By Chris Lang
In December 2010, the World Bank’s Special Envoy for Climate Change, Andrew Steer, wrote that one outcomes of Cancun was that “Forests [are] firmly established as a key for addressing climate change, and to be included in a future carbon trading system.” This comment should end any discussion about whether the World Bank considers REDD to be anything other than a carbon trading mechanism.
Of course, there is nothing new in pointing out that the World Bank is promoting of a version of REDD that is based on carbon trading. At the launch of the Forest Carbon Partnership Facility (FCPF) in Bali in 2008, Benoit Bosquet, who was responsible for leading the development of the FCPF at the Bank, announced that
The facility’s ultimate goal is to jump-start a forest carbon market that tips the economic balance in favor of conserving forests.
A new report from the Bretton Woods Project outlines how influential the World Bank is in developing, promoting and trading in carbon markets. The report, which is titled, “The role of the World Bank in carbon finance,” can be downloaded here (pdf file 287.8 KB)
The World Bank manages 12 carbon funds and facilities, working in 57 countries. By 2010, when the Bank’s Prototype Carbon Fund reached its tenth birthday, the Bank had a carbon finance portfolio of US$2.4 billion, with more than 200 projects. The Bank provides finance to set up carbon projects, as well as buying and selling carbon credits.
The report highlights the following concerns with the Bank’s role in carbon finance in general:
- Failure to produce expected emissions reductions;
- Finance supporting heavily polluting industries, including coal power, and as a result delaying the transition to a low-carbon economy;
- Lack of additionality in terms of finance and emission reductions;
- Conflicts between the Bank’s carbon-intensive portfolio and its role in carbon finance;
- Very limited finance going to smaller, poorer countries, despite these being an express priority for the Bank;
- Evidence that purported development benefits are not integral to Bank carbon finance, despite the Bank being a development institution;
- Negative social impacts associated with Bank carbon projects and programmes, including conflicts over resource rights and sharing of benefits;
- Major shortcomings on transparency, engagement and accountability, particularly in monitoring whether commitments to community benefits are fulfilled;
- Limited effectiveness in achieving the official Bank goal of transferring and diffusing technologies to developing countries and poor communities.
None of which bodes well for the Bank’s role in promoting the trade in forest carbon. Here are extracts from the Bretton Woods Project report relating to the FCPF (and two examples of the Bank’s past role in promoting industrial tree plantations for carbon credits in India and Brazil):
The Bank is leading efforts to extend carbon finance beyond 2012. It established the Forest Carbon Partnership Facility (FCPF) in 2008 to finance reduced emissions from deforestation and forest degradation (REDD) at country-level, rather than just project-by-project. The FCPF comprises a Readiness Fund, to support the development of national strategies and systems, and a Carbon Fund, a public-private partnership that will buy emission reductions after its launch, planned for early 2011. As with the other carbon funds, the Bank acts as trustee, holding the funds and disbursing them according to rules prescribed by the governing Participants Committee. For the FPCF, the Bank also serves as the secretariat, applying its operational policies and making recommendations on funding objectives and criteria, and a delivery partner, providing technical support and conducting due diligence on matters such as fiduciary policies and environmental and social safeguards.
[ . . . ]
Civil society groups including the Bank Information Center (BIC), which has observer status on the FCPF Participants Committee, have called for the FCPF to “more explicitly explain how the relatively small carbon payments from [its] Carbon Fund will positively contribute to achieving the general objectives of ensuring equitable benefit sharing or promoting large-scale positive incentives for REDD.”[23] They have also suggested that the anticipated early launch of the Carbon Fund means that “it is unlikely that countries will be prepared to implement REDD at the national level by the time they begin designing proposed emission reduction programmes”, and therefore “the Carbon Fund is likely to focus on sub-national programmes,… potentially undermining the objectives of the [FCPF’s] Readiness Fund to support the development of national… strategies.”[24]
[ . . . ]
The Bank is calling for reforms to the CDM to alter this balance, including expanding the eligibility of emission reductions from agriculture. It has also blamed the CDM’s transaction costs and “too frequent changes to rules, procedures and methodologies,”[34] though similar problems affect the Bank-managed FCPF, according to NGO Forest Peoples Programme.[35]
[ . . . ]
There are concerns about tying developing countries into the carbon market, which has proved highly volatile during the global economic crisis and regulatory uncertainty.[40] For example, a Bank-sponsored project in India involves J.K. Paper Mills Ltd. contracting small farmers to provide timber products. By shifting from subsistence agriculture to agro-industrial forestry, IPS argues that “farmers are trading communal land rights and their ability to feed themselves for the whims and price fluctuations of the international carbon market.”[41]
Forest carbon projects have provoked concerns about finance going to large plantations and agro-forestry, which can have negative impacts on land rights, livelihoods and the environment. Eucalyptus plantations in the Plantar SA project in Brazil, a recipient of PCF finance in 2002, resulted in local communities being dispossessed of their lands and the use of herbicides that caused water pollution and biodiversity loss.[42]
The Bretton Woods Project has previously asserted that, “Without adequate consultation or prior strengthening of community land tenure rights and forest law enforcement capacity, the FCPF could merely create a new source of revenue for logging companies, governments, and investors without securing genuine long-term reductions in carbon emissions and protection of forest resources from degradation, or equitable benefits for the poor (especially forest-dependent communities).”[43] A 2009 review of 25 countries’ initial FCPF documents, by the US-based World Resources Institute and the Brazilian Instituto Centro de Vida, found a need for a more systematic, practical approach to issues of governance such as land tenure, law enforcement and transparency.[44] Failure to address regulatory and enforcement issues relating to the generation of emission reduction credits remains of concern as the FCPF’s Carbon Fund approaches its launch, according to a joint statement by four NGOs.[45] Civil society groups, including the Pan-African Climate Justice Alliance, have also highlighted the lack of clarity regarding how requirements of the FCPF charter, including on safeguards and indigenous rights, will be fulfilled, particularly as the Bank attempts to widen the range of delivery partners for the fund.[46]
[ . . . ]
In a joint statement focusing on the FCPF, BIC and other NGOs expressed concerns about the “trend … towards decision-making processes that are non-transparent and unaccountable.”[49] Clear criteria have not been set out for assessing whether countries have made “sufficient progress” to move to selling credits.[50] BIC’s observer to the FCPF has reported that country proposals are moving forward without sufficient scrutiny.[51] In addition, NGO the Forest Peoples Programme has raised concerns about “the repeated reworking of FCPF rules, criteria and templates leading to confusion, ambiguity and apparent retro-fitting of these rules, in violation of transparency and due process standards.”[52]
Endnotes
[23] ^ Bank Information Center, Friends of the Earth, Global Witness, Greenpeace (2010) ‘Civil Society comments on the revised Carbon Fund Issues Note.’ Available from: www.bicusa.org/en/Document.102364.aspx.
[34] ^ World Bank (2010) 10 years of experience in carbon finance; World Bank (2010) Carbon finance for sustainable development: annual report 2009, p. 16.
[35] ^ Bank Information Center, Friends of the Earth, Global Witness, Greenpeace (2010) ‘Civil Society comments on the revised Carbon Fund Issues Note.’ Available from: www.bicusa.org/en/Document.102364.aspx.
40 ^ World Bank (2010) State and trends of the carbon market 2010.
[41] ^ Institute for Policy Studies (2008) World Bank: climate profiteer, p. 36.
[42] ^ Carbon Trade Watch, Transnational Institute and The Corner House (2009) Carbon trading: How it works and why it fails. Available from: www.carbontradewatch.org/publications/
carbon-trading-how-it-works-and-why-it-fails.html.
Development Dialogue, Corner House (2006) Carbon Trading: a critical conversation on climate change, privatisation and power p. 302 – 320.[43] ^ Bretton Woods Project (2007) ‘Deforestation and double standards.’
[44] ^ World Resources Institute and Instituto Centro de Vida (2009) A Review of 25 Readiness Plan Idea Notes from the World Bank Forest Carbon Partnership Facility.
[45] ^ Bank Information Center, Friends of the Earth, Global Witness, Greenpeace (2010) ‘Civil Society comments on the revised Carbon Fund Issues Note.’ Available from: www.bicusa.org/en/Document.102364.aspx.
[46] ^ Bretton Woods Project (July 2010) ‘Update on the Climate Investment Funds.’
[49] ^ Bank Information Center, Friends of the Earth, Global Witness, Greenpeace (2010) ‘Civil Society comments on the revised Carbon Fund Issues Note.’ Available from: www.bicusa.org/en/Document.102364.aspx.
[51] ^ Bretton Woods Project (July 2010) ‘Update on the Climate Investment Funds.’
[52] ^ Forest Peoples Programme (2009) Moving the goal posts? Accountability failures of the World Bank’s Forest Carbon Partnership Facility Available from: www.forestpeoples.org/sites/fpp/files/publication/2010/08/fcpfbriefingoct09eng.pdf
PHOTO Credit: Valentin Druzkinin, Russia.
Dear Chris; it is no surprise an no news at all that the World Bank wants to promote trade. However, they have become very cautious on creating the preconditions for a REDD+ market, see the Readiness Fund. There is no contradiction in all that. There is no market unless there are common baseline requirements and MRV, and ownership has been clarified (to say the least). We all know that REDD+ is a national endeavor that needs to be underfed with subnational activities. What has received little attention so far is that national REDD+ policies and subnational REDD+ activities will compete for any credits to be generated. Who is actually making the change, the government that implements and enforces new rules (e.g. on forest concessions), or the landowner who sticks to these rules? REDD+ will move the additionality test from the level of an international body – like the CDM Executive Board – to the national level. Hence, there is an additional requirement for readiness, namely benefit sharing on the national level. Why not insist on doing things right, instead of destructively criticizing the carbon market?
Let’s face the facts: If we are to reach the stabilization target (2 degrees) by 2050, there is no way around quantitative commitments by all nations. REDD+ is an entry point for countries whose major GHG emissions source is land use. And for them, changing their development path is just as burdensome as for industrialized countries to de-carbonize their economies. The industrialized world has overcome its phase of primary resource over-use, none the least, because cheap natural resources are now imported from the south. Whether it’s deforestation in Brazil for meat or biofuel production (cattle grazing, soy beans, sugar) or Chinese coal-based energy for European carmakers, we’re talking about exactly the same process. There is no such thing as good and bad mitigation. We cannot do one thing without the other.