Katherine Sierra
(Credit: The World Bank)SAN FRANCISCO--How will a shift in carbon reduction play out with the world's poor? This is an issue The World Bank is grappling with as it prepares for the international climate change summit in Copenhagen this December.
Katherine Sierra, the vice president for sustainable development at The World Bank, and Awais Khan, the director of KPMG's Clean Tech Venture Capital Practice, spoke on this topic Tuesday here at the Commonwealth Club.
Along with higher temperatures, climate change is causing rising sea levels, shifts in rain/snow patterns, and an increase in weather-related natural disasters. Although the impact is worldwide, people in developing countries get the brunt of it with severe risk to their agriculture, food, and water, Sierra said.
"We took a major step a couple years ago because we felt we weren't doing as good a job as we should have in integrating environment into our programs," said Sierra. "We actually merged our infrastructure practice with the environmental and social practices."
On top of being more vulnerable to climate change, countries in the developing world have a shortage of infrastructure. According to The World Bank, 1.6 billion people in the developing world still do not have access to electricity, and those who do may have only intermittent service.
"There are areas in Pakistan that have 12 to 14 hours of blackouts per day," said Khan. If the shortest way to fix that problem is through burning coal, he explains, that's what governments will do.
However, being the ninth-largest coal deposit in the world--with 186 billion tons of coal, Pakistan's "government is very favorable to using cleaner coal technologies," Khan said. "Sometimes we don't give enough credit to governments of developing countries."
The event fell on the heels of an article Sierra wrote for The San Francisco Examiner last week, where she explained what The World Bank, an international financial institution that loans money to developing countries, intends to do regarding climate change and the world's poor. Last year, The World Bank gave almost $7.6 billion for energy financing, a third of which went to renewable energy and energy efficiency. Projects included putting in rapid bus transport in five major cities in Mexico and working on smart grids in Turkey.
But another third of the $7.6 billion put forth was given to fund traditional fossil fuels. This is what skeptics generally point to when criticizing The World Bank's initiatives and intentions. The nonprofit Bank Information Center, for example, released a study in February on how The World Bank's energy financing is being felt by developing countries
The organization found that although The World Bank increased funding for renewable energy (by 11 percent), it dramatically increased funding for fossil fuels (by 102 percent) last year. "The bank's continued lending focus on fossil fuels commits many developing countries to fossil-fuel based energy for the next 20 to 40 years," said Heike Mainhardt-Gibbs, a consultant with the Bank Information Center.
The Bank Information Center points out that when developing countries begin to work on greenhouse gas emission reductions, it will be more difficult and expensive because of their extended use of fossil fuels.
The World Bank says the fossil fuels they are funding are increasingly clean coal technology and natural gas, which is the cleanest fossil fuel. "We want hospitals with refrigerators, schools with light bulbs," Sierra said during her talk, "if you look at any projections, they tell us under any circumstance we still need fossil fuels."
This will all be hashed out come December when representatives from over 180 countries meet in Copenhagen to work on a new treaty that addresses global warming. Within this international agreement, countries will look at what is doable and possible to lower greenhouse gas emissions while still trying to get energy to the world's poor.
Demand for biofuels in Europe and the United States has forced up food prices 75 percent around the world, according to a World Bank report that was leaked and published in The Guardian newspaper on Friday.
The number stands in sharp contrast to the 3 percent contribution to higher food pricing estimated by the United States Department of Agriculture.
Meanwhile, a study commissioned by food manufacturers pegs the contribution of biofuels on food prices at between 25 percent and 35 percent. (Click here for PDF).
The reports will surely heat up the debate on biofuels policy one week before the scheduled G8 meeting in Japan. Both the U.S. and Europe have biofuels mandates to lessen dependence on imported fossil fuels.
The World Bank argues that these policies have distorted the market for grains in three ways, according to The Guardian. First, crops that would have been sold for food have been diverted for biofuels production. Second, land is now being used for fuels rather than food. And third, the mandates have set off speculation in financial markets
"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," The Guardian quoted the report as saying.
The World Bank earlier this year issued a warning on biofuels and blamed them, in part, for food crises in developing countries. The Guardian said that the food impact report was delayed for political reasons, specifically not to discredit the Bush Administration's strong support for biofuels, particularly corn-based ethanol.
The wide disparity in analysis among the different parties is hard to decipher.
At the very least, it demonstrates the public relations and political battles we can expect over the coming years between supporters and detractors of biofuels.
Grist.org parses the political angles of the report in its post on Saturday.
A non-political research organization, New Energy Finance, published an analysis early this year that found a relatively small impact on price from biofuels policy.
Overall, it found grain prices went up about 8 percent because of biofuels, with corn affected more heavily because of U.S. policy. From the report:
In grains, during the period from 2004 to April 2008, global dollar prices increased by an average of 168 percent. The rising price of oil accounts for an increase of 32.5 percent and other inputs--such as land and labor costs--contributed 7.4 percent. Dollar depreciation accounts for a further 17.9 percent. Supply and demand imbalances account for the remaining 57.7 percent, with biofuels responsible for up to an 8.1 percent increase in global average grain prices (the impact on U.S. corn was clearly above average). The biggest issues were the failure to improve yields to compensate for global population growth, along with the failure of the Australian harvest.
Biofuels Digest has more background on the food versus fuel debate.
Update at 8:00 a.m. PT on July 8: The Wall Street Journal found that the supposedly secret report was actually a position paper from April. A final paper to be published later this week will likely conclude that the contribution of biofuels on food prices will be lower than 75 percent. See here.
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