07 June 2012

World Bank Group Environment Strategy 2012 – 2022 at first glance

Rather than waiting on the outcomes of Rio+20, the World Bank has announced just announced it’s new environment strategy for the next decade. The full document can be downloaded here. Here are some very rough notes, on first reading, for anyone who's interested in this type of thing:
  • There seems to be a very weak interconnection between the Bank's environment strategy and its “core infrastructure business,” beyond some waffley rhetoric. Further work is needed to see how the environment strategy maps onto and relates to Bank’s energy and infrastructure strategies.
  • The Strategy assumes a continuing (expanded?) role for the Climate Investment Fundss – with no “sunset” in sight. By way of background, these controversial funds were started with a "sunset clause," which should mean that they disappear once a Green Climate Fund is up and running.
  • Wealth Accounting and Valuation of Ecosystem Services (WAVES) is the first of 7 strategic focusses identified in the Strategy. The Bank looks set to push policy advice that “focuses on the value of natural capital and integration of “green accounting” in more conventional development planning analysis. ” Very briefly, this approach looks to have elements of a positive framing (moving beyond GDP as a measure) but is ultimately wound back into a policy-promotion framework that encourages the financialisation of nature. The WAVES framework (the first phase of which is funded by the UK’s DfID) is something the Bank looks keen to launch at Rio, in the form of proposing “an international program of action on Ecosystem Accounting” at the Summit.
  • “Blue carbon” (relating to coastal regions and wetlands) is increasingly a part of the Bank’s “green” agenda; while soil carbon is a critical concern for the Bank’s work in Africa.
  • There’s a lot on REDD (Reducing Emissions from Deforestation and Degradation) and some “innovations” to support REDD are foreseen. These include “wildlife premiums” (Zoellick’s proposal from Cancun on “charistmatic species”) as well as instruments (including bonds) that could support a REDD market in the current context of virtually non-existent demand for credits
  • Despite the obvious failings of carbon markets, the Bank shows no sign of retreat (it currently holds a $2.7 billion portfolio of carbon funds). Quite the opposite, in fact: “Developing access to carbon finance for low-income countries will be the centerpiece of the WBG’s strategy.” (p.61). The Bank envisages a 3-fold approach: (1) encouraging policies and simplified regulations to “accelerate speed to market” (irrespective of contradictions with environmental integrity); support for developing countries’ development of “capacity, technical knowledge, and carbon market infrastructure”; and support for “building up the potential supply for a scaled-up future carbon market” so as to “avoid possible future market dysfunctions resulting from supply shortages. ” Setting aside all of the major critiques of carbon markets for a moment, this is quite an extraordinary and unjustified focus given the obvious over-supply problems that the market faces.
  • The WB highlights the following carbon funds as key in moving forwards: Carbon Partnership Facility (including support for sectoral approaches), Forest Carbon Partnership Facility (REDD readiness), Partnership for Market Readiness (piloting new market instruments, and “increasingly... examining the possibilities for carbon trading between domestic markets on a bilateral or multilateral basis. ”); BioCarbon Fund Tranche 3 (BioCF T3) (next generation): (including developing new methodologies for forestry and agriculture); Carbon Initiative for Development (CI-Dev) (capacity building, technical assistance, and financing to the seller entities behind the programs).
  • This confirms a trend that’s already been apparent for the last couple of years – namely, that the Bank is shifting it’s emphasis beyond project-based funding to support new market infrastructures across whole economic sectors, plus putting guarantees/funding to the investors (rather than purchasing credits directly).
  • The IFC is becoming more involved in climate-related activities. “While the IFC’s investment and advisory work in energy efficiency, renewable energy, and resource efficiency will remain the mainstay of its climate change activities, it also aims to grow its Cleantech venture investment portfolio. ... The IFC is working on several initiatives to mobilize commercial and concessional funding to support private sector climate investments in the form of equity, debt, and technical assistance.” It will also build on its post-2012 Carbon facility (which targets European utilities and energy companies).
  • Carbon neutral greenwashing is being upscaled (p.63) : “As with the headquarters, the carbon emissions of country offices will also be offset, along with emissions from staff travel. ”
  • Climate risk insurance (p.64) is likely to form a key part of the Bank’s adaptation agenda

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