Wednesday, December 07, 2011

UK gives big business millions in climate aid meant for world's poorest

The Mexican windfarm at Tehuantepec which services Walmart not the poor
£385 million of UK funding intended to help poor people get access to electricity instead is going to EDF and Walmart.

The UK is today announcing proudly that it has allocated more than two thirds of its Fast Start Finance, to help the world's poorest people combat climate change and adapt to the effects of global warming, and that it is well on track to meet its £1.5bn commitment by the end of 2012.

However, some of the projects financed under the initiative have come under severe criticism for not actually helping the people for whom they are intended.

The World Development Movement also says that far from being new funding, as claimed, one third of this money was already allocated before 2008, all of it comes out of the existing Official Development Assistance budget, and at least 86% is in the form of loans to countries that can least afford to repay them instead of grants.

Fast Start Finance amounts globally to $30 billion, that was pledged between 2010-12, by developed countries to vulnerable developing ones, at the Copenhagen climate talks in 2009.

The UK, contributing £1.5bn, is, alongside Germany, the third largest contributor after the USA and Japan.

The UK’s money is channelled through the government’s £2.9bn International Climate Fund (ICF), a programme jointly managed by the Department of Energy and Climate Change (DECC) and the Department for International Development (DfID).

The Government announced today that £1,056 million has been approved or spent so far, on specific multilateral and bilateral programmes (£569 million in 2010 and £487 million in 2011).

The World Development Movement (WDM) has produced several reports analysing the way these projects are funded; amongst them is Climate Loan Sharks.

A WDM spokesperson said the WDM “is not criticising the projects per se, but the way in which the funding is channelled".

She continued, “many of the projects being funded do not generate a return on investment in the capital sales, such as flood defence barriers. Therefore, how can these poor countries be expected to repay the loans?"

WDM has found that, for instance, a windfarm in Mexico for which the UK government provided £385 million channelled through the Clean Technology Fund, will produce electricity not for homes but for Walmart, the world's largest company and owner of Asda in the UK.

This is achieved through a loophole in Mexican law allowing the company to claim it has produced the power itself, whereas in fact it just owns a nominal stake.

In fact, the 65MW windfarm is owned by EDF, the French company which is the world's largest electricity utility.

Local activists are demanding and deserve cheap electricity, but were not consulted at all over the development of the windfarm which, says activist Bettina Cruz Velazquez, form part of an attempt “to grab indigenous lands and convert them into resources for the market.”

A WDM spokesperson told me, “indigenous people there have been forced to sell their land have suffered human rights abuses, and sign contracts in languages which they did not understand".

The project financing is managed by the World Bank, which, according to WDM, hopes will encourage up to 2,000MW of further private sector wind projects in the Isthmus of Tehuantepec, where the wind park is located, but which are resisted by local people.

The involvement of the World Bank in channelling these funds has been criticised by many, including the House of Commons Environmental Audit Commission, which advised in a report published this summer that the DFID should encourage the World Bank to develop a "new strategy [to] prioritise low-carbon strategies, affordable energy access for the poor and improve energy efficiency".

It said "DFID should use its position as a major shareholder to ensure that the World Bank’s portfolio is ‘climate smart’".

A windfarm is undoubtably in this category, but the World Development Movement is now arguing that its projects lack social and other environmental safeguards such as access to affordable energy and the protection of ecosystems.

UK Energy and Climate Change Secretary Chris Huhne meetings did his best to talk up the advantages of the projects, saying: “Africa is one of the areas which will feel the impacts of climate change first which is why we’re helping its people adapt to a warmer world and not become reliant on dirty fossil fuels.

“We have a moral responsibility to help the poorest countries. This not only benefits the most vulnerable but also helps all of us move towards a safer and cleaner future.”

Chris Huhne was announcing several new allocations under the fund this morning:
  • £150m to fund the Clean Technology Fund, which will make it possible to support projects such as low carbon public transport systems and promote energy efficiency in Nigeria and save 47 million tonnes of carbon dioxide
  • £38m to unlock $300m to help 250,000 farmers in Eastern and Southern Africa adapt farming methods to get 10% more farmed land and produce 20% more food
  • £27.6m to bring electricity to 7,200 rural households in Eastern and Southern Africa
  • £15m to help Ethiopia respond to climate change
  • £6.7m to stimulate further investment in climate adaptation programmes in Kenya
  • £10m for the UN Adaptation Fund
  • £30m for the Least Developed Countries Fund
  • £85m for the Pilot Programme for Climate Resilience (PPCR)

DECC has made available a video showing some examples of UK climate funding.

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