Source:
Third World Network
World Bank and climate funds
April 2008
The World Bank is holding a key two-day meeting in Washington DC (14-15 April 2008) to move forward plans to establish its proposed portfolio of climate investment funds (CIFs). The Washington meeting is expected to be followed by another session in May, with approval for establishment of the new funds by the World Bank’s Board of Executive Directors expected in early July in time for the G8 summit in Japan in July.
The World Bank’s proposal threatens to undermine the current work under the UNFCCC on long-term cooperative action that was launched in Bali last year. Under the “Bali Action Plan’, enhanced action on the provision of financial resources and investment to support action on mitigation, adaptation and technology cooperation is one of the main elements in the process leading up to the expected agreement in 2009. The World Bank’s proposed initiatives threaten to divert funds away from the UNFCCC process, and undermine efforts there. Specifically, the World Bank’s proposed Climate Resilience Pilot Programme is running parallel to and is in direct competition with the UNFCCC’s newly approved Adaptation Fund.
Many developing countries in the UNFCCC are calling for urgent implementation of developed countries' existing commitments on finance and technology transfer. They would like to have the funds channelled through the multilateral UNFCCC process, where the design and governance of the funds can be fairly and representatively decided upon by all the Parties. An example of such an alternative is the Multilateral Fund for the Implementation of the Montreal Protocol which has already handled over $2bn successfully. At the very least, financing mechanisms outside of the UNFCCC process should come under the guidance of the Parties to the UNFCCC.
The World Bank's proposed initiatives will be providing loans as well as grants. This means that developing countries will have to pay for dealing with a problem that has been caused by developed countries. Developed countries have obligations under the UNFCCC to provide “new and additional” funding, and this must be in addition to ODA. There is also the potential for conditionalities to be imposed which would run counter to the decision under the UNFCCC that this “should not impose new forms of conditionalities”.
Developed country governments should be urged not to channel their funds through the World Bank, but instead, through the UNFCCC. Putting financial resources under the World Bank could be seen as yet another indication of the lack of political will by developed countries to implement their commitments on the provision on financial resources under the UNFCCC.
Further reading:
World Bank's climate funds may undermine UNFCCC talks
World Bank: climate profiteer
See below the NGO letter to governments and the World Bank, endorsed by 31 NGOs at last week's climate change talks in Bangkok:
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Letter to Governments and the World Bank from Civil Society Organisations
5th April 2008
The Head of Delegation
Dear Sir/Madam
Re: World Bank's Climate Change Investment Funds
We, the undersigned civil society organisations who are gathered here in Bangkok, Thailand on the occasion of the Climate Talks as well as those around the world, bring to your attention our grave concerns regarding the World Bank's initiative on the Climate Change Investment Funds (CIFs).
Among the key concerns that we have about the current direction of the proposals are as follows:
The CIF initiative is currently being led by a small group of G8 members, and without clear participation by developing country governments or civil society. For initiatives taken by the developed countries to be beneficial, it is vital that these proposals are opened up to wider ownership and engagement from civil society and developing countries at this critical proposal stage and to get their views as to the desirability and design of such initiatives.
We are worried that inclusion of the US-led Clean Technology Fund could imply support for the US Major Economies Meeting process, which threatens the UNFCCC and Kyoto Protocol track of negotiations by failing to support economy-wide emission reduction targets for all developed countries.
We are concerned about the complications which may arise from two parallel processes going forward: the proposed “Pilot Programme for Climate Resilience” (PPCR), and the UNFCCC Adaptation Fund agreed at Bali. The latter has a balanced Board in terms of regional representation that was elected at Bali that has already held its first meeting, and is moving forward. This UNFCCC Adapation Fund should be supported through more sources of funding beyond the levy from CDM. The World Bank initiative potentially undermines the UNFCCC fund by diverting away potential funds from it.
We understand that it is currently suggested that the proposed PPCR will offer highly concessional loan finance for adaptation. We believe it is inappropriate to use loans, given that the problems that developing countries must tackle were largely created by rich countries in the first place.
The main climate fund proposed by the Bank is a Clean Technology Fund with proposed $5-10 billion. New funds for clean technology are urgently needed. However, this proposal for a separate fund prejudges the negotiations now underway in the UNFCCC in which several developing countries are suggesting a multilateral fund within the UNFCCC itself aimed at technology development and transfer. If the Bank proceeds with its plans, it would prejudge the outcome of the technology and finance negotiations at the UNFCCC, and may even undermine the negotiations. At the UNFCCC many are envisaging a technology system including funding in which developing countries have a fair voice in decisions, while the Bank is attempting to quickly adopt a competing fund with a different governing structure and without approval or guidance from the UNFCCC member states.
We have reservations about the role of the Bank itself: its energy portfolio continues to be skewed towards fossil fuels over decentralised renewable energy, and there are also concerns about the Bank’s own environmental track record and governance arrangements. It is imperative that these concerns be addressed. In addition, if the Bank were only to be the administrator of the CIFs, then a further concern would be whether the implementing agencies - such as regional development banks - have adequate social and environmental safeguards in place.
We understand that substantial parts of the Climate Investment Funds will be counted as ODA. We believe, however, that funding to help developing countries respond to the challenges of climate change should be additional to the long-standing ODA commitment of 0.7% GDP.
At the plenary sessions of the UNFCCC’s ad hoc working group on long-term cooperation, the G77 and China has criticised the World Bank initiative and individual developing countries have also also raised grave concerns that the Bank initiative would undermine their efforts in UNFCCC. (Note: Philippines for G77 and China, and India etc have raised this issue on 2 and 3 April in the Bangkok Climate Talks).
While we believe that urgent action is required, we are concerned that the current rush could lead us into establishing top-down funds, without adequate participation of developing countries, without much-needed accountability mechanisms, and without promoting the wider environmental and development benefits and sustainable transformation that are so vital.
Until UNFCCC negotiations have clarified how climate-related financing issues will be comprehensively dealt with, we urge developed country governments to channel resources through the Adaptation Fund (in the case of adaptation-related funds) and ensure that any new mitigation-related funds address the aforementioned concerns, are provided on an interim basis, and are channeled through relevant UNFCCC institutions at the earliest possible stage.
In addition, we also call on the developing country governments to give attention to our concerns and raise them with donor countries, the World Bank and other relevant institutions.
We also urge the World Bank secretariat to withdraw or suspend its proposal for climate funds, at least until the above concerns are addressed.
Yours sincerely,
1. The Third World Network
2. Friends of the Earth International
3. Oxfam International
4. Greenpeace International
5. Oil Change International
6. Christian Aid
7. Bretton Woods Project
8. Norwegian Church Aid
9. Friends of the Earth US
10. Friends of the Earth, Malaysia
11. Friends of the Earth, England Wales and Northern Ireland
12. Friends of the Earth, Germany
13. Consumers Association of Penang, Malaysia
14. International Forum on Indonesian Development (INFID)
15. Indonesian Society for Social Transformation (INSIST)
16. Konphalindo
17. Bali Collaboration on Climate Change
18. Sustainable Energy and Economy Network, US
19. Ecologistas en Accion, Spain
20. Germanwatch
21. International Forum on Globalization
22. International Rivers Network
23. Global Environment Centre, Malaysia
24. Red Ambiental Loretana
25. Mexican Action Network on Free Trade
26. Centre for Encounter and Active Non-Violence
27. World Economy, Ecology and Development, Germany
28. AllianceSud, Switzerland
29. Campagna per la Reforma della Banca Mondiale/Manitese
30. Jubilee Debt Campaign
31. Red Ambiental Loretannaa
copy to
Mr. Robert Zoellick,
President,
World Bank,
Washington, DC
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