By Paul Brown
The Guardian
November 13, 1998
The World Bank plans to take control of the £60 billion international carbon
trading market being set up under the Climate Change Convention, even before
the 167 countries involved agree how it will be organised.
Confidential documents leaked to the Guardian at the climate talks in Buenos
Aires show that even the United States treasury is alarmed by the move. It
sees a conflict of interest with the bank's other role as a developer of
fossil fuels, a role in which the bank has a bad reputation among
environmental groups and in the developing world.
The World Bank itself fears its move may carry the "political risk of seeming to get ahead of the convention on emissions trading", but sees rich rewards from controlling a system by which Third World countries can sell their pollution allowance to developed countries in return for cleaner combustion technology.
The bank plans to charge 5 per cent commission on all deals. It estimates that the market will be worth £90 billion by 2020, giving a total commission income of £4.5 billion, of which 60 per cent will be "profit above administration costs".
Rather than opt for expensive fossil-fuel reductions at home, companies can buy cheap carbon credits from developing countries, the bank says. It believes that renewable energy sources like wind and solar power are too expensive, and suggests further investment in fossil fuels. This would involve Western countries building new coal-fired plants to replace inefficient ones in developing countries, and then claiming those countries' carbon credits because of the efficiency gained. The World Bank in its document calls it "a win-win of collecting low-hanging fruit", but in English it means easy pickings.
The leak coincides with a report published yesterday in which the bank is strongly criticised for continuing to build fossil-fuel plants in the developing world. The US Institute for Policy Studies and the International Trade Information Service say this makes the bank unsuitable for any role in the carbon market.
The joint report says that since the Rio Earth Summit in 1992 the bank has spent 25 times more on supporting fossil-fuel projects than on renewable sources of energy. In the past year it has voted almost £800 million for four massive coal burners in China alone.
The bank claims that the new plants are needed to bring electricity to the 2 billion people in the world without it, and much needed economic development. In reality, the report says, almost all the investment goes to existing industrial areas, and large and often dirty industries from the developed world move in to take advantage of cheap power. Only 7 per cent of the power provides electricity to people who previously had none. Daphne Wysham, the author of the report, said: "It is appalling news that the bank plans to try and control carbon trading. It has a terrible track record of wrecking the climate by building coal stations in the developing world without proper environmental controls. Even the US government is alarmed."
The US treasury document says the conflict arises from the bank's role as a developer of fossil fuels, a promoter of greenhouse gas reduction, and now a carbon trader. "The bank has a credibility problem, having long supported fossil-fuels development... having failed to implement its own energy and environment policies," it says.
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