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

Business as usual on the climate

(An edited version of this article was published by The Guardian on 28 May)

When Sir Crispin Tickell had the temerity to suggest that "the business community needs to re-examine the fundamentals of economics" at the recent World Business Summit on Climate Change in Copenhagen, his discordant tone was drowned out by a chorus of over 800 delegates singing the praises of unfettered markets as a means to tackle climate change.

The commitment to carrying on with business as usual took an almost surreal form at times. Indra Nooyi, CEO of PepsiCo, proudly proclaimed "The fact that I flew here for 1 1/2 hours to sit on a panel them I´m flying straight back to the US is an example of our commitment to environmental sustainability."

More worryingly, plans for low-carbon technology give the expansion of high-carbon coal power pride of place. The promotional rhetoric is of Carbon Capture and Storage (CCS), yet those from the power sector are blunt about its shortcomings. "One of the plants we are building is CCS ready, although to be quite frank no one really knows what that is at the moment" claimed Steve Lennon, Managing Director of South Africa´s Eskom. James Rogers, CEO of US-based Duke Energy, added that CCS is at best 15 years off and is likely to prove unfeasibly expensive if it even works at all.

The underlying problem is that business adjusts the problem of climate change to neoliberal economics, which judges value according to financial cost rather than environmental sustainability or social justice. This manifests itself in a promise to massively expand carbon markets. The idea is that governments give out a limited number of permits to pollute; the scarcity of these permits should encourage their price to rise; and the resulting additional cost to industry and power producers should encourage them to pollute less.

Jos Delbeke, Deputy Director-General for the Environment at the European Commission, was in Copenhagen claiming that this is how the EU Emissions Trading Scheme (ETS) is now working. Yet his department´s own data for 2008 shows more international "offset" credits circulating than the level of claimed reductions, while lobbying pressure has resulted in a twin-track system from which every business wins.

On one side, heavy industry like the steel sector has more credits than would be needed to reduce its emissions, so it sells them. Delbeke shared a panel on carbon markets with a representative of ArcelorMittal, which alone gained an estimated subsidy of over €1 billion between 2005 and 2008 by this means.

On the other side, power companies pay less for pollution permits than the cost they pass on to consumers, generating windfall profits that could reach up to around €70 billion by 2012. The circulation of these permits does nothing to help new investment in renewables, as Zhengrong Shi, CEO of Chinese firm Suntech Power, admitted in a second session on carbon markets: "All European investment in renewables, in our sector [solar] is based on a feed-in tariff not the Emissions Trading Scheme or Clean Development Mechanism."

Carbon markets might be used to help polluting sectors avoid other obligations that are placed on them, however. As Giovanni Bisignani, Head of the International Air Transport Association (IATA), put it, "If some governments still want to implement taxes [on aviation emissions], we should get carbon credits to compensate every penny of these taxes."

Other measures to avoid business obligations displace the problem of tackling climate change onto the global South. The Summit´s final Copenhagen Call talks of a crucial role for forest protection in developing countries, with the co-organisers´ Business Case for a Strong Global Deal suggesting that such measures should represent around half of the action needed to limit climate change by 2020.

These figures are taken directly from Project Catalyst, an initiative bringing together "climate negotiators, senior government officials... and business executives", whose presentation (marked confidential) more straightforwardly emphasises the "the size of the prize for business" and, in particular, the opportunities for "companies in forest management, pulp and paper, or construction" to access a "€20-30bn value chain" in developing countries.

Strikingly similar assumptions have found their way into negotiating texts on Reducing Emissions from Deforestation and Degradation (REDD), which will be discussed when UN climate negotiations resume in Bonn next week. Yet the whole idea that deforestation can be stopped by simply putting a price on forests is flawed, with forest communities and Indigenous Peoples warning that it will encourage further land grabs by large companies. They point to evidence that the real drivers of deforestation are the major construction, mining, logging and plantation developments whose owners stand to be rewarded by REDD funds.

These are the voices that the world should be listening to as it seeks to tackle climate change - for, as things stand, even the self-proclaimed "progressives" of big business seem to be putting profit margins above environmental need. Without a more fundamental re-examination, to paraphrase one panellist, they look more like the back end of a horse that is galloping in the wrong direction.