Wednesday, April 9, 2008

World Bank climate profiteering

Global The World Bank’s long-running identity crisis is proving hard to shake. When efforts to rebrand itself as a “knowledge bank” didn’t work, it devised a new identity as a “Green Bank.” Really? Yes, it’s true. Sure, the Bank continues to finance fossil fuel projects globally, but never mind. The World Bank has seized upon the immense challenges climate change poses to humanity and is now front and center in the complicated, international world of carbon finance. It can turn the dirtiest carbon credits into gold. How exactly, does this work, you ask?

Quite simply: The Bank finances a fossil fuel project, involving oil, natural gas, or coal, in Poor Country A. Rich Country B asks the Bank to help arrange carbon credits so Country B can tell its carbon counters it’s taking serious action on climate change. The World Bank kindly obliges, offering carbon credits for a price far lower than Country B would have to pay if Country B made those cuts at home. Country A gets a share of the cash to invest in equipment to make fossil fuel project slightly more efficient, the World Bank takes its 13% cut, and everyone is happy. Everyone, that is, who is cashing in on this deal. If you’re after a real solution to the climate crisis, these shenanigans can and should make you unhappy.

Consider a project the International Finance Corporation (IFC) had scheduled for board consideration on March 27, but is now, according to its press office, slated for approval in April. (The World Bank Group’s boards virtually never reject anything sent to them). The IFC, the World Bank’s private sector lending arm, plans to back a massive coal-fired power plant in Mundra, a town in the Indian state of Gujarat. The complex of five 800 megawatt plants will cost $4.14 billion to build and be owned and operated by Tata Power Company Limited, a scion of India’s largest multinational corporation, the Tata Group.

To put this in perspective, Tata Motors, a division of the same conglomerate, recently announced plans to buy the luxury car companies, Jaguar and Range Rover from U.S. automaker Ford for $2.3 billion. And Tata Power’s 2007 revenues totaled $1.6 billion. So, it’s hard not to ask how much help Tata needs from the World Bank, which has as its motto: “our dream is a world free of poverty.” Several other corporations are involved. Toshiba, for example, will supply the steam turbine generators….

Photo of German coal plant, Arnold Paul, Wikimedia Commons

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