Select Committee on Environmental Audit Minutes of Evidence


Memorandum submitted by Christian Aid

INTRODUCTION

1.  There are a multitude of environmental challenges facing poor communities. The most pressing of these and the one which is at the root of many of the others is climate change.

2.  Action on climate change in particular, and sustained work on the conservation and wise use of natural resources in general, are bound together in the DNA of development and should not be separated.

3.  Most poor people depend on their natural environment for survival and livelihood. Because many also live fragile and marginal existences, any change in the nature of that environment will affect them profoundly. Climate change therefore impacts on poor people first and worst with many already suffering its effects (Up In Smoke, Working Group on Climate and Development, 2004).

4.  It is also clear from climate-related disasters that women are more vulnerable to climate change than men and from the energy dynamic in poorer communities that women stand to gain more from harnessing renewable sources of energy (for instance, most poor people burn wood for cooking, which women are usually obliged to spend long hours collecting).

5.  But poor people also need more secure means of making a living, which means that new jobs must be created in the countries in which they live. While this may mean more carbon emissions in the immediate term, it can no longer be argued that growth can be achieved at the expense of the climate. The opposite is now true. For growth to favour poor people it must, among other things, be achieved wherever possible using clean technologies.

6.  Christian Aid knows this not only through its extensive work on global economic justice, but from decades of experience working with poor people in their own communities where sustainability and stewardship of resources have always been the byword. The agency has long-funded projects and worked with partner organisations that conserve water and vegetation and has learnt from poor people—the experts on the climate writ small—about the profoundly worrying changes that are taking place.

7.  Christian Aid welcomes DFID's increasing focus on the impact of climate on poor people. But fundamental changes in pan-Whitehall policies are needed with a major commitment to joining up across government. Through the lens of climate change, British transport and energy policy is intrinsically intertwined with the potential for economic growth in Africa, a truth that must be set at the heart of the UK government's response.

TAKING RESPONSIBILITY FOR CLIMATE CHANGE

8.  Poor people should not be expected to be accountable for the influence humans have brought to bear on the climate through their profligate use of fossil fuels. The lion's share of the c380 parts per million (ppm) of carbon dioxide—the most prolific of greenhouse gases—that currently reside in the earth's atmosphere have been emitted in industrialised countries.

9.  In spite of the economic growth of China and India (the benefits of which to poor people are questionable, see Ghosh, Christian Aid 2005, among other literature) it is rich countries that still emit more greenhouse gases. In Britain, for instance, per capita carbon emissions are currently around nine tonnes per year, compared with less than one tonne per year in Sub Saharan Africa (International Energy Agency, 2002).

10.  Since the earth's atmosphere is a globally-shared resource, the onus in efforts to reduce emissions is on rich countries. It is critical that global emissions peak by 2015 and decline thereafter, but within this context of historical and current massive inequity in the use of the atmosphere, while rich countries reduce their emissions, poor countries must be allowed to expand theirs. This "redistribution" of pollution rights is enshrined in the Kyoto Protocol.

11.  In this regard, the UK government's work on climate change and poverty must begin at home. In the interests of poor people in many of the countries in which DFID spends UK taxpayers' money on development, the UK must champion the systematic reduction of greenhouse gas emissions. This must be a cross-Whitehall initiative involving, inter alia, the Treasury, DEFRA, Department for Transport, the Office of the Deputy Prime Minister and DFID.

12.  This is entirely in line with DFID's core purpose and the UK government's stated aim of reducing poverty and contributing towards sustainable development. Cutting emissions in the UK will not only help save lives and improve livelihoods in poor countries but it will also create greater atmospheric capacity for their economic development.

RECOMMENDATIONS

13.  The UK government, led by the Treasury, must set an annual "carbon budget" to limit the greenhouse gases Britain can produce each year. The limit of this budget should then be reduced each year in line with or beyond the UK's existing goal of cutting emissions 60% by 2050.

14.  An independent audit commission should also be established to monitor the reduction of emissions according to the carbon budget.

CLIMATE-PROOFING BRITAIN'S INVESTMENTS

15.  If DFID accepts the impact of climate change on poor people and that climate change is itself not an act of God but human influenced, then its spending of UK taxpayers money ought to be climate proof—spent in a manner so as to safeguard the climate and, wherever possible, reduce greenhouse gas emissions.

16.  In 2004, the review of extractive industries by the World Bank recommended a phasing out of World Bank funding for coal, oil and gas projects by 2008. A significant number of other studies (Sachs and Warner 1995, Ross 2001, Christian Aid 2003, Catholic Relief Services 2003) have identified a counter-intuitive corrosive effect on human and economic development of natural resource extraction, especially oil and gas. Recent attempts to lift the oil curse by implementing flanking fiscal transparency and accountability measures on projects such as the Chad Cameroon Pipeline appear similarly doomed (Background Briefing for European Executive Directors on The World Bank Group's Support for Natural Resources in Africa, Bretton Woods Project et al, 2005).

17.  With the added impact of the extraction of these resources on the environment from which they're taken and, through their use, on the climate, Christian Aid believes that UK development assistance should no longer be spent—ostensibly though multilateral institutions—on such projects.

18.  UK development assistance should, however, be spent on clean, sustainable development in poor countries, both as a means of reducing emissions and the impact of climate change on poor people and of enhancing livelihoods. Christian Aid believes that, with foresight, there will be many opportunities for poor communities that choose to develop by harnessing renewable sources of energy. There is clearly an opportunity for support for low-emissions small and medium-sized enterprises, which DFID already recognises are critical in pro-poor growth.

19.  Christian Aid feels there is also a major opportunity for poor communities in off-grid renewable energy. Rather than investing in big, infrastructural power projects, now is the moment to leap a technology and go straight to community-scale renewable energy. DFID, through its programmes and advocacy across government, could play a major role in encouraging this leap, which may also provide opportunities for the UK's renewables sector.

20.  Meanwhile, British business invests heavily in carbon emitting projects in poor countries, especially in the extractive sectors. According to Henderson's Global Investors, while the UK is responsible for 2% of global emissions, financing from the UK accounts for up to 15%.

21.  It is clear from this that the UK, as a financial centre, is a significant player in funding climate change. The UK government must, therefore, do everything within its power, both nationally and internationally, to offer incentives that discourage the flow of money towards highly polluting investments and encourage rapid investment in renewable energy and projects with a low emissions exposure.

22.  The new Operating and Financial Review (OFR), that recently earned a reprieve after being scrapped by the Treasury, is a step towards more open reporting by companies of their social and environmental risks. But, in view of the urgency required over climate change and with increasing numbers of investors calling for the clearer declaration of the carbon exposure of projects, the UK government must look at a number of market-based measures to make disclosure mandatory. Climate change has identifiable costs; there is a business case for disclosure!

23.  But disclosure must go beyond that encouraged currently through the Extractive Industries Transparency Initiative, on which DFID leads for the UK government. While of merit, the EITI lacks teeth. In the face of the human rights and environmental violations that so often surround such projects and bearing in mind the climate changing impact of what is extracted, is the EITI a response of appropriate proportion? Christian Aid believes not.

RECOMMENDATIONS

24.  DFID must conduct a thorough review of donor support for coal, oil and gas projects (as well as support for other natural resource sectors, such as logging, which might increase people's insecurity), including funding of social and environmental mitigation projects. It must draw up a timetable for its withdrawal from any support for projects, advocate that the World Bank does the same and publish its findings on the effectiveness of its funding of mitigation versus the harm done by exploitation.

25.  Alongside this, DFID should investigate the efficacy of renewable energy with major new research examining the power needs of poor communities through the lens of renewable sources of energy. It should also back the development of community-based renewable energy and livelihood initiatives, starting with pilot projects in Asia, Africa and Latin America to study their efficacy.

26.  The UK government must convene a panel of experts to recommend measures to make mandatory the disclosure of the carbon emissions of projects put forward for UK stock exchange listing. This might include more binding measures within the OFR or new listings rules or both.

27.  DFID and the UK government in general must be aggressive supporters of clear, mandatory social and environmental standards for investment, including open disclosure of carbon emissions. The EITI should be replaced by mandatory International Financial Reporting Standards.

28.  The UK's Export Credit Guarantee Department must require disclosure of carbon emissions, must phase out its support for projects—coal, oil, gas, power, infrastructure—with high carbon exposure and increase support for those with zero emissions or those that attract carbon credits. There is an opportunity for the ECGD and the UK government to lead Britain into a new era of sustainable exports and ensure poor countries have access to appropriate technology at the same time.

CLIMATE CHANGE, POOR PEOPLE AND GROWTH

29.  There is a common assumption of an explicit causal link between growth and poverty eradication. In reality, this is questionable. Wealth must be more evenly distributed for poverty to be eradicated, and so must use of the atmosphere, which will allow more scope for poor countries to develop (and to pollute) in the short term.

30.  DFID has already identified that climate change is likely to have particularly dire consequences for poor people, not just in terms of the increased frequency and severity of climate-related disasters, but in harming their livelihoods (DFID climate change key paper 02, undated, UNDP 1998, World Bank 2002). In general, it is estimated that African GDP could decline by to 10% in the next 10 years due to climate change (The Economist).

31.  So-called "pro-poor growth"—economic development that occurs in sectors of importance to poor people, particularly agriculture—is especially at risk from a changing climate (FAO 2001, Up in Smoke, WGCCD, 2004). It is Christian Aid's belief that any growth that is pro-poor must therefore be climate change proofed too—in effect, growth through clean technologies is more pro-poor and therefore must be the focus of the UK government's advocacy and policy on development.

32.  Poor people will not all desire or be able to live the life of smallholder agriculture. Moreover, climate change will drive people off their land, as is already the case in particularly sensitive regions. New jobs will be needed and, for this new pattern of economic activity to be sustainable, poor countries need a rapid but sustainable transfer of existing renewable energy technologies. Just as many poor countries have leapt over landline telecommunications technology and developed mobile networks only, so they must leapfrog dirty, centralised power generation and go straight to decentralised, renewable power to energise their development.

33.  To find this Holy Grail, poor countries will need to protect fragile markets in which poor people are most active—especially as producers in these markets are further disadvantaged by climate change—and, conversely, to open other markets in order to import clean technology cheaply. For this, they will need a great deal more space in trade policy making—freedom from prescriptive trade agreements and conditions attached to agreements with the IMF.

34.  In the meantime, DFID programmes must also be targeted at supporting poor people to adapt to the impact of an already changing climate, including through adapting their businesses to withstand climate change. Disaster risk reduction should also become an integral part of all social and economic policies advocated for and supported by DFID.

RECOMMENDATIONS

35.  In championing pro-poor growth, the UK government must recognise that climate change is already undermining poor people's livelihoods and must take this into account in its policy-making. This means that UK aid cannot come with economic policy conditions attached, as has already been promised. The International Development Act should be amended accordingly.

36.  Pro-poor growth is contingent on climate change being reversed and, in the meantime, on DFID and others supporting poor people to adapt their livelihoods as well as their lives to cope with increasingly hostile weather.

March 2006





 
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