Last week, the House Finance Committee’s Subcommittee on Domestic and International Monetary Policy, Trade, and Technology (the HFCSDIMPTT for short) held a hearing about whether the United States should invest in a multilateral fund to support the deployment of clean energy technology in the developing world. There’s been talk of World Bank investment in clean tech for years; now they’re asking G8 nations to pony up.
The hearing stemmed from a Bush administration proposal to put $2 billion over three years toward a “Clean Technology Fund” administered by the World Bank; other nations would contribute a total of $8 billion to the fund. As the names suggests, these funds are supposed to be used to help developing countries green their energy sources. But according to the testimony of several international nongovernmental organizations, the programs that would get funded aren’t all clean. Among the potential recipients of funding are, for instance, coal-fired power plants.
David McCormick, undersecretary for International Affairs in the U.S. Department of Treasury, testified to the subcommittee in support of the fund, on behalf of the Bush administration. “Each time they invest in dirty technology, the more difficult it will be to mitigate climate change in the future,” said McCormick.
He also stressed the valuable roll the fund could play in helping bring countries like China and India on board for a new global climate pact. “The Clean Technology Fund will do more make an impact on the growth of greenhouse gas emissions in the developing world,” said McCormick. “It will develop trust, which is critical for a world climate agreement.”
Of course, most environmental organizations would love to see investment in international projects to encourage green technology in the developing world, where the use of dirty technology is rapidly expanding. But where that money goes — and whether the World Bank is the best vehicle to deploy those funds — is a concern. As we’ve noted here several times over, the World Bank ain’t all that green.
Under the proposed clean technology fund, money could go toward minor environmental improvements to things like new coal-fired power plants, rather than technologies that are actually clean and renewable. Enviros would like to see the funding be directed more specifically to making green energies more available in these countries.
Brent Blackwelder, president of Friends of the Earth, testified to the subcommittee on why they should proceed with caution in allocating funds to this program. He suggested to the subcommittee that they consider requesting that the Bank outline a definition of “clean technology” before funds are allocated, and that they reconsider whether these funds might be better invested through other mechanisms.
“Coal is dirty from start to finish,” said Blackwelder. “It is not acceptable if we want to go in another direction that does not have further fossil fuel lending.”
David Wheeler, a senior fellow with the Center for Global Development and a former top economist in the World Bank’s Development Research Group, echoed Blackwelder’s concerns. “The only credible argument for a technology fund is to use it for renewable technologies,” said Wheeler.
That could be achieved, he said, by putting conditions on their allocation of funds — like a focus on clean technologies, a push for the most cost-effective solutions, and a system of “carbon accounting” for all projects. Jacob Werksman, program director of the institutions and governance program at the World Resources Institute, added that U.S. leadership in funding green tech in the developing world would be integral to ensuring that other countries can adopt more climate-friendly energy sources. That investment, or the next decades, would need to be in the trillions of dollars, he said.
But the Bush administration’s representative at the hearing didn’t think the fund should be given specific guidelines. “We don’t think the government should be in the business of picking technologies,” said McCormick.
Friends of the Earth and a group of 120 other NGOs has put out a statement opposing the World Bank’s proposal.