WORLD BANK: Treasury Department issues coal lending guidelines

Here is some great progress for the Treasury Department. We made these recommendations to Treasury a few months back, and it's great to see them put our recommendations into effect.

If you haven't read it yet, please check out the report we wrote on public international finance of coal-fired power plants, "Foreclosing the Future: Coal, Climate and International Public Finance."

From E&E News:

For the first time ever, the U.S. Treasury Department is preparing guidelines aimed at discouraging the World Bank from lending money to build coal-fired power plants.

In a blueprint that quietly appeared on the agency's Web site last month while world leaders met in Denmark to craft a new climate change plan, the Treasury Department calls on multilateral development banks to "remove barriers to and build demand for no or low carbon resources" that meet the power needs for developing countries.

It recommends supporting fossil fuel plants only if the banks are unable "after substantial effort" to help secure additional funding to pay for the lower-carbon alternative.

"The guidelines were developed in response to increased concern about climate change, a desire to strike the right balance between the goals of poverty alleviation and the global environment, and the need to be transparent," Treasury Department spokeswoman Natalie Wyeth said in an e-mailed statement.

Experts said the guidelines are essentially an internal Treasury Department policy paper that does not affect World Bank decisions. But it comes at a critical time as the bank tries to position itself as the main channel for billions of dollars in climate financing, and several sources said the guidelines are likely to cause consternation within the World Bank and among developing countries.

World Bank officials were not available for comment yesterday, and Treasury officials declined to discuss the guidelines in person.

Public funding for coal-fired power plants remains one of the most divisive issues for the World Bank. The institution has developed a new framework that calls for boosting renewable energy lending and screening new coal projects for climate impacts and cleaner alternatives. But despite a steady drumbeat of criticism, it has steadfastly refused to rule out lending for coal altogether.

The World Bank notes that it is primarily concerned with alleviating poverty. Dirty infrastructure projects, it and developing countries often argue, are sometimes the only way to bring energy quickly and cheaply to millions still living without power.

Environmental activists, meanwhile, praised the Treasury Department for developing the recommendations but pointed to loopholes in the language and questioned whether the political will exists to implement it.

"They're the first to issue this set of guidelines," said Athena Ballesteros, a senior associate at the World Resources Institute. "Doing that sends a very strong political signal that the U.S. is serious about helping support low-carbon development in developing countries."

But Ballesteros as well as advocates from the Bank Information Center, the Sierra Club and others told the Treasury Department in a series of written responses that the World Bank needs to account for the greenhouse gas emissions associated with its energy investments. The practice known as "carbon accounting" is the best way to integrate the cost of climate change into proposed projects, many said.

Bruce Rich, a senior adviser to the Sierra Club, said he questions the agency's definition of "low carbon," and noted that a World Bank loan last year for the rehabilitation of a coal plant in India was announced on the bank's climate Web page because the fixes were aimed at making the plant more efficient and emit less carbon dioxide.

"Of course, the lifetime emissions of the modernized plants would get an extension of over 20 years, a huge net increase of CO2, as opposed to letting the plants shut down as planned and channeling the money into true low-carbon alternatives," he said.

Agreed the Bank Information Center (BIC) watchdog group, "the implication of these policy loopholes is the potential justification for the financing of projects that would otherwise be phased out due to their obsolete generation technologies."

Yong Chen, a sustainable energy expert at BIC, called the guidelines "a positive step." But he added and others said the guidelines might have gone further in actively encouraging the World Bank to find and fund low-carbon energy projects.

"They are trying to push the bar higher without having too much trouble with the multilateral banks in how they're going to adopt them," Chen said. "It's not that useful, except for sending a signal."

The guidelines did not appear in the Federal Register, presumably because they do not affect U.S. government policy. Environmental groups said they met informally with U.S. Treasury officials late last year to discuss the development of the recommendations, and have been asked to submit comments.

Agency officials did not say whether they expect to revise the guidelines, but Wyeth wrote that the Treasury Department will work with other World Bank shareholders and staff "with the goal of operationalizing this guidance, recognizing we are but one shareholder."

FP: Why is the World Bank subsidizing one of the planet's dirtiest fuels?

It's been a while since I've mentioned the report I helped to write about public international financing of coal-fired power plants which can be see HERE. The findings are referenced in this Foreign Policy article:

With the U.N. climate change conference in Copenhagen getting under way this week, the pressure's on for world leaders to come up with some sort of climate agreement. Despite the appearance of a unified plea for action, however, not everyone is playing ball. And one of the shirkers is especially surprising: Even as governments are weighing tough choices to bring down emissions and cope with rising temperatures, the World Bank is financing -- and plans to continue financing -- coal projects to the detriment of renewable energy. In effect, the World Bank is sending the message that coal is not just an acceptable fuel, but also a resource that should be developed with international funding. It's a betrayal of everything the World Bank's member countries are supposed to be working for.

The bank's recently released draft Energy Strategy, which will guide its energy lending and influence partner institutions for the next seven to 10 years and announces its investment in coal, is very, very bad news. Although the proportion of coal to renewable energy is falling, the shift is too little too late. Back in 2004, the World Bank's Extractive Industries Review recommended that the bank "phase-out support for oil by 2008, and formalize its moratorium on lending for coal projects immediately." That was five years ago. Today, the World Bank strategy notes that "In some countries, electricity from coal is significantly cheaper" and the bank "could use its traditional financing instruments to support client countries to develop new coal power projects under certain conditions." Indeed, the Bank Information Center finds that bank funding for coal has increased almost 200 percent between 2007 and 2009.

But even if it saves costs in the short term, each newly constructed coal plant has a life of about 50 years, during which it will emit carbon; rehabilitation extends the life of the plant by an additional 20. So even as World Bank donor countries are fighting political battles to cut emissions, their dollars are funding new World Bank coal projects that will cancel out any hard-won gains.

It's hard to understand why "coal" isn't a dirty word in the halls of the World Bank -- an institution whose mandate is built on the idea of sustainable development. According to the U.S. Energy Information Administration, coal is the most carbon-intensive of the fossil fuels and is the fastest growing carbon-emitting energy source. Coal's share of world carbon dioxide emissions is projected to increase to 45 percent in 2030, meaning that nearly half of all new pollutants can be traced back to coal. Perhaps most outrageous of all is that climate change driven by such investments will disproportionately affect the poor, those who've had the smallest role in producing emissions.

Mining the stuff also wreaks havoc on the environment. Open pit, strip, and underground mines all cause severe erosion, leach toxic chemicals into nearby streams and aquifers, and push animals and plants out of their habitats. Coal is particularly harmful for public health. A 2009 Environmental Defense Fund study estimated that between 6,000 and 10,700 annual deaths can be attributed to the 88 coal-fired power plants and companies receiving public international financing, including from the World Bank.

Yet even knowing coal's blemished track record, the bank is not only subsidizing coal projects but doing so to an increasing degree. During the 2008 fiscal year, the World Bank and International Finance Corporation (IFC) increased funding for fossil fuels by 102 percent compared with only 11 percent for what it categorizes as new renewable energy such as solar, wind, biomass, geothermal energy and hydropower projects under 10 megawatts. On average, fossil fuel financing by the bank still accounts for twice as much as all new renewable energy and energy efficiency projects do, combined. Bloomberg News reported that thanks to World Bank financing, India's Tata "ultra mega" power plant will have the dubious distinction of being one of the world's 50 largest greenhouse gas emitters once it begins operation in 2012. At this very moment, the bank is considering a loan for the South African electricity company Eskom that would commit $3.75 billion for the 4,800-megawatt Medupi coal-fired power station, currently under construction. According to Reuters, if approved, this will represent the single largest World Bank loan awarded to post-apartheid South Africa -- and yes, it's for a coal plant.

Of course, the bank does know and admit that cutting emissions is a goal it should strive for. But its rhetoric and actions on the topic are mismatched. Whereas the institution claims in its Energy Strategy that it "support[s] countries in their efforts to shift to a low-GHG-intensity path," the hard data on bank support for coal paints another picture. For each thoughtful, renewable project that the bank supports, such as its $20 million investment in the Yemeni Al-Mokha wind farm, there is another coal-fired power plant or emissions-intensive hydropower project on the horizon.

What does this mean in the context of Copenhagen? World Bank-financed projects are a significant source of the world's greenhouse gas emissions, and they're set to grow. When the fossil fuels involved in the World Bank and IFC lending projects for the 2008 fiscal year are combusted, the projected lifetime CO2 emissions from this one year of financing will amount to approximately 7 percent of the world's annual CO2 emissions from the energy sector. That's twice the amount of Africa's annual energy-sector emissions.

What's even worse is that sustainable alternatives to coal exist. The World Bank could use its sizable energy investment portfolio (more than $7 billion) to promote low-carbon development that helps (rather than hurts) emissions targets. It could push the political consensus to do the same. But it's not doing either -- a failure of great magnitude for an institution that's supposed to lead by example, not follow the path of least resistance.

Grist: ‘No compromise’ faction attacks climate bill

Grist:

Global warming activists endorsed by the preeminent climatologist James Hansen are working to defeat the climate and energy bill in Congress, and they’re using some provocative stunts to spread their message.

Briefly:

* Activists handed out fake $2 trillion bills at a rally for climate legislation in New York last week, criticizing the size of the global-warming emissions market they oppose. ($2 trillion is their estimate for the size of the emissions market they oppose.) The bills depict Al Gore holding a wrench and a compact-fluorescent light bulb and the words “Corporate Giveaways! Carbon Ponzi Schemes! FALSE SOLUTIONS!”
* Others hung a 14-foot banner of the same bill from the Manhattan headquarters of the Natural Resources Defense Council (NRDC).
* “Cap’n Trade,” an actor in a pirate costume, unfurled a similar banner at a presentation by Connie Hedegaard, chairperson of the Dec. 2009 UN Climate Summit and Denmark’s minister for climate and energy.
* Still others blocked a motorcade of UN delegates to drop a banner with the message “Cap + Trade is a Dead End.”

At least three groups worked together on last week’s events—Climate SOS, Rising Tide North America, and “Greenwash Guerrillas,” which pied Thomas Friedman last year. They all hold a “no compromise” philosophy on climate-change action, opposing carbon markets that allow polluters to buy and sell pollution credits and arguing that larger environmental groups such as NRDC have compromised too much in working with businesses and Democratic lawmakers.

“It’s an awkward position to be environmentalists working on climate change but opposing a climate bill,” said Climate SOS organizer Rachel Smolker, a Vermont ecologist and author. “Especially with a new administration that we want to support. But we felt we need to take a really strong position because this [bill] is so inadequate.”

The campaign is awkward for “establishment” green groups too. They’ve been preparing to battle fossil-fuel interests over the energy bill introduced in the Senate this week. Now they must figure out if and how to respond to this attack from the far left.

“It’s troubling,” said Daniel J. Weiss, director for climate strategy at the Center for American Progress, a center-left think tank with close ties to the Obama administration. “No one believes that the clean energy bill that will come out of Congress will address the threat of global warming in a single step. But we have to start.”

“The real enemies are Big Oil and Big Coal and the right wing attack machine,” he said. “For them to mock [Gore] in the way they did shows that they don’t understand you need to attack your enemies and not your allies.”

Hansen’s involvement is especially troublesome. The director of NASA’s Goddard Institute for Space Studies wasn’t involved in the New York stunts, but he endorsed Climate SOS’s recent tour against a climate bill. The $2 trillion bill includes his statement that a cap-and-trade program “would be worse for the environment than doing nothing.”

The opposition by Hansen and Climate SOS is unlikely to influence Washington policymakers, in Weiss’s opinion, but it’s got the potential to make everyday Americans think the situation is hopeless.

“If they hear from such a respected scientist as James Hansen that what Congress is doing won’t matter, then why would they bother to call their senators to say ‘Act on this’?” he said.

Aside from the stunts last week, other moves by the “no-compromise” camp are downright perplexing. Last week Greenwash Guerrillas launched a website in response to Cleanenergyworks.us, a three-month-old diverse coalition supporting a comprehensive energy bill. The similar-sounding Cleanenergyworks.biz was a replica of the real Clean Energy Works site, with two notable changes: The phone number and email address for spokesperson Josh Dorner had been changed. His name was left the same. The site changed to a more innocuous version over the weekend and is currently down.

Dorner had no interest in speaking about the site that took his name. “I don’t send too much of my day worrying about a website,” he said Thursday. “There are considerably more important tasks before us to get this bill across the Senate floor.”

NRDC spokesperson Michael Oko shared Dorner’s reluctance to give attention to the stunts. “There are a lot of different groups out there,” he said in regard to the banner hung at NRDC’s office. “Everybody has the right to express themselves.”

About the replica website Oko said, “Frankly, I was a little confused about what their intention was.”

Smolker of Climate SOS said the idea was “to provide a spoof, to reveal the emptiness of the claims Clean Energy Works provides. For them, it’s green jobs and clean energy and everything’s a smiley-face, you know? Our goal is to tell people to look deeper and take the smiley faces off.”

She said she contributed ideas for the mock site, but individuals from Greenwash Guerrillas, who did not want to be identified, created the idea.

The 51-year-old Smolker has seen firsthand how environmental groups can evolve, professionalize, and grow in wealth and influence. Her father was one of the founders of Environmental Defense Fund (EDF), another group targeted by Climate SOS last week. EDF met in her childhood home when it was still a “ragtag group,” as Climate SOS is now, she said. (Smolker, who works for Biofuel Watch, declined to give funding information for Climate SOS but said all members were volunteers.)

“We’ve played that compromise game for a long time,” she said. “There’s too much at stake right now.”
The old saw

The compromise question—whether to sacrifice what is ecologically necessary for what seems politically possible—has been around as long as the green movement itself. The naturalist-and-mystic John Muir and the politician-and-forester Gifford Pinchot clashed over the same tensions in the early 20th century.

As for Hansen’s “worse than nothing” remark, there has been plenty written about the failings of the House climate and energy bill—it gives away too much to dirty-energy backers, it even protects coal-plant pollution from further regulation. But there is historical precedent of legislation that is deeply flawed at first evolving into something effective and durable. The original Clean Air Act did not address the acid rain crisis, an omission not corrected until 1990. The original Social Security Act did not include domestic or agricultural workers, effectively excluding many Hispanic, black, and immigrant workers, as Democratic strategist Paul Begala notes.

“If that version of Social Security were introduced today, progressives like me would call it cramped, parsimonious, mean-spirited and even racist,” writes Begala. “Perhaps it was all those things. But it was also a start. And for 74 years we have built on that start.”

Most progressives, including many major green groups, would gladly embrace an imperfect climate bill as a start.

“Those who see the House clean energy bill as somehow tainted by deals, and therefore want a carbon tax, have to understand that no tax proposal would ever emerge from Congress as we know it without similar or worse deals being made,” said Weiss. “Unfortunately the moral high ground of ‘we must act for our children’ is necessary but not sufficient for our political process.”

Smolker said Climate SOS would continue on a different tack, insisting on an acceptable bill from the get-go. She expected the group would pause to take stock of the bill released in the Senate this week, then regroup.



Here’s Cap’n Trade delivering his message to Danish climate and energy minister Connie Hedegaard:

ClimateWire: A plan to save rainforests gains international momentum

I haven't reported much on the G20 and Obama's climate speech (mostly because there is nothing to report), but here is a pretty decent summary on the status of REDD (Reducing Emissions from Deforestation and Degradation) in the climate negotiations. A few of my EDF colleagues are quotes.

E&E News:

Jessica Leber, E&E reporter

The scene was one for the history books. Kevin Conrad, representing the small tropical nation of Papua New Guinea, stood up at the 2007 climate negotiations in Bali, Indonesia. He gave the United States two options: Either lead or "get out of the way." The dramatic moment broke a deadlock at the time.

Today, some analysts believe that a plan to save the world's rainforests, championed then by Conrad in Bali, could again carry the day -- this time at international climate talks in Copenhagen in December aimed at drafting a replacement to the Kyoto Protocol.

While the United States and China continue to hedge on their broader commitments to reduce greenhouse gas emissions, negotiators have made steady progress on the plan, known by its acronym REDD, which stands for Reducing Emissions from Deforestation and Forest Degradation.
Rainforest canopy
Before: Because of the lush Amazon rainforest's carbon dioxide-storing capability, preserving it is regarded as essential to reducing the threat of climate change.

The underlying concept seems simple at first glance. Industrialized countries pay to lock carbon into developing nations' forests. The money, if directed as intended, would provide a long-absent motive for local landowners and indigenous populations to abstain from clear-cutting their trees to create ranches, plantations and farms. Conservationists hope it will save the rainforests where decades of other efforts have fallen short.

"We have to value forests when they are alive and standing. Presently, we only value them when they're dead," Conrad told reporters yesterday. He spoke after a high-level meeting at the United Nations yesterday, attended by Secretary-General Ban Ki-moon and key world leaders.
A deal with appeal to rich and poor nations

Those who have watched REDD's development since it was first placed on the international agenda by Papua New Guinea in 2005, say that it may provide the best hope for a concrete deal that includes nations both rich and poor.

"I regard it as having the potential to be at center stage in Copenhagen as a mechanism for breaking logjam and enabling an overall agreement," said Annie Petsonk, international counsel for the Environmental Defense Fund. She said yesterday's meeting was encouraging because many prominent leaders attended and declared the importance of REDD in the broader framework.

REDD is powerful because it is one of the quickest and cheapest available options for slowing the trajectory of rising temperatures in the atmosphere. Deforestation causes nearly 20 percent of global greenhouse gas emissions, the equivalent of the world's entire transport sector. Indonesia and Brazil are, respectively, the world's third- and fourth-largest emitting nations. In Brazil, deforestation is responsible for 70 percent of emissions.

"Protecting tropical forests is one of the most affordable ways to reduce climate pollution," Glenn Hurowitz, Washington director of the nonprofit Avoided Deforestation Partners.

According to figures cited at the U.N. meeting, a ballpark of $22 billion to 36 billion dollars of global investment in REDD by 2015 -- a relatively small amount in the grand climate financing scheme -- could cut global deforestation rates by a quarter.

That low cost is a big carrot for the United States. At a bargain price of about $5 a ton, REDD credits could either slash expenses in meeting emissions targets or afford lawmakers the flexibility to propose more lofty aims. For example, the cost of the climate legislation passed by the House, sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), would rise by 89 percent without its international offset options, most of which would come from tropical forest projects, U.S. EPA estimated.
So far, the U.S. and other big emitters sit on their wallets

But at the United Nations yesterday, big emitters, including the United States, backed away from offering firm financing to fund REDD goals, echoing deadlocks seen elsewhere in the negotiations. "Developing nations are willing to lead, provided they work in partnership with developed nations and receive the required financial and technical support," said Secretary-General Ban.

Those very developing nations also lamented the lack of progress. "There isn't adequate financing currently on the table," said Guyanese President Bharrat Jagdeo. The president said that he and others were expending precious political capital championing a cause that could potentially slow their development, while Western nations refused to do the same.

And a focus on the potential pitfalls of REDD, rather than its benefits, means that it is not receiving the attention it needs to be included prominently in a Copenhagen agreement, he said.

But embedded in those pitfalls are other open questions that have yet to be resolved beyond the issue of cold, hard cash: namely, how and to whom that money will be delivered, who will claim credit and responsibility for the carbon output avoided, and how it all fits into a broader climate deal.

Brazil and the United States are the two countries with perhaps the most at stake in the answers. High-level leaders of the former were notably absent from yesterday's meeting and U.S. Secretary of State Hillary Rodham Clinton, on the program to attend, did not come due to a scheduling conflict.
Brazil has sovereignty worries

For years, Brazil's leaders, fearful of ceding sovereignty over its own lands, opposed any discussion of tropical deforestation in climate negotiations. But since 2003, the country has reversed that attitude and has also promised to slash its forestry emissions by an impressive 80 percent by 2020, with the help of a $1 billion investment from Norway.
Deforestation
After: "Slash and burn" farming techniques turn forests into ash and rubble for relatively short-term economic gains.

The Amazon nation, however, has big reservations about sharing the fruits of its efforts by offering credits on a market, which could ultimately give the United States a free pass to make fewer of its own sacrifices. Instead, it wants to receive most of its funds outright to meet its own goals, although even that stance is slipping as powerful state leaders push Brazil's leadership for access to open markets, said Hurowitz of Avoided Deforestation Partners.

Less powerful countries are also pushing back. The Coalition for Rainforest Nations, a bloc of 32 countries, including Indonesia and Guyana, wants developed nations to fund two successive REDD start-up phases. These would help individual countries build the capacity to create, measure and verify legitimate forest carbon projects, according to Federica Bietta, deputy director of the coalition, which Conrad heads.

Ultimately, the coalition envisions a third phase, one that is key to the United States: credits sold to the market to offset buyers' emissions. This market approach, the coalition believes, would make it harder for a few countries to monopolize the wealth.

And African nations in the Congo Basin, which have so far maintained more of their forests, don't want to be left out of the pool. That may eventually require a different payment plan to reward landowners despite their low historic deforestation rates. "The Copenhagen process must not leave precious forests like the Congo Basin unprotected just because it is not so-called 'high risk,'" wrote Denis Sassou Nguesso, president of the Republic of the Congo, in an op-ed in the Boston Globe this week.

Such insurance will also prevent loggers and ranchers from getting visas and moving to new nations where they can still slash and burn. This is a prospect several small island nations, slated to disappear off the map as sea level rises, fear the most.
A game changer for negotiations

In the end, the power of progress on REDD is also in how it could change the negotiating dynamic.

Depending on its structure, a forest payment plan could allow major emitters, such as Brazil, to adopt binding emissions targets financed in part by international funds. Smaller nations, such as Papua New Guinea and many African countries, meanwhile, could use the aid to prove they are contributing what they can to global goals.

And because U.S. businesses so desperately want the cost savings of offset credits, the scheme gives tropical nations leverage to push the United States to adopt more stringent emissions targets. Brazil, for example, has signaled that it plans to do exactly this, said Hurowitz. That dynamic tension could even nudge along a U.S. deal with China, said Environmental Defense Fund counsel Petsonk.

Despite all the talk, however, there have been few projects of substantial size that would now measure up to what everyone involved promises will be stringent integrity standards.

Although both the United Nations and the World Bank have raised millions of dollars to prepare nations to stem the tide of carbon leaving their forests, these funds have not yet been filled, and billions more will ultimately be needed, said the Coalition for Rainforest Nations' Bietta. Hurowitz said that some countries may be willing to commit to REDD funding before Copenhagen, while others -- like the United States -- will be loath to get ahead of domestic legislation.

The pending U.S. legislation does look promising. The Waxman-Markey bill would offer 5 percent of annual emissions revenues to fund extra emissions reductions through tropical forest projects, and would also permit up to 2 billion tons a year of offsets. And yesterday, dozens of prominent U.S. ecologists wrote to President Obama, urging him to definitively link tropical forest conservation with his global climate mission.

But as with the broader negotiations, progress is slow. "So far, it's all talk. There is no REDD," said the Environmental Defense Fund's tropical forest policy director, Steve Schwartzman. But he said efforts to change that over the next few months look promising. "You can really see some light at the end of the tunnel."

Huffington Post editorial: Climate Follies: Bankrolling Dirty Power in Developing Countries by Mindy S. Lubber; President, Ceres

My work mentioned in the Huffington Post? No big deal.

Huff Post:

In Washington, it's a popular climate conundrum everyone talks about: Even if the U.S. lowers its greenhouse gas emissions, China and India are on track to dwarf the entire Western World's as they build enormous coal-fired power plants. Politicians of all stripes regularly say we must get China and India to use less coal, the dirtiest of fossil fuels, to power their emerging economies.

But who do you think is financing all these new coal plants in the developing world?

Try the World Bank, the Asian Development Bank and other international public financial institutions supported by the world's wealthiest nations.

That's right. While the industrialized world is struggling to cut its emissions, and is gearing up to negotiate a new international climate treaty in Copenhagen this December, it is simultaneously bankrolling the construction of thousands upon thousands of megawatts of new coal-fired power in developing countries.

A new study by Bruce Rich, formerly of Environmental Defense Fund (EDF), shows that international public financial institutions have provided $37 billion to finance the construction of at least 88 new coal plants in the developing world since 1994. What's more, that $37 billion in direct financing secured another $60 billion or so from private and local sources, bringing total investment in new coal plants in developing nations to over $100 billion.

Even worse, the World Bank classifies these coal plants as "low carbon" financing projects if they are the so-called supercritical type with marginally better CO2 emissions rates.

Collectively those 88 coal plants will pump out 792 million tons of CO2 a year -- essentially negating pollution reductions the Waxman-Markey climate bill hopes to achieve over the next decade. The bill was approved last month in the House and is now up for debate in the Senate.

Bear in mind that 88 is a minimum number because most export credit agencies do not release detailed information on transactions and only plants for which the financing could be verified were included in EDF's study.

If you're wondering why 1994 is the baseline, it's the year the United Nations Convention on Climate Change took effect, committing industrialized nations to provide funds and technology to mitigate climate change in poorer nations. But instead, the wealthier nations have been locking into place a carbon-intensive energy infrastructure, one that will endure for decades since coal plants typically operate for 40 to 50 years.

Sure, these public international lenders have committed $6 billion over the past 15 years to help the world's most vulnerable citizens adapt to a warming planet -- but it's a fraction of the $100 billion spent on new coal plants.

Some would call that shooting yourself in the foot.

And it's not as though the World Bank is unaware of the dangers of continued reliance on coal. It commissioned a three-year independent study on the future role of the World Bank Group in supporting coal, oil and gas. But when that study recommended decisive action away from fossil fuel lending, the World Bank refused to endorse its findings -- even at the urging
of six Nobel Peace Laureates and the European Parliament.

The World Bank also gets it that the poorest countries will suffer the worst effects of global warming. In 2003 it published Poverty and Climate Change: Reducing the Vulnerability of the Poor through Adaptation, which stated "climate change is a serious risk to poverty reduction and threatens to undo decades of development efforts."

Why then does it finance coal? Here's what the World Bank's Chief Economist has to say: "Because coal is often cheap and abundant, and the need for electricity is so great, coal plants are going to be built with or without our support. Without our support, it is the cheaper, dirtier type of coal plants that will proliferate."

Not true says the Center for Global Development. It says most new coal plants that are built without World Bank funds, at least in India, ARE the cleaner, so-called "supercritical" type because the operating and fuel costs of the supercritical coal plants are cheaper.

More to the point, supercritical coal plants are only slightly cleaner, producing about 15 percent less C02 than traditional coal plants, according to EDF. They are still not as clean as even a natural gas-fired plant.

Which leads me to alternatives. Clearly, bringing electricity to the world's poor is a goal we can all get behind, but there's a better way to do it: Renewables, energy efficiency and grid modernization. International financial institutions should be scaling up their support for these rather than financing coal.

Today the Bank spends twice as much on fossil fuel projects as new renewable energy and energy efficiency projects combined and five times as much as new renewables alone.

That's a missed opportunity when large-scale renewables are so feasible in the developing world. Take Gujarat State in India, where a monstrous 4,000-megawatt coal-fired plant, the Tata Mundra, is being built with World Bank support. More than 7,000 megawatts of renewable energy are also in the works there -- with no help from international development banks. AES, a US based energy company, is constructing a $1.2 billion 1,000 megawatt solar thermal array as part of that plan.

Think how many more renewable energy projects could be built if public international financial institutions changed their lending priorities.

Equally important, international financial institutions must also tighten the definition of "low carbon." Supercritical coal plants now meet that feeble standard, which gives the World Bank's claim that 40 percent of its energy lending is "low carbon" a hollow ring.

These reforms are imperative, for if we do not slow the rise of CO2 emissions from coal in the developing world, no amount of emissions cuts in industrialized nations will make a difference.

International Public Financing of Coal in a Carbon-Constrained World

I'll be presenting the research and data analysis methodology.

Foreclosing the Future: Coal, Climate and International Public Finance

I've been working on this for the last 2 months for work. Check it out.


http://www.edf.org/coalfinance

An Environmental Defense Fund report has found that the World Bank and other international public financial institutions are continuing a 15-year trend of supporting coal-fired power plant construction throughout the developing world and economies in transition.

By financing this new carbon-intensive infrastructure, multilateral development banks (MDBs) and export credit agencies (ECAs) of the industrialized world are hamstringing the fight against global warming and setting back longer term efforts to alleviate poverty in the world's poorest countries.

* Since 1994, the World Bank, other MDBs and ECAs financed new construction or expansion of 88 coal-fired power plants.
* These plants will generate roughly 791 million tons of CO2 emissions per year, or more than 75% of the current emissions for coal-fired power in the entire European Union.
* According to the International Energy Agency, without a decisive reorientation of energy investment from carbon-intensive sources in developing and emerging economies, atmospheric CO2 will overshoot the point of no return for dangerous global warming, even if the industrialized world were to reduce its CO2 emissions to zero by 2030.

The time for change is now

EDF urges the MDBs and ECAs to hasten the shift to renewable energy by adopting the following recommendations:

1. Deploy public international finance in support of renewable energy, energy efficiency and other alternatives to coal. Scarce public international resources should go to renewable technologies and energy efficiency programs, which will help countries grow and alleviate poverty while reducing the impacts of global warming on the poor.

2. Calculate coal's true cost; MDBs and ECAs should institute comprehensive Greenhouse Gas Screening and Accounting and Shadow Carbon Pricing for all projects that emit greenhouse gases. (Shadow Carbon Pricing includes the external cost of carbon emissions to society and the economy.)

3. Create under the auspices of the United Nations Framework Convention on Climate Change the first international database of GHG-intensive investments (including coal plants) and their emissions by public finance institutions. No such database currently exists.

4. Negotiate as soon as possible, an international agreement among OECD member nations on a common climate/GHG policy for their ECAs.

Read the summary [PDF] of "Foreclosing the Future" to learn more about the financing behind these plants and their impact on the fight against global warming.

Environmental Defense: Cap. Trade. Grow.