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Dirty is the New Clean: A Critique of the World Bank’s Strategic Framework for Development and Climate Change

Dirty is the New Clean:A Critique of the World Bank’s Strategic Framework for Development and Climate Change
Institute for Policy Studies, Campagna per la riforma della Banca Mondiale, Oil Change International and Friends of the Earth
October 2008

Download the full report, Dirty is the New Clean (PDF)

The World Bank’s new three-year Strategic Framework on Development and Climate Change makes a strong case for urgent action on global warming, but the Bank’s increased lending for fossil fuels in the past year suggests limiting climate change is far from a priority.

The report’s key findings on the World Bank’s Strategic Framework on Climate Change and the Bank’s energy portfolio are:

  1. The World Bank Group is actually increasing lending for fossil fuels. Despite the recommendation of a high-level panel selected by the World Bank that it end oil and coal funding, the Bank’s funding for oil, gas, and coal projects is up 94 percent this year over 2007, reaching $3 billion.
  2. The Bank’s new “Climate Investment Funds” are inadequately governed, overly dependent upon poorly developed market mechanisms, usurp the role that many nations want the United Nations to play, and would force developing countries to pay for the industrialized world’s pollution by providing loans for them to adapt to a climate crisis they did not create. It is, as one observer put it, as if you were to drive your car into someone’s house, and then offer them a loan to repair the damage.
  3. The Bank’s “new” approach differs little from its over 60 years of top-down, growth-oriented lending which has widened inequalities in recipient communities and has largely benefited rich-country corporations that have carried out the “development” projects.
  4. The Bank’s claim that it is promoting “clean technologies” and “low-carbon projects” is undercut by its weak definitions of both “clean” and “low-carbon.”

To tackle climate chaos, we need to change course. We need to heed strong voices that call for a strengthened global facility under the United Nations, and robust national and local actions. In particular, our recommendations are:

  1. The World Bank Group should immediately implement the full recommendations of the Extractive Industries Review and phase out lending for oil and coal. Donor countries should demand this of Bank management.
  2. The World Bank should close down its Climate Investment Funds. There already exists a new Adaption Fund under the UN Framework Convention on Climate Change (UNFCCC) and advanced negotiations are underway to establish a technology transfer and financing mechanism.
  3. In new UN-controlled funds, recipient countries and communities should have full and direct participation in the use of funds for technology, development and adaptation financing mechanisms, as proposed by the G77 (composed of 132 developing countries) and China. This proposal is based on the fundamental UNFCCC principles of equity and “common but differentiated responsibilities,” whereby industrialized countries must both take the lead in deeply cutting their own greenhouse gas emissions and provide the means to enable developing countries to address climate change based on their overwhelming historical responsibility for causing the climate crisis.
  4. These UN mechanisms should prioritize truly clean, renewable energy.
  5. The mechanisms should stimulate decentralized, locally-driven mitigation and adaptation efforts.
  6. Governments of the North and South should protect forests by recognizing legal and customary land rights and investing in direct support to community-driven forms of forest conservation, sustainable management and ecosystem restoration.

Instead of staying the business-as-usual course, international financial institutions and governments must seriously rethink “development” to reflect the reality of a climate-constrained world. The World Bank Group must stop paying lip service to climate action and make real commitments to stop practices and lending that contribute to climate change and do little, if anything, to alleviate poverty.

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