A new analysis of the World Bank’s $5-billion-dollar policy loans shows lender supporting investment incentives for coal and other fossil fuel projects in Southeast Asia, South America, Africa and the Middle East, threatening climate change efforts, indigenous groups and natural resources

World Bank policy loans are creating subsidies for coal, gas and oil projects and undercutting initiatives to build wind, solar and geothermal power infrastructure and protect vulnerable rainforests, including the Amazon, a new report by the Bank Information Centre (BIC) and worldwide partner organisations finds.

The study, which examines seven World Bank policy operations from 2007 to 2016 totaling $5 billion in four countries – Indonesia, Peru, Egypt and Mozambique – reveals that funds intended to boost low-carbon growth are instead supporting investment incentives for projects that put the climate, forests and people at risk.

The report sheds light on the Bank’s Development Policy Finance (DPF) operations, which account for approximately a third of all World Bank funding – equal to more than $15 billion in 2016. The DPF operations provide funding in exchange for national policy and institutional reforms mutually agreed to by the Bank and the borrowing government. As part of its Climate Action Plan, the World Bank identifies DPF operations as the main instrument for incentivising countries to transition to low-carbon economies. To meet national commitments to reduce greenhouse gas emissions, new investments in low-carbon infrastructure, especially in the energy sector, are critical. The BIC study therefore examines DPF-funded policy reforms involving investment incentives for large-scale infrastructure projects.

“The World Bank has pledged to help countries adopt a low-carbon development path specifically by phasing out fossil fuel subsidies and promoting a carbon tax,” said Nezir Sinani, Europe and Central Asia Manager at BIC. “However, the Bank’s policy lending does the opposite by introducing tax breaks for coal power plants and coal export infrastructure.”

The report was published by BIC in collaboration with Derechos, Ambiente y Recursos Naturales (DAR) Peru, Egyptian Initiative for Personal Rights (EIPR), Greenpeace Indonesia, Friends of the Earth Mozambique, and 11.11.11 Belgium.

Key findings are listed to include:

• In Peru, World Bank DPF measures provide subsidies to government-proposed public-private partnerships (PPP) that will develop: a liquid petroleum gas pipeline, a diesel/gas power plant and, in the Amazon, three natural gas pipeline networks and 26 new oil and gas concessions. They will also support two energy efficient street lights and the development of hydropower. No solar or wind power projects are planned.
• In Indonesia, the World Bank DPF established subsidies for PPP infrastructure projects, which include four coal power plants and three coal transport railways (on the forest-rich islands of Kalimantan and Sumatra). There are no geothermal, solar or wind PPP projects in the works.
• In Egypt, upcoming infrastructure projects targeted to receive DPF-supported subsidies include: more than a dozen oil and gas projects, 12.5 gigawatts of new coal power plants and 12 pending oil and gas exploration agreements.
• In Mozambique, Bank DPF-supported subsidies are slated to benefit four coal power plants, three coal port terminals and two coal transport railways. Other planned projects include one hydropower plant and one natural gas plant. No geothermal, solar or wind projects are targeted by the subsidies.

The report points to several substantial climate change concerns and measures that appear to contradict the World Bank’s climate change pledges.

Introduction of new fossil fuel subsidies. The DPFs introduced subsidies for coal in three (Indonesia, Egypt and Mozambique) of the four countries studied. Bank-supported subsidies for coal infrastructure in Indonesia have helped the country become one of the world’s top coal exporters. By propping up coal infrastructure with subsidies in Mozambique, the Bank’s DPF is turning the country, highly vulnerable to climate change due to droughts, floods and cyclones, into a major coal producer.

In addition, Bank-supported subsidies benefitting new investments for coal power plants in Indonesia and Egypt contribute to the planned significant rise in coal’s share of the power generation mix for these countries – from 35 to 66 percent and from zero to 20 percent by 2022, respectively.

According to the Intergovernmental Panel on Climate Change’s (IPCC) Fifth Assessment Report (2014), meeting the internationally agreed goal of limiting global average temperature increase to 2 degrees Celsius requires at least two-thirds of existing fossil fuel reserves must be left in the ground. BIC’s study shows that World Bank policies supporting oil and gas exploration subsidies directly contradict the 2-degree goal.

Specifically, in Mozambique, the Bank supports an accelerated rate of depreciation for oil and gas exploration, which significantly reduces the overall tax rates, and thus, government revenue, associated with these fossil fuel investments. Not only is this a significant fossil fuel subsidy but the loss to government coffers further threatens Mozambique’s debt sustainability crisis.

Inadequate support for renewable energy. Each country examined in the study has potential to develop renewable energy, including vast solar and wind resources in Egypt and geothermal resources – among the world’s largest – in Indonesia. The assessment found that in Indonesia, Egypt and Mozambique, the DPFs did contain actions on new renewable energy laws with feed-in tariffs for one or more forms of renewable energy. However, the report finds that, when effectively used, the World Bank DPFs could have removed further barriers to renewable energy investments. These barriers include, among others, inadequate legal frameworks, a lack of feasibility studies and a lack of incentives for geothermal exploration.

Undermining environmental governance and threatening forests. In three of the case study countries (Indonesia, Peru and Mozambique), the DPF operations ushered in expedited licensing and land acquisition procedures for infrastructure investments. These changes exacerbate already-existing weak environmental governance, ineffective land tenure rights and pressures on forests. Indonesia and Peru have the third and fourth largest, respectively, extent of rainforest in the world. Their forests are of paramount importance not only to the many indigenous peoples that depend upon them for their livelihoods, but also to the climate. Indonesia is the world’s sixth largest emitter of greenhouse gases due to deforestation; the forests of Peru store more carbon than the US emits every year.

Many of the upcoming PPP infrastructure projects in Indonesia and Peru examined in the study include components that could damage forests. These include oil, gas, coal and mining; large hydropower; and roads. As much as 84 percent of the Peruvian Amazon has been granted as oil and gas concessions. The study shows that licensing and land acquisition reforms prompted under DPFs undermine efforts to improve the governance structures critically needed in Indonesia and Peru and to abate forest loss and climate change.

In Indonesia, for example, the DPFs sped up land acquisition procedures that undermined the ability of local communities to protect their lands from development. One particular project, the Central Java coal-fired power plant, had been delayed for over four years due to local landowners’ refusal to give up their land. A law propped up by the Bank gave the government the power to ultimately evict them.

Kate Geary, BIC’s forest campaign manager and a report contributor, said, “Rather than using its development policy lending muscle to protect forests and combat climate change, the Bank is helping to weaken vital environmental laws and governance and undermine local communities’ rights to the resources they rely on for their livelihoods.”

The report urges the World Bank to heed its own advice on confronting climate change by providing the right incentives for a clear pathway to low-carbon development. The report argues that the Bank must go beyond supporting some incentives for renewable energy to steer developing countries towards a low-carbon transition.

“The climate crisis and staying under 2 degrees Celsius warming not only requires increasing investments in renewable energy but also drastically decreasing fossil fuel investments,” Sinani said.

The report calls on the World Bank to support incentives for more renewable energy through DPFs, and to be transparent about the measures and incentives tied to DPFs, as well as the projects that DPFs are slated to support.

“We also want a more rigorous climate- and forest-related assessment of DPFs before they are approved,” Nezir Sinani said. “This call has resonated with several World Bank Executive Directors who believe that the Bank’s approach to environmental and social safeguards should be applied to all types of its lending. At present, the Bank’s DPF falls outside the social and environmental safeguards applied to direct project lending.”

The BIC partners with civil society in developing and transition countries to influence the World Bank and other international financial institutions (IFIs) to promote social and economic justice and ecological sustainability. BIC is an independent, non-profit, non-governmental organisation that advocates for the protection of rights, participation, transparency, and public accountability in the governance and operations of the World Bank Group and regional development banks.

A High Court in London has dismissed a suit by Bille and Ogale communities seeking to sue Royal Dutch Shell (RDS) in English courts for spill incidents in the Niger Delta. The communities had, on May 2015, through their UK solicitors, Leigh Day, brought oil spill litigation against The Shell Petroleum Development Company of Nigeria Limited (SPDC), and also filed claims against RDS as an “anchor defendant” to bring the claims in England. RDS and SPDC challenged the jurisdiction of the English court to hear these claims.

In his ruling on Thursday, 26 January 2017, the judge rejected Leigh Day’s claim that RDS owed a duty of care to the Nigerian claimants allegedly impacted by SPDC, and consequently that there was no anchor defendant for the case against SPDC to be brought in England.

“The court rightly decided these claims should be dealt with by the Nigerian courts and confirmed longstanding principles of corporate law, which are critically important for multinational companies headquartered in the UK,” said Igo Weli, SPDC’s General Manager, External Relations.

“Both Bille and Ogale are areas heavily impacted by crude oil theft, pipeline sabotage and illegal refining, which remain the main sources of pollution across the Niger Delta. The judge correctly decided that the holding company, Royal Dutch Shell, had no legal responsibility for harm to the communities in the Niger Delta caused by criminal interference in Nigeria with the operations of a joint venture in which the Nigerian government owns a majority interest.

“We hope the strong message sent by the English court today ensures that any future claims by Nigerian communities concerning operations conducted in Nigeria will be heard in the proper local courts. Nigeria is a core part of the Shell Group’s upstream business. We see considerable potential for growth in Nigeria and are determined to help Nigeria unlock its energy potential over the long term.

“Litigation in courts unfamiliar with the law and realities on the ground ultimately does nothing to address the real problem in the Niger Delta: widespread pipeline sabotage, crude oil theft and illegal refining. SPDC continues to play an active role in the search for solutions to these complex issues.

“Examples of recent initiatives include a 2016 campaign against crude oil theft which highlighted the dangers of crude oil theft and sabotage of pipelines to more than 40 communities in Ogoniland and a programme which ran with the objective of providing alternative means of livelihood for young people in Ogoniland in 2014.”

A court has described the plan by the Lagos State Government to demolish all waterfront informal settlements as inhuman and degrading, and that it violates the law of the land.

Honourable Justice Onigbanjo of the Lagos State High Court gave the decision on Thursday, 26 January 2017 in a fundamental rights enforcement case brought in October 2016, after the Lagos State Government stated its intention to demolish all waterfront informal settlements.

The judge delivered his decision while hundreds of urban poor residents – men, women, and children – from waterfronts across the state waited patiently inside and outside the courtroom. Relying on the Fundamental Rights (Enforcement Procedure) Rules, 2009, his Lordship said that he found these demolitions to be inhuman and degrading treatment in violation of the right to dignity enshrined in Section 34 of the 1999 Constitution of the Federal Republic of Nigeria and Article 5 of the African Charter on Human and Peoples’ Rights.

Balancing his responsibility to protect the fundamental rights of citizens against the duties of the state government, Justice Onigbanjo then ordered the parties to attempt mediation through the Lagos State Multi-Door Courthouse and report back to his court in one month’s time.

It will be recalled that the threat to the Lagos waterfronts began when Lagos State governor, Akinwunmi Ambode, announced last October government’s intention to “start demolishing all shanties on waterfronts across the state within seven days,” citing recent kidnapping incidents as the purported justification.

Based on mapping and profiling done by the Nigerian Slum / Informal Settlement Federation, it was identified at least 40 communities that fell under this threat and estimated over 300,000 residents were at risk of imminent eviction.

Accordingly, more than 20 member communities of the Federation joined together to write to Governor Ambode, calling for a retraction of the threat and requesting for dialogue to explore alternatives to eviction. Two peaceful protests brought thousands of waterfront residents to the gates of the Governor’s Office and the State House of Assembly, but to no avail. To the contrary, elements alleged to have links with government proceeded to demolish Ilubirin on 15 October 2016. Finally, the threatened waterfronts had no option but to proceed to court to enforce their fundamental rights.

On 7 November 2016, Justice Onigbanjo granted a temporary injunction restraining the Lagos State Government and the Nigerian Police Force from proceeding with any demolition of the waterfronts or eviction of their inhabitants. Despite this order, Otodo Gbame community – an ancestral Egun fishing settlement in Lekki – was demolished and over 30,000 residents forcibly evicted on 9-10 November 2016 by arson and a bulldozer working in the dead of night.

The demolition of Otodo Gbame has been broadly condemned as a forced eviction and a gross violation of human rights, including by the United Nations Special Rapporteur on Adequate Shelter, Amnesty International, and countless others. Evictions that use arson and take place during the night – such as what occurred at Otodo Gbame – also constitute violations of the United Nations Convention Against Torture, especially when they are discriminatory in nature.

Officials of the Justice & Empowerment Initiatives – Nigeria (JEI) and the Nigerian Slum / Informal Settlement Federation have been celebrating the court decision.

Megan Chapman, co-founder of JEI, said in a statement: “We are overjoyed that the Honourable Justice Onigbanjo has aligned himself with such established jurisprudence to find that such evictions constitute inhuman and degrading treatment.

“We also welcome the opportunity for the threatened waterfront communities to enter into dialogue with the state government to explore amicable settlement to find win-win solutions to any legitimate concerns the state has that can be settled through alternatives to eviction. We firmly believe that partnership and collaboration between communities, civil society, and the government is the best way of solving social and developmental problems that face the city. Just as firmly, we know that demolition and forced eviction are not the answer to any social problems.

“As we approach the court-ordered mediation, we fervently hope that the Lagos State Government and the Lagos State Command of the Nigerian Police Force will distance themselves from the recent smear campaign that has attempted to misrepresent waterfront residents as criminals and spread lies that waterfront communities are full of Boko Haram, Niger Delta militants, and kidnappers. As members of these communities and civil society organisations working in the waterfronts on a daily basis, we decry these false allegations and condemn those who stoop to spreading such falsehoods in order to try to justify land grab.”