Cancun: World Bank role 'still uncertain'
The debt movement aims to get the World Bank ‘out of climate’ and to ensure climate funds are given as grants not loans. As such we have serious concerns surrounding the Cancun Agreement. In particular:
- The World Bank will retain a role in climate finance, though the final form is still uncertain;
- Developing countries will be under-represented on the Board of the Green Climate Fund, despite reasonable representation in the Committee to design how it works;
- The money ‘promised’ to developing countries will only in part come from rich countries. The $100 billion figure talked about includes developing countries' own money, and money from carbon offsets and other flawed private sector schemes;
- There is no promise to give grants rather than loans. Doubtless large quantities of the funding will come in the form of loans.
Green Climate Fund
In Cancun the UN climate negotiations agreed to create a Green Climate Fund to help tackle climate change in developing countries.
The fund shall be governed by a Board of 24 countries, half from developed countries, half from developing. The World Bank will be a trustee of any money held by the fund, at least for the first three years of its operation.
World Bank model
The model of equal representation of developed and developing countries is based on that of the World Bank’s climate investment funds, which were created by rich countries three years ago. In contrast, the one fund which already exists under the UN negotiations, the Adaptation Fund, has a board who’s members come 75 per cent from developing countries, far more in line with global population.
The World Bank’s role in climate funding may not end with the Green Climate Fund. Despite agreeing to create the UN Adaptation Fund, rich countries have still been putting their money through the World Bank instead. Recently the World Bank added its own loans to money given by the climate investment funds to help Niger, Tajikistan and Bangladesh adapt to climate change.
This all suggests that when the Green Climate Fund is finally created, it may look more like the World Bank climate funds, currently creating new unjust debt for developing countries, than the more democratic, grant giving, UN Adaptation Fund.
Key decisions postponed
The agreement in Cancun suggests that the Green Climate Fund will finance measures in developing countries to both cut emissions and adapt to climate change. It is unclear how it relates to the already existing UN Adaptation Fund.
A Committee has been created which will design how the Green Climate Fund will work. This Committee will have 25 representatives from developing countries and 15 from developed; a step forward in representation compared to the World Bank funds, a step back compared to the UN Adaptation Fund. Presumably, this Committee will seek to reach agreement on how the Green Climate Fund should operate ahead of the climate negotiations in South Africa at the end of 2011.
An empty box?
Crucially, the money committed to the Green Climate Fund is far short of what is often reported in the media. The agreement in Cancun says $100 billion is needed in developing countries, but this will come from both developed and developing countries.
Developed countries expect and want much of their share of the $100 billion to come from the “private sector”. This means carbon offsets, which prevent emissions from falling in rich countries. It could also include normal investment by rich country companies in developing countries for profit; Japan currently counts such investment as climate finance.
Under current plans much of this money will be loans, and even more could impose new financial burdens on developing countries.
In Copenhagen, rich countries committed to providing $8 billion a year from 2010 to 2012. So far, it appears that most of this money comes from pre-existing aid commitments and is going through the World Bank and as loans. However, there is no official record of whether and how this money is being given. In a small step forward, in Cancun developed countries committed to enhance transparency around this money by informing the UN of what is being given and on what terms.
There is still no commitment by developed country governments, either now or in the future, to provide a specific amount of new grant money which actually leads to a real flow of resources from developed to developing countries to help them tackle climate change. As one campaigner put it in Cancun: "It looks like a great Christmas present - until you realise the box is empty because rich countries are failing to follow through on their commitments."
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For further reaction to the Cancun summit from our partner climate justice organisations, see: