Monthly Archives: April 2010

Disappointing Disconnect Between World Bank General Capital Increase, Need for Low-Carbon Development

The World Bank announced Sunday at the end of its Spring Meetings its intent to seek more than $86 billion for a general capital increase from its donor countries with additional funds going toward new strategic priorities following the global recession.

With the Bank having granted internal approval for the increase, the additional funding will now need to be approved by the finance ministries of the World Bank’s individual donor countries.  (Funding from the United States is proposed by the U.S. Treasury and submitted to the U.S. Congress for approval.)

While in its announcement the Bank included climate change among its areas for strategic focus, it did not address NGOs' call to condition capital increases in sustainable energy financing.

In a statement released Sunday and distributed to finance ministries around the world, nearly 90 international organizations, including Environmental Defense Fund and development, environment, faith-based, science, women's, and indigenous groups, called for international financial institutions to stop using public resources to subsidize the fossil fuel industry.

While World Bank funding is limited and the need for electricity for economic development is critical, funding should be directed towards renewable and sustainable energy sources.

Until policies phasing out carbon-intensive infrastructure are approved, the statement says,

countries should direct funds requested by the Bank and other institutions for general capital increases to other financing mechanisms for supporting sustainable development, poverty reduction and clean energy.

EDF strongly encourages the U.S. Congress and Treasury to help shift World Bank resources and strategy towards a fundamental rethinking of development policies to favor strictly low- or no-carbon energy sources, both by providing sufficient funding for the Bank’s dedicated Clean Investment Funds and by reorienting the Bank’s overall lending portfolio toward low-carbon development.

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Earth Day past and future: U.S. legislation should be next environmental victory

To commemorate today's 40th anniversary of Earth Day, my friend David Bornstein over at dowser.org asked me two good questions about environmental achievements past and future, and I think they’re worth sharing.

What's been the major achievement in the environmental field since Earth Day 1970?

The decision by Europe to reduce its greenhouse gas emissions through a cap-and-trade system. Europe is today the only major geopolitical region that has plateau'd its greenhouse gas emissions and is now on a downward slope. That is where we all have to go. And they have helped to show us the way.

What do you see as the next major step for the field?

The next, and essential, critical step is for the U.S. to pass similar legislation this spring. Earth Day may well coincide this year with the release by three U.S. senators of a draft bipartisan bill to curb U.S. greenhouse gas emissions. As I write this, we do not know what the key provisions of this bill will be, and whether it will represent a reasonable compromise between the urgent need to move forward and some of the countervailing political trends it will be necessary to accommodate to get 60 votes. But passing a serious carbon bill and establishing a large global carbon market is the next major threshold for all of us.

See responses of environmental leaders Gillian Caldwell of 1Sky and Majora Carter of the Majora Carter Group at Dowser’s Earth Day Exclusive.

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Major Economies Forum Meeting Helps Lays Groundwork for New International Framework to Cut Carbon

Nations participating in the Major Economies Forum on Climate and Energy that ended in Washington yesterday reaffirmed their interest in moving forward on actions that could lay a foundation for a new international framework on cutting carbon emissions.

Annie Petsonk, EDF’s international counsel, said:

These countries recognize that the first to seize the initiative will have the greatest edge in the race for the low-carbon economy of the future.

The rapid succession of high-level talks on climate change in various forums demonstrates the growing focus on the need for action.

Reuters and the FT Energy Source blog (subscription required) have nice readouts of the State Department's concluding press briefing.

Countries are acting already

Actions that have put some nations in the forefront of international efforts include:

Upcoming  Meetings

More high-level ministerial meetings are scheduled within the next few weeks; the next ministerial meetings will be convened by German Chancellor Angela Merkel in Petersberg, Germany from May 2-4 and by Norwegian Prime Minister Jens Stoltenberg in Oslo, Norway on May 27.  High-level talks among Brazil, Russia, India and China (BRIC) concluded last week in Brasilia, Brazil.

The UN Climate Treaty Parties are expected to conduct a ministerial meeting shortly after their next round of talks in Bonn, Germany, in June.

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U.N. Climate Negotiators Facing Crucial Test

United Nations climate change negotiators agreed Sunday to hold more sessions aimed at bridging differences left unresolved by last December's contentious talks in Copenhagen.

While some developing nations signaled support this week for the accord reached in Copenhagen, others questioned the role of the accord in future talks.

EDF’s International Counsel Annie Petsonk, who monitored the talks in Bonn this weekend, said:

The U.N. climate negotiations are facing a crucial test over whether this process can serve as the global guidance system for tackling climate change.

There is still momentum in the U.N. process, but it is fragmenting.  In the absence of U.S. legislation, and with the corresponding slow progress in the U.N., there is a new focus on national action as talks continue toward a global agreement.

This fragmentation presents challenges, but it also creates opportunities, as nations that move swiftly to embrace carbon regulation position themselves for economic growth in the 21st century.  That competition presents an even greater imperative for the Obama administration to make a serious push for a balanced energy-climate bill in the U.S. Senate.

For more details about the Bonn climate talks, read wrap-up stories from Reuters, The Associated Press, Bloomberg and AFP.

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World Bank Vote for Coal Power Plant a Setback for Low-Carbon Development

The World Bank voted today to approve a $3.75 billion loan to South Africa’s public utility Eskom, the bulk of which would finance construction of what will be the world’s seventh-largest coal plant.  The United States abstained from the vote.

EDF’s Climate and Air Program Director Peter Goldmark said in EDF’s news release:

Giving the go-ahead to the Medupi coal plant, which will release massive amounts of greenhouse gases for decades, without a clear South African plan to level off and then decrease emissions amounts to a step backward when the world is moving forward to a clean energy future.

This was a missed opportunity for the U.S. and the World Bank to move away from a traditional focus on fossil-fueled growth and toward a new model of low-carbon economic development.

An abstention is a weak position for the U.S. to take in defense of its own proposal. Next time, the U.S. and others must vote no if we’re really going to reverse the headlong stampede to build coal plants in the developing world.  The coal lending guidelines are a good start — but now the Bank should adopt them and Treasury must show, at a minimum, that it is willing to act on them.

The problem here is not giving South African citizens access to cheap energy – we all want that.  The challenge is to do that within a framework that clearly puts South Africa, and the world, on a course where greenhouse gas emissions will peak and then decline. South Africa has not explained how the Medupi plant, or the successor coal plant right behind it, fits into a realistic program to level off and then decline the level of greenhouse gas emissions.

The U.S. Treasury Department issued a statement today, saying:

the United States is concerned about the project since it would produce significant greenhouse gas emissions, and uncertainty remains about future mitigation efforts.  Without actions to offset the carbon emissions of the Medupi plant, the project is incompatible with the World Bank's strategy to help countries pursue economic growth and poverty reduction in ways that are environmentally sustainable.  We also remain concerned about other facets of the project, including the inconsistency of Eskom's procurement process with the World Bank's Procurement Guidelines, deficiencies in the environmental impact assessment, and potentially inadequate efforts to mitigate local pollution.  The project is also inconsistent with new guidelines on coal lending adopted by the United States in December 2009.

In a larger sense, this decision highlights the challenge the World Bank is facing in adhering to its own Development and Climate Change Strategic Framework, which looks to “support sustainable development and poverty reduction at the national, regional, and local levels, as additional climate risks and climate-related economic opportunities arise.”  The vote also apparently conflicts with the leaders’ statement from the September 2009 Pittsburgh meeting of the G-20, of which South Africa is a member.  That statement commits all members to “phase out and rationalize over the medium term inefficient fossil fuel subsidies” that “encourage wasteful consumption.”

EDF’s 2009 report “Foreclosing the Future: Coal, Climate and International Public Finance” urged multilateral development banks, including the World Bank, to hasten the shift to renewable energy by adopting recommendations like deploying public international finance in support of renewable energy, energy efficiency and other alternatives to coal.

As the World Bank, International Monetary Fund, and other multilateral financial institutions seek a capital increase from the U.S. Congress, they will be faced with a decision as to when cheap, dirty development will finally take a backseat to clean, sustainable alternatives.

EDF strongly encourages the U.S. Congress and Treasury to help shift World Bank resources and strategy towards a fundamental rethinking of development priorities – both by providing sufficient funding for the Bank’s dedicated Clean Investment Funds and by reorienting the Bank’s overall lending portfolio toward low-carbon development.

Read more in EDF's news release.

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