World Bank

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The World Bank Group, founded in 1944, is "one of the world's largest sources of development assistance. The Bank, which provided US$19.5 billion in loans to its client countries in fiscal year 2002, is now working in more than 100 developing economies, bringing a mix of finance and ideas to improve living standards and eliminate the worst forms of poverty. For each of its clients, the Bank works with government agencies, nongovernmental organizations, and the private sector to formulate assistance strategies. Its country offices worldwide deliver the Bank's program in countries, liaise with government and civil society, and work to increase understanding of development issues.

"The World Bank is owned by more than 184 member countries whose views and interests are represented by a Board of Governors and a Washington-based Board of Directors. Member countries are shareholders who carry ultimate decision-making power in the World Bank.

"The Bank uses its financial resources, its highly trained staff, and its extensive knowledge base to individually help each developing country onto a path of stable, sustainable, and equitable growth. The main focus is on helping the poorest people and the poorest countries...."

From web site for the World Bank Group: http://www.worldbank.org/

In 2012 Jim Yong Kim became the new head of the Bank.

Perspectives on the World Bank

A Latin American view is provided on 20 November 2003 by Oscar Ugarteche. Pontifical Catholic University of Peru [1] excerpts therefrom:

  • The debt issue has returned to remind humanity that the solutions posed during the 1980s have been to no avail.
  • The consequence of this on the result of the world can be viewed in the failure of the promises made by the IMF/WB and other orthodox economists that assured that the implementation of what we know as neoliberal polices would result in an increase in the rate of growth, a reduction of external credit dependence, a surplus in trade and an increase in domestic savings. The conditions set for this were that the developing countries follow the ten points indicated by the Washington Consensus plus one further point added by the Theory of Public Choice in terms of reducing the State to as little as possible. Williamson stated recently that he did not appreciate that as a recommendation in the list of the policies to be pursed, which had consensus in 1989. The reduction of the State is present in the 1987 World Development Report of the WB as part of the set of policies that were later discussed for the Consensus.
  • The debt problems must be then seen as an instrument for the introduction of policies and an extortion of Governments into following them
  • This requires a reform of the WB/IMF and a change in their charters, were respect to human rights in all its dimensions come in front. Their failure during the 1980s and 1990s as well as their support of dictatorships in the name of the neutrality of technicians and efficiency, warrants the request for the reform of these institutions. They passed from Project based lending to Policy based lending in the mid 1980s without recognizing their failure in project based lending and the problems they had generated with them. The next step is from Policy based lending to Human rights based lending with recognition of the mistakes made and the failure of the promise to be made real. The existing globalization resulting from these are rejected en masse in the streets everywhere.
  • The race to the bottom in wages in order to compete with China must be put to an end with a specialization in each country that complements the order lines of production existing in the country, thus creating cluster economies for the benefit of domestic capital accumulation. Wages must be brought in line with the fight against poverty. Miserable wages produce misery.

Coal Funding

Nearly half of the World Bank's energy lending – more than US$15 billion – went to fossil fuels from 2007-2011.[1] One example is the coal-powered Tata Ultra Mega power plant in western India, a $4.14 billion project scheduled to go online in 2012. When it is fully operational, it will become one of the world's 50 largest greenhouse-gas emitters and "will emit more carbon dioxide annually than the nation of Tunisia," according to the U.S. Department of Energy. The World Bank decided to provide "$450 million in loans and guarantees for the project and also will buy a $50 million stake in it."[2]

In September 2010, the World Bank said that US $3.4 billion ($3.6 billion) - or a quarter of all funding for energy projects - was spent from January to June 2010 helping build new coal-fired power stations, including the controversial Medupi Coal Plant in South Africa. This was record sums into coal by the World Bank. Over the same period the bank also spent US $1 billion on looking and drilling for oil and gas. The Bank Information Centre, which examined the spending, said the figure invested in coal was actually US $4.4 billion, due to the World Bank not including in its figure a US $1 billion project in India which is funding power transmission networks for coal-fired power stations rather than the stations themselves. Environmental campaign groups said spending on coal in that period was 40 times more than five years ago.[3]

A 2011 Friends of the Earth Report, "Catalysing catastrophic climate change: The World Bank’s role in dirty energy investment and carbon markets" notes that, in 2010, the Bank hit a new record in terms of its fossil fuel funding, totaling US$6.6 billion, a 116% increase over 2009. US$4.4 billion of this total was invested in coal, also a record high, and a 356% increase over the previous year. From 2007 until November 2010, the World Bank provided US$6.5 billion for coal-based energy development, primarily in middle-income countries, "locking them into coal use for the next 40 to 50 years and making their eventual shift to low carbon economies much more difficult and expensive" (p. 6).

2010 report finds WB oil/coal projects do not help poor

A 2010 report by Oil Change International, World Bank Group Energy Financing: Energy for the Poor? released on the eve of the World Bank's Annual Meetings, found that World Bank support for coal and oil projects does not increase access to energy for the world's poorest. The report found that only 9 percent of Bank energy sector lending actually went to support basic needs or productive uses in communities that lacked access to energy. Many of the energy projects had no clear targets for the energy produced, while other projects went expressly to energy projects for industrial uses (often for export), or to add power to existing grid systems without the specific purpose of increasing access.[4]

The finding challenged government, Bank, and industry claims that taxpayer support for large coal and oil projects is the path to alleviating energy poverty. The World Bank has used arguments about increasing energy access – providing energy to the 1.4 billion people who lack access to electricity – to justify the approval of coal-fired plants like the Eskom Plant in South Africa, as well as the continued funding of oil projects. Yet both Oil Change International's original research and the Bank's own analysis show that none of the Bank's coal or oil lending for the last two years have prioritized increasing energy access:[5]

  • None of the 26 fossil fuel projects reviewed clearly identify access for the poor as a direct target of the project.
  • The World Bank Group and the report authors agree that no coal or oil projects can be classified as improving energy access for the poor.
  • In FY2009 and FY2010, funding for upstream fossil fuel projects and fossil fuel power plants dwarfed World Bank spending on access projects by 225 percent, or $7.2 billion compared to $3.2 billion for access (according to the Bank's own assessment, which Oil Change International notes includes two questionable gas projects).

The International Energy Agency has suggested that to achieve universal energy access for the world’s poorest, 70 percent of the additional energy would come from decentralized energy systems, which are often fueled by renewable power.[4]

World Bank Loan to Eskom's Medupi Plant in South Africa

In late February 2010, climate change activists and concerned individuals from about the world expressed concern that the World Bank would fund new coal-fired power stations proposed by the South African government-owned utility, Eskom. One of the projects is the Medupi power station, a 4800 megawatt plant under construction in Lephalale in the country's northern region of Limpopo.

Groups opposing the project, which includes Climate Justice Now, groundWork and the Federation for a Sustainable Environment, vowed to pressure country directors within the World Bank to vote against the loan and also said they would revive the World Bank "bond boycott" that was launched last decade to end structural adjustment programs and anti-environmental project funded by the Bank.[6][7]

On March 8, 2010 it was announced that the UK and US threatened to withhold support for a World Bank loan intended to help South Africa build the new coal-fired power station. The UK and US opposed to the loan because they believe it will make it harder for South Africa to deliver emission cuts.[8]

On April 8, 2010 the World Bank voted to approve a $3.75 billion loan as requested by the South African government. The United States abstained from voting on the measure.[9] It was the first World Bank loan to the country since the fall of Apartheid in the mid-1990s.[10]

In December 2011, an 18-month investigation by the World Bank Inspection Panel concluded that the bank insufficiently took health, water scarcity and pressures on local services into account when approving the loan, yet the decision did not violate World Bank climate change policies because the World Bank does not have explicit emission targets. The panel did say that it found the World Bank's steps to mitigate Medupi's estimated 25 million metric tons of greenhouse gas emissions lacking, and that the World Bank's statement that its partnership with South Africa will lower the country's emissions trajectory was "overly optimistic ... given that Medupi will emit significant levels of GHG emissions." The inspection panel was most critical when it came to water, finding that the expansion of the Grootegeluk coal mine to supply Medupi will result in significant water scarcity and pollution problems.[11]

WB financing of India's Tata Plant

In May 2011, a group known as Machimar Adhikar Sangharsh Sangathan (MASS) filed a collective protest against the Mundra Ultra Mega Power Project, saying there are high risks to the project without proper mitigation and accountability measures. The protest is targeted against the International Finance Corporation (IFC), the World Bank’s private sector lending arm, whose financing of coal plants in India faces community resistance. Its Compliance Advisor Ombudsman (CAO) accepted a complaint against the Plant in Mundra, Gujarat. CAO is the independent body of IFC that handles disputes and compliance issues with its investments.

MASS says the plant is located in the special economic zone (SEZ) that cuts across fishing grounds, habitat of diverse marine lives, and wide expanses of farm land, and that the project’s social impact assessment is significantly flawed, as fishing communities were excluded from the list of those directly impacted and IFC green lighted the loan without a cumulative impact assessment.

With a total project cost of US$ 4.14 billion, the IFC is investing a $450 million loan and $50 million in equity. Other financial institutions funding the project are the Export-Import Bank of Korea, Asian Development Bank, India Infrastructure Finance Co. Ltd., Housing and Urban Development Corporation Ltd., Oriental Bank of Commerce, Vijaya Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Travancore, the State Bank of Indore and other local banks.

The MASS complaint came two months after villagers in Odisha state formally challenged IFC’s funding for the GMR Kamalanga Energy Limited.[12]

WB considers new rules to limit loans for fossil fuel projects

Under proposed new rules released in April 2011, only the very poorest countries would be eligible to receive grants or loans for building new coal-fired power stations from the World Bank, and then only if they could prove they were necessary and that alternatives – such as renewable energy – were not feasible. The proposed rules were in response to criticisms over the bank spending £3.4bn – one-quarter of all its spending on energy projects – on coal-fired power in developing countries in the year to June 2010. That was 40 times more than the sum spent five years previously. The bank has also been attacked for its attempts to take over the international funding of climate change projects. Under the 2009 Copenhagen accord, the bank could be charged with dispensing the billions of funding that rich countries are due to send to poor countries, in order to help them cope with the effects of climate change and cut greenhouse gas emissions. The new proposals are likely to take months to be accepted.[13]

Carbon markets

The World Bank Group (WBG) created the first international carbon fund (the Prototype Carbon Fund), which became operational in April 2000, the first reforestation fund (Biocarbon Fund), and the first avoided deforestation fund (Forest Carbon Partnership Facility). The Carbon Finance Unit (CFU) of the WBG facilitates international offsetting and carbon trading through the buying and selling of carbon credits by governments that are party to the Kyoto Protocol of the UNFCCC. This is done through the two offsetting mechanisms of the Kyoto Protocol – the Clean Development Mechanism (CDM) for developing countries and Joint Implementation for "economies in transition." The World Bank financially benefits from its involvement in the CDM by earning 5 to 10 percent in commissions on the credits it purchases for the funds that it manages.[14]

2013: WB says it will limit coal funding

In July 2013 the World Bank’s board of directors adopted an Energy Sector Directions Paper [PDF] stating that the World Bank will “provide financial support for greenfield coal power generation projects only in rare circumstances,” such as where there are “no feasible alternatives to coal.”

Personnel

Associated Organizations

References

  1. ↑ "Unclear on the Concept: How Can the World Bank Group Lead on Climate Finance without an Energy Strategy?" Friends of the Earth et al., Dec. 2011.
  2. ↑ Christopher Swann, Bank increases fossil-fuel funding despite pledge Pittsburgh Tribune Review, August 24, 2008.
  3. ↑ Juliette Jowit, "World Bank spends billions on coal power" SMH, Sep. 17, 2010.
  4. ↑ 4.0 4.1 Elizabeth Bast and Steve Kretzmann, "A Pro-Poor, Pro-Climate Energy Strategy" Oil Change, June 7, 2011.
  5. ↑ "New Report: Despite Rhetoric, World Bank Fossil Fuel Projects Do Not Contribute to Energy Access" PR Newswire, Oct. 6, 2010.
  6. ↑ "Eskom told to charge companies fair rates ", Business Report, February 23, 2010.
  7. ↑ "Eskom's R29 billion World Bank loan runs into opposition", Business Report, February 23, 2010.
  8. ↑ "World Bank split over controversial 'clean coal' investment" Cath Everett March 8, 2010.
  9. ↑ "U.S. abstains on vote to proliferate coal in South Africa" Climate Progress, April 8, 2010.
  10. ↑ "South Africa wins $3.75 billion coal loan" Climate Wire, April 9, 2010.
  11. ↑ Lisa Friedman, "Auditors find World Bank skipped policy steps in approving huge South African coal plant" E&E, December 2, 2011.
  12. ↑ ["World Bank Group Ombudsman to Probe Tata Mundra Project"] Machimar Adhikar Sangharsh Sangathan Press Release, 2011.
  13. ↑ Fiona Harvey, "World Bank to limit funding for coal-fired power stations" Guardian, April 4, 2011.
  14. ↑ "Unclear on the Concept: How Can the World Bank Group Lead on Climate Finance without an Energy Strategy?" Friends of the Earth et al., Dec. 2011.

SourceWatch Resources

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  • Cecile Jackson, “Women/nature or gender/history? A critique of ecofeminist 'development,'” Journal of Peasant Studies, 20 (30), 1993, pp.389-419.

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