyond Bretton Woods: Alternatives to the Global Economic Order (Pluto, 1995). In addition to research and advocacy work, SEEN is working with village women in rural India to develop the "Women's Power Project," a model of sustainable development that incorporates women's empowerment, renewable energy, forest regeneration, and microenterprise. For more information, please contact: Daphne Wysham, SEEN/IPS, 733-15th St., NW, Suite 1020, Washington, DC 20005. Phone: 202-234-9382. Fax: 202-387-7915. E-mail: <dwysham@seen.org>.

The International Trade Information Service, a project of the non-profit Tides Center, was formed in 1995 to investigate and expose the social and environmental impacts of international trade. Previous reports involving ITIS research include three ground-breaking reports on the production and trade of ozone-depleting chemicals (two in collaboration with Ozone Action, one with Greenpeace International); "The World Bank's Juggernaut," a collaboration with SEEN which exposes how multilateral and bilateral aid, combined with transnational corporate interests, is turning a region of India into a "toxic colony" designed to provide G-7 countries with cheap commodities; and "A Day in the Life of U.S.-Indonesia Trade," an independent report on the social and environmental repercussions of a typical day's commerce between two countries. ITIS also provides background reports for numerous non-profit organizations on a wide variety of subjects. For more information, please contact: Jim Vallette, ITIS, P.O. Box 658, Southwest Harbor, ME, 04609, USA. Phone: 1-207-244-3106. Fax: 1-800-861-9611. E-mail: <itis@igc.apc.org>.

Contributors

The Halifax Initiative is a coalition of Canadian environment, development, social justice, and faith groups deeply concerned about the policies and practices of the international financial institutions and committed to their fundamental reform. The Coalition, formed in 1995, has been active on issues including multilateral debt relief, structural adjustment, environmental sustainability, and institutional accountability. Through education, advocacy, and research, the Coalition has fostered an active and engaged public constituency and helped create space for public debate on the role of financial institutions in a globalizing world. The Coalition produces an annual report card measuring the effectiveness of reforms undertaken by the Bretton Woods institutions, and has produced research papers on structural adjustment, multilateral debt relief and the Tobin tax. For more information, please contact Robin Round, Coalition Coordinator, Halifax Initiative, #142-1 Nicholas St. Ottawa, Ontario, Canada, K1N 7B7 Phone: 613-241-4611. Fax: 613-241-2292. E-mail: <rjr@web.net>. Home page: http://www.sierraclub.ca/national/halifax.

The Italian Reform the World Bank Campaign, launched in 1996 by Centro Internazionale Crocevia, is a coalition of 13 Italian development and environment NGOs, and is coordinated by Francesco Martone. The Campaign's work is aimed at enhancing the possibilities of civil society and Parliament to monitor and influence lending activities and policies of the World Bank. Its work mostly focuses on projects where there is significant involvement of Italian transnational corporations, or where policies and projects of the World Bank contradict or undermine international commitments taken by the Italian government, such as under the Climate Convention. The campaign has held a hearing at the Italian Parliament on the need to reform the World Bank and IMF and participated in the Lyon G-7 summit and the 1996 World Bank Annual meeting. The Italian version of the report also includes a section with data and findings of research on Italian bilateral aid funding to thermal power plant. For more information, contact: Francesco Martone, Campagna per la Riforma della Banca Mondiale, Via F.Ferraironi, 88/G - 00172, Roma - Italy. Phone: 39.6.24404212. Fax: 39.6.2424177. E-mail: fmartone@gn.apc.org

Conclusion and Recommendations

The signs of climate change are everywhere. A prehistoric man emerges from the Italian alps during a heat wave, his intact body frozen for centuries. The Antarctic ice shelf calves an iceberg the size of Rhode Island. Record heavy storms, heat waves that kill hundreds, and unprecedented forest fires rage across the planet. Weather-related disaster insurance costs for 1996 cost the reinsurance industry a record $60 billion. And, finally, the cautious IPCC concludes a "human footprint" can be discerned in the chaos of weather systems. As we head toward the brink of climate catastrophe, oil, gas, coal and auto companies urge us to "take a balanced approach," and to "go slow." Now, we find that, rather than going slow, the World Bank is moving us faster than we ever anticipated toward the brink--in the name of "poverty alleviation" and "sustainable development." Clearly, the world needs to take a second look at what we have done, while it may still be undone.

1. First, we must revisit the Climate Convention. It must be recast to ensure that its original provisions--namely, for non-Annex 1 countries to address their overriding concern of poverty alleviation--are not exploited by Northern industries, and facilitated by the World Bank.

2. The Bank should recast itself as the provider of energy services that are truly sustainable and renewable.

3. The Bank should speedily adopt the recommendations proposed by World Bank Environmental Department advisor Robert Goodland, namely to internalize the costs of carbon emissions in a two phase process--beginning with a shadow price for carbon and proceeding with a full internalization of the cost of carbon as soon as possible. In addition, the Bank should immediately implement the following changes:

a. The Bank should undertake a full and transparent review of existing energy and transportation portfolios, related Bank policies and Bank policy advice noting institutional barriers to implementation of climate change priorities as a prelude to the re-orientation of Bank activities to fully support the objectives of the Convention;

b. The Bank should create a dedicated World Bank Energy Efficiency and Conservation Unit at the IBRD and IFC with the resources, skills, and authority to promote and implement demand-side energy efficiency and conservation investments by Bank borrowers across many sectors.

c. The Bank must develop procurement norms/standards for energy using equipment that take energy life-cycle costs into account.

d. The Bank should undertake sustainable energy development assessments in ALL Country Assistance Strategies and establish specific goals for improving the productivity of energy use and developing renewables where appropriate.

e. The Bank should offer guarantees to mobilize private capital for investments in energy efficiency and renewables.

f. The Bank should make public all documents and procurement contracts related to projects undertaken in non-Annex 1 countries since the signing of the 1992 Climate Convention.

g. The Bank should keep a disaggregated inventory, akin to the greenhouse gas inventory proposed by the IPCC for their own national greenhouse gas emissions, for these same projects in non-Annex 1 countries.

h. The Bank should devote at least 50 percent of the World Bank's energy budget--or monies collected from a carbon tax--toward addressing the energy and fuel needs of the 2 billion poorest.

Glossary of Common Terms