Environmentalists criticise World Bank on climate ahead of annual meeting

Elana Schor in Washington
guardian.co.uk,
Wednesday October 08 2008 20.42 BST

Ahead of the World Bank annual meeting in Washington this weekend, an alliance of US environmental campaigners today stepped up their criticism of the Bank's proposed funds to combat climate change.
The Bank's climate investment funds were unveiled in July, when 10 industrialised nations pledged $6.1bn (£3.5bn) in aid to developing nations to fight the threat of rising global temperatures.
But environmental groups as well as some representatives from developing nations have condemned the Bank for attempting to set climate policy while continuing to fund large fossil fuel-burning projects such as the planned Tata Mundra coal plant in India.
The same concerns about the Bank's involvement with coal projects have prompted the US Congress to delay approval for an American contribution to the climate funds.
"The Bank is proposing that the solution to this problem of climate change is advocating cheap energy in the form of coal, that coal is integral in overcoming poverty," Janet Redman, a research director at the Institute for Policy Studies, a liberal-leaning US think tank, told reporters today.
Redman called the climate funds "a classic move of the World Bank, which is to announce something that doesn't have the critical buy-in it needs to move forward".Republican senator Pete Domenici and other coal supporters in the US have cheered the proposed climate funds, although Congress is unlikely to authorise an American share until next year.
Developing nations in the so-called Group of 77 also have pushed back against the Bank's climate funds, contending that the UN should take the lead on climate policy in preparation for next year's Copenhagen talks on a global emissions treaty. "We are very concerned by the Bank's attempt to control global financing policy on climate," Brent Blackwelder, president of Friends of the Earth US, said. "The World Bank is a major climate polluter, a major deforester."
The global financial meltdown - which prompted a US government rescue plan more than 100 times the size of the proposed climate funds - is likely to dominate the Bank and International Monetary Fund meeting, pushing climate change further down the agenda.
Uncertainty about evaporating worldwide credit could ultimately help by dissuading the Bank from pursuing a solely market-based climate policy, according to Bernarditas Muller, lead coordinator for the Group of 77 and China during last year's UN climate talks in Bali.
"We've been told that the market will solve the problem," Muller said. "What's happening right now shows very clearly that markets will not necessarily, or even not at all, solve the problem."
Another controversial aspect of the proposed climate funds is the possibility that wealthier nations will offer aid in the form of loans, requiring developing countries to pay back the money with interest.
Redman, of the Institute for Policy Studies, said the loan-based structuring risks "undermining climate justice". She pointed to a sunset clause in the proposed funds that allow the Bank to step aside if the UN reaches a deal on a new global climate treaty next year.
The UK government has defended the funds as innovative. Phil Woolas, the environment minister, and Gareth Thomas, the trade and development minister, wrote to the Guardian in May that the proposal would "influence [the Bank's] lending to move in the right directions".