Energy vs. climate
Only fossil fuel-intensive energies financed in developing countries

afrol.com, 18 July - As the leaders of the world's richest countries meet for their annual summit this week in Okinawa, Japan, the World Resources Institute (WRI) urged them not to undermine their commitments to reduce the threat of global climate change by continuing to finance new projects that increase greenhouse gas emissions in developing countries.

"Every coal-fired power plant built in developing countries today will continue to operate for at least 30 to 40 years, locking those countries into the same inefficient, high carbon future that rich industrialized countries are starting to leave behind," said José María Figueres, WRI board member and former president of Costa Rica.

"It is the height of hypocrisy for the world's richest countries and their industries that oppose the Kyoto Protocol to finance new carbon emissions in developing countries while insisting that those same countries reduce their carbon emissions before the protocol can be ratified," he added. 

A new WRI study reveals that Canada, France, Germany, Italy, Japan, the United Kingdom and the United States - collectively called the Group of 7 or G7 - privately continue to subsidize billions of dollars in exports and investments that encourage fossil fuel-intensive development. At the same time, they publicly assure developing countries of financial and technical assistance in achieving development that minimizes the threat of global climate change.

The report, The Climate of Export Credit Agencies, documents how during the mid- to late-1990s G7 governments through their export credit agencies (ECAs) co-financed energy-intensive projects and exports valued at over US$103 billion. These projects and exports included oil and gas development, fossil-fueled power generation, energy-intensive manufacturing, transportation infrastructure, and civilian aircraft sales.

"The G7 countries accounted for the overwhelming share, that is 90 percent, of the co-financing provided by ECAs to these energy-intensive exports and projects, " says the report's lead author, Crescencia Maurer. 

By comparison industrialized countries have directed just a fraction of their ECA financing to renewable energy projects. Between 1994 and 1999 ECAs supported a total of US$2 billion in renewable energy projects. 

"The main problem is that G7 governments continue to drag their feet on ECA reform," says Ruchi Bhandari, co-author of the report. 

Three years ago, at 1997 G8 Summit (G7 plus Russia) in Denver, Colorado, the problem of climate change and the need to reform ECAs were highlighted as priority issues. The final Denver communiqué called for the OECD to adopt ECA environmental guidelines by May 1999. "It is now July 2000 and there has been no meaningful progress within the OECD to fulfill this mandate," said Maurer. 

The WRI report makes the case that it is imperative for ECAs to evaluate the emissions contributions of the projects and exports to which they direct financing. Maurer and Bhandari propose the following policy changes: 

• require ECAs to estimate and publicly report greenhouse gas emissions generated by projects they co-finance, guarantee or underwrite; 
  
• incorporate climate change criteria into common ECA environmental guidelines adopted by G8 countries; and 
  
• take active steps to increase the financing available to projects that generate clear climate benefits, including renewable energy, energy-efficiency and emission reduction technologies. 

Dr. Nancy Kete, director of WRI's Climate and Energy Program, says that the adoption of such policies represent first steps. She says that in the future, countries will have to consider how to account for ECA project emissions in national greenhouse gas inventories. In the near term, industrialized countries should include estimates of the greenhouse gas emissions generated by projects their ECAs support in the national communications they prepare and present to the United Nations Framework Convention on Climate Change.

Maurer concludes "progress on both the climate change and ECA front will require the G8 heads of state to send an unambiguous directive to their ECAs - define and adopt common environmental guidelines that approach those of multilateral development banks, and that include criteria to evaluate climate change impacts."

The full WRI report The Climate of Export Credit Agencies can be seen on this link.

Source: WRI

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