World Bank Back In Charge Of Global WarmingPolitics / Climate Change Nov 19, 2012 - 12:12 PM GMT
Following a Group of 20 finance ministers meeting in Mexico City this month, in the wake of superstorm Sandy, Bank of Italy governor Ignazio Visco told reporters: “The World Bank has gone back to being in charge of climate change,” “For a certain period....., it had stopped”.
This followed the report on climate change by the Potsdam Institute for Climate Impact Research, commissioned by the World Bank and released this month, which bluntly says "a 4 degC warmer world must be avoided".
The report was itself a superproduction of gory predictions, a throwback to the days before the ill-fated (for alarmists) Copenhagen conference on climate change of December 2009. It starkly says the world risks “cataclysmic changes” caused by extreme heatwaves, rising seas and depleted food stocks as it heads toward a "probably unstoppable" global warming of 4 degrees Celsius this century.
Current national pledges to reduce greenhouse gases will not do much to change the current trajectory of temperatures, which are set to rise by about double the United Nations target of 2 degrees Celsius (3.6 degrees Fahrenheit) by 2100, the study says. In no way new in its scenarios and forecasts, this study for example also says that if the world's temperatures rise as much as its researchers believe they will, this would cause sea levels to rise by a metre or more by 2100, flooding cities in nations from Mexico to Mozambique and the Philippines. The warming could also start dissolving coral reefs from 2060, deplete crop yields in India, Africa, the US and Australia, and exacerbate heatwaves, storms and cyclones worldwide, the report predictably adds.
THE WORLD BANK BELIEVES
One difference, today, is that after nearly 3 years of keeping a low profile on global warming fear and loathing, the World Bank and IMF are "back in charge" of institutional media-rousing for extreme global warming forecasts - and carbon finance. Summarising the Potsdam Institute report at recent meetings and in World Bank official publications, notably its "Turn Down The Heat" report of November, the Bank's president Jim Yong Kim said: “A 4-degree Celsius world is so different from the current one that it comes with high uncertainty and new risks that threaten our ability to anticipate and plan for future adaptation needs”. Echoing the Potsdam Institute report, Jim Yong Kim said that it “can, and must, be avoided.”
Envoys from more than 180 nations will gather in Doha, Qatar next week for talks to lay the groundwork for a new treaty to fight climate change to be reached by 2015 and, if agreed, come into force by 2020. The discussions also aim to establish a new set of targets under the current emissions-limiting treaty, the Kyoto Protocol, to enter force from January 2013.
In its 108-page "Turn Down The Heat" report, the World Bank is forced to nuance the "4 degree warming" spectre, by saying that with current mitigation efforts, such as they are, there is roughly a 20% chance of temperatures rising by 4 degrees C by 2100, driving a sea level rise of between 50 cms and 1 metre through the 88 years from 2012-2100. The Bank then shifts the attention to likely or possible further warming "in following centuries", potentially, it says, by as much as 6 degrees C above present-day global temperatures. This of course could or might be possible, but we have to wait for "following centuries" which even for the World Bank, takes time.
The scientific credibility, or even physical possibility of global temperatures rising by 6 degrees C, much more than the amount since the last Ice Age, must be considered almost infinitely low except on a timescale of multi-thousand years.
More central and urgent to World Bank and IMF interests and on an almost "mechanical basis", further raising international targets for global warming mitigation will further raise the financing and spending that can be justified on "a precautionary basis". The World Bank, and IMF can be counted on for this expansionary spending mentality.
In its November report the Bank says: "....the global community has committed itself to holding warming below 2°C to prevent dangerous climate change, and Small Island Developing states and Least Developed Countries have identified global warming of 1.5°C as warming above which there would be serious threats to their own development and, in some cases, survival, the sum total of current policies—in place and pledged—will very likely lead to warming far in excess of these levels".
Potential or possible economic damage will therefore be higher, probably much higher, and therefore anticipatory spending must be higher.
The World Bank doubled lending for climate change adaptation in 2011 and plans to step up the financing of country initiatives to mitigate carbon emissions and promote what it calls inclusive green growth and climate-smart development. Among other measures, the Bank administers its twin $7.2 billion Climate Investment Funds now operating in 48 countries which helped leverage an additional $43 billion in clean investment and climate resilience spending in 2011. These are however "small beer' for both the Bank and the IMF, which see global warming mitigation in triple-digit billions of dollars of annual financing, funding and trading operations.
SAVING CARBON FINANCE
Certainly since 2010, carbon finance has beaten a solid one-way retreat in the so-called "financial community". Europe's much-vaunted and obligatory trading of CO2 emissions credits (ETS) is mired by critical problems of simple overproduction or over-issuance of permits, and outright corruption in their trading and exchange. Apart from its tiny outshoot secondary markets in New Zealand and Australia, no other nation or group of nations intends applying ETS. By a supreme irony, European CO2 emissions are rising in 2012, despite economic recession and the forced development of "clean energy", notably due to increased use of coal for power production, while the USA which does not have obligatory CO2 permits and trading of permits, is emitting less CO2 than in previous years, notably due to cleaner natural gas displacing coal for power production.
Carbon finance, meaning forced development of emissions-related and clean energy-related finance, above all suffered a huge loss of credibility following the failure of the 2009 Copenhagen conference. It went into long decline and can only be saved if, or when public and political concern on global warming can be rebuilt. This is now possibly happening, in particular due to the USA's very hot summer of 2012 and superstorm Sandy also in the USA. Little or nothing else has happened which can be used by global warming alarmists to relaunch their gravy train.
Before the ill-fated Copenhagen conference, both the World Bank and IMF gave regular airtime to forecasts of literally extreme financial operations becoming possible, on the back of global warming fear. One estimate by former IMF chief Dominique Strauss Kahn, in 2009, was that carbon finance and trading could attain "annual turnover of $10 trillion" in a short time forward, well before 2020. Turnover figure forecasts even higher than this were regularly offered.
For the IMF of today, run by Strauss-Kahn's fellow French political party "parachute candidate", Christine Lagarde, little will be needed except to re-publish its 2009-vintage publications on climate finance. In a December 2009 report the IMF clearly identified the potential for financial leverage on the back of global warming fear. In particular it focused the CDM or Clean Development Mechanism for "taking carbon finance offshore" to a variety of mostly tax haven smaller non-Western countries fitting the climate change agenda - especially small island states. Carbon markets under the CDM would feature firms buying offsets for their carbon emissions in developed countries under a regime where emissions trading could attain $10 trillion a year turnover, but this would only generate a minuscule amount of net, on-the-ground physical investment in the target developing countries.
Amounts were of course carefully fudged in IMF and joint IMF-World Bank publications and statements on the subject, but some estimates were in the $60 - $80 bn a year range, around 0.7% pass through or filter down. The mechanism proposed was a 2% levy on carbon finance and emissions trading of all kinds, bundled together as CDM-related, with roughly 1.3% of the 2%, or 65% going to "operating costs and charges" of participating banks, brokers and traders, and to the IMF and IBRD.
This was of course much too little for the IMF-IBRD couple, and their global financial partners. Their reports of the 2008-2010 vintage estimated that "adaptation investments" must soon attain $175 billion a year (compared with current real world amounts of about $9 bn a year for the target small island state and least developed countries). The vastlyhigher goal of global carbon finance and emissions turnover attaining $100 trillion a year, would become desirable or necessary. As with the policy dream or fantasy of Clean Coal and carbon sequestration, however, appetites and desires for easy money are vastly far ahead of the real world ability to funnel-in the money.
The recent "rewarming of global warming" hysteria by the World Bank surely indicates that hope or at least greed for relaunching the pinball machines and roulette wheels of emissions trading and carbon finance are alive and well. The main problem is the massive loss of credibility for both - global warming and global warming finance - that was suffered in 2009-2012. This year's hot US summer and superstorm Sandy can be seen as the proverbial miracle saving the day and enabling the tried-and-failed gameplan to be tried out, one more time.
President Obama's rising potentials for pushing through a US carbon tax - simply to raise Federal tax revenues - are also another likely factor pushing World Bank bureaucrats into "re-inventive mode", dusting off their old reports and studies, and running them through the media one more time.
By an almost fatal mismatch of timing however - launching global warming hysteria in winter - the Bank and IMF risk the same humiliation they received in December 2009, at Copenhagen. The IMF boast, by boastful Strauss-Kahn in 2009 that carbon finance would soon attain $10 trillion a year turnover - at present it attains about $0.12 trillion a year and is declining - should in theory remind hopeful bureaucrats and their bank, broker and trader friends that good timing is an art.
The upcoming Doha climate meeting will therefore be an interesting gauge of potentials for World Bank and IMF bureaucrats to relaunch their dream of clawing more cash out of energy consumers' pockets, worldwide, and channelling this cash into the carefully selected pockets of the bank, broker and trader "community" of climate-conscious finance sector professionals.
By Andrew McKillop
Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights
Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012
Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.
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