The energy tug-of-war

For years, the World Bank has been faced with mounting pressure to accept accountability for the impact of its investments in the Majority World. In response, World Bank President James Wolfensohn pledged in 2000 to undertake a review of the World Bank’s support for the extractive industries (oil, gas and mining).

The Extractive Industries Review (EIR) reported in January 2004. It concluded that World Bank support for fossil fuel and other mining projects simply doesn’t alleviate poverty, which is the World Bank’s stated mission. After spending millions of dollars for an independent team of experts to evaluate the effects of its energy lending, the Bank brushed off most of the final report’s recommendations. Instead, its management and board of directors opted merely to endorse minimal commitments to change the way the Bank does business. Pivotally, it pledged to provide indigenous peoples and affected communities with ‘consultation’ instead of the recommended ‘consent’ before the Bank backs projects on their lands. It also pledged to measure the poverty impact of bank lending; but the poverty indicators will be developed at some later time.

The Bank’s rationale for continuing to subsidize oil companies is that people in developing countries need energy. However, research by the Institute for Policy Studies demonstrates that 82 per cent of all oil projects that the Bank has invested in since 1992 – the year of the Earth Summit – are primarily designed for export of oil to the United States, Western Europe, Canada, Australia, New Zealand/Aotearoa and Japan. The Institute has also calculated that the largest number of procurement contracts for World Bank fossil fuel extractive projects go to some of the largest companies in the developed world: Halliburton, Shell, ChevronTexaco, Total, and ExxonMobil, in that order (see (http://www.newint.org/issue361/facts.htm)[ Facts], (http://www.newint.org/issue361/index.htm)[NI 361]). With or without the World Bank’s involvement, energy systems based on fossil fuels will eventually become obsolete. The only question is how soon, and how much damage will be endured – particularly by the poorest – in the meantime. By ignoring the recommendations of its own report, the World Bank has declared itself to be more concerned with the needs of oil companies than the impoverished people it is officially supposed to serve.

Latin America co-ordinator for the Sustainable Energy and Economy Network (SEEN), a project of the Institute for Policy Studies in Washington DC. For further information, visit http://www.seen.org.

This first appeared in our award-winning magazine - to read more, subscribe from just £7