Is the Bank’s carbon markets approach an effective way to address climate change?

The Bretton Woods Project (“Critical voices on the World Bank and the IMF”) has perceptive, worthwhile dialogue about carbon trading. The voices are Janet Redman, Sustainable Energy and Economy Network, Institute for Policy Studies, taking the critical position. She says, “Despite promises at the outset to the contrary, by the end of 2007 only five per cent of the World Bank’s entire carbon market activities were in wind, solar and small hydropower generation. And only one fund, the Community Development Carbon Fund, focussed funding on local sustainable energy projects. If the World Bank is going to be a major player in fighting climate change it should start by ending its own fossil fuel funding. After that, public and private finance should be directed to existing clean, renewable technologies that promote local control of energy development and consumption.”

Arguing the pro-carbon-trading side is Jon Sohn of Climate Change Capital: “It is true that financing emissions reductions through the CDM in countries without a cap does not provide additional reductions beyond the agreed cap; CDM is designed to meet the caps of industrialised countries more cost-effectively while accelerating and scaling up technology diffusion globally. However, there are proposals for CDM reform that involve setting progressive baselines that would result in greater net contribution to the atmosphere, i.e. by moving beyond 1:1 offsetting. CCC supports these proposals as a desirable evolution in carbon finance for developing countries that have the technical capacity (e.g. data gathering and monitoring) to deploy these more advanced policy tools but are not yet ready to take on hard caps.”

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