a must Read article Piggybacking on the goal of reducing carbon emissions, multilateral banks are aggressively re-orienting their lending priorities. They are once again advocating big hydro projects and nuclear energy to mitigate the effects of climate change in transition countries like India and China
Big dams and nuclear energy make a backdoor entry By Richard Mahapatra http://www.infochangeindia.org/analysis123.jsp Piggybacking on the goal of reducing carbon emissions, multilateral banks are aggressively re-orienting their lending priorities. On April 23, the World Bank will discuss a confidential report that advocates big hydro projects and nuclear energy to mitigate the effects of climate change in transition countries like India and China Far away from the current impasse over the Sardar Sarovar dam project in India, decision-makers at the World Bank (WB) are swiftly pushing for big hydropower projects in Washington. The World Bank is also talking about lending for nuclear power projects. In the early-1990s, the Narmada Bachao Andolan (NBA) campaign against the WB-funded Sardar Sarovar Project forced the Bank to stop funding the project. Since then, the WB has been reluctant to lend for big projects. Closer home, the Asian Development Bank (ADB), a regional multilateral development bank based in Manila, Philippines, is also seriously considering lending for high-risk big hydropower projects, and is also talking about lending for nuclear power projects. The return of multilateral development banks to lending for big dam projects, and their reversal of the principle of not lending for nuclear power projects, piggybacks on the goal of reducing carbon emissions to mitigate climate change. These banks are aggressively re-orienting their lending priorities to allow them to capture the multi-billion-dollar carbon market as well as increase lending in transition countries like India, China and Brazil. The WB and the ADB are trying hard to stay relevant in big borrower countries like India and China. And, given the enormous energy needs of these fast-growing economies, the energy sector is turning out to be a priority sector for multilateral development banks. The threat of climate change only facilitates this process. On April 23, in Washington, the Development Committee, a senior decision-making body of the World Bank, will debate a confidential report titled 'Clean Energy and Development: Towards An Investment Framework'. This comprehensive report strongly advocates multilateral development banks lending for big hydropower projects and nuclear power, to help reduce carbon emissions. It also accepts nuclear energy as a viable clean energy source that needs to be encouraged. The report focuses on transition countries like India and China. The development committee will debate the report on April 23, at the spring meeting of the World Bank in Washington -- a debate that will lay the ground for the framework to be approved at the WB-IMF annual meeting in September this year. The report is a comprehensive and radical assertion of lending for big hydropower and nuclear projects, as insurance against climate change. Although it claims that its suggestions are not WB-centric, it does point to the Bank's future lending areas. The report, which was put together in consultation with officials from India, Brazil, China and South Africa, can be safely said to reflect the governments' priorities in lowering carbon emissions. It suggests a 'fast two-track' approach to developing an investment framework for clean energy to reduce carbon emissions. Interestingly, despite the fact that developed countries are the biggest polluters, with the US alone contributing 25% of greenhouse gases, the report prescribes carbon reductions for developing countries. It sees developing countries as the place where most carbon reduction activities will have to take place. This can be interpreted as the World Bank seeking opportunities for lending (after all, developed countries don't borrow from the Bank). At the summit of the Group of Eight (G8) most industrialised nations, in Gleneagles, Scotland, last July, the World Bank was asked to propose a plan for a global transition to a sustainable energy future that would support energy sector expansion towards the ultimate goals of economic growth and poverty reduction. The G8 gave the World Bank the mandate to "take a leadership role in creating a new framework for clean energy and development". The report identifies and emphasises that big hydropower projects and nuclear energy are two 'feasible and economically viable' options for reducing carbon emissions. It describes nuclear energy as a clean and efficient energy and clubs it with other renewable sources like wind power. The document adds that financing options should be 'fast-tracked' and completed by September 2006, which is when the WB-IMF annual meeting will discuss and finalise it. Charting out an agenda to attain the above objective, it suggests that its own financial strength and that of other international financial institutions (IFIs) should be explored, to start with. And as a strategy to reduce carbon emissions quickly, it prescribes the exploration of new sources like nuclear and big hydropower projects. The World Bank has historically been the single largest financer of large dams worldwide, providing an average of around $ 1.25 billion a year for big dams over the past 60 years -- five times more than current lending for clean, renewable energy. The report shows that 60% of the Bank's supposed support for renewable energy and energy efficiency (RE and EE) is, in fact, for big hydro projects. In its annexure, the report details the carbon reduction activities of specific countries. For India, it says that the government is pushing for big hydro projects along with nuclear energy. The report's authors consulted extensively with Indian officials, including the energy ministry and the Planning Commission. India is the fifth largest emitter of carbon related to fossil fuels, after the US, China, Russia and Japan. It contributes 4.2% of the world's total carbon dioxide. Eighty per cent of India's electricity comes from thermal sources, thus making it one of the largest producers of greenhouse gases. The report is very specific in its prescription for India: "…opportunities to reduce the GHG intensity of the power sector is to shift the balance of production towards more diversified and cleaner sources. The latter include a mix of large and small hydro (projects)…." For India, the World Bank has already made clear its intention to lend for big projects; this confidential report carries this intention forward. The foray back into large dams in India comes close on the heels of the Bank's approval of an Infrastructure Action Plan (IAP) in July 2003. The plan aims to increase Bank support for what it terms "high risk/high reward" infrastructure projects such as large dams, over the next two years. As part of the IAP, the World Bank recently announced a doubling of its lending to India, predominantly for projects in the power, water and transport sectors. On April 25, the Bank's development committee, at the spring meeting in Washington DC, will discuss the implementation of this plan. The carbon rush Meanwhile, the ADB is going to review its energy policy adopted in 1995. According to a high-level official at the ADB: "We are not sure whether we will be lending for nuclear power projects, as currently we don't have any request for lending. But definitely this year we will be talking about it." The ADB is one of the World Bank's key partners in its clean energy development programme. "Nuclear power generation is a proven technology that provides about 20% of the world's electricity production. There is, however, widespread public concern about the safety of nuclear power operations and waste disposal methods," reads the energy policy. In its 1995 energy policy, the ADB states that based on concerns of transfer of nuclear technology, proliferation risks and environmental and safety aspects, the ADB would not support nuclear power. However, the 2000 review papers of the policy don't mention this. Sources say that given requests from big borrowers like India and China, the ADB may consider starting a debate on it. Meanwhile, the ADB is now definitely open to lending for big hydropower projects. It has announced a $ 2 billion a year credit line for water-related projects; the World Bank had already done so in 2004. Both pitch for large centralised projects. Of late, multilateral development banks like the World Bank and the ADB have become the new trustees of climate. Over the last five years, they have seriously pursued the carbon market. The World Bank coordinates all such activities; this latest report is one way of establishing its primacy in this field. The G8 asked the World Bank to prepare this report last December. Over the past five years, banks like the World Bank, the ADB, the African Development Bank, the European Bank for Reconstruction and Development, European Investment Bank and the Inter-American Development Bank have invested over $ 17 billion in projects that directly or indirectly contribute to lowering carbon emissions in developing countries. Both the World Bank and the ADB now manage carbon funds worth close to $ 5 billion. The former is managing eight carbon funds as trustee, where various countries contribute. The ADB is managing four funds under its Renewable Energy, Energy Efficiency and Climate Change (REACH) programme. The catch is that the International Energy Association estimates that a total capital investment of $ 8.1 trillion, equivalent to an average of $ 300 billion/year, is needed from 2003 to 2030 for developing and transitional economies to meet their energy needs. Of this, electricity comprises roughly 73%, oil 12%, natural gas 12% and coal 3%. Of the total global greenhouse gas emissions, the energy sector contributes 80%. Thus any carbon reduction programme has to focus on the energy sector. The World Bank report says that to mitigate greenhouse gas emissions it would cost anything between $ 10 billion and $ 200 billion/year. This offers huge opportunities to lend and do business in the name of climate change mitigation. The focus on developing countries stems from the fact that developed countries with carbon emission commitments can't reduce emissions in their own countries. According to the World Bank, in developed countries the cost of reducing one tonne of carbon dioxide could cost between $ 15 and $ 100, while it would be around $ 1 to $ 4 in developing countries. (Richard Mahapatra writes on environment and development. He is based in New Delhi) --~--~---------~--~----~------------~-------~--~----~ greenyouth mailinglist is the activist support mailinglist for kerala run by Global Alternate Information Applications (GAIA) To post to this group, send email to [email protected] -~----------~----~----~----~------~----~------~--~---
