The impact of UK overseas aid on environmental protection and climate change adaptation and mitigation

Written evidence submitted by Dr David Hall-Matthews, Senior Lecturer in International Development, University of Leeds

Summary

· DFID’s own programmes appear to have been better designed to include environmental impact considerations since the last EAC report.

· The ECGD and UKTI have not yet delivered on the coalition commitment to support investment in – and stimulate demand for – green technology and low-carbon energy generation in developing countries.

· This reminds us of the critical point that HMG cannot deliver a strategy for sustainable development, growth and poverty reduction through DFID aid programmes alone. Sustainable development goals need to be mainstreamed through Whitehall, with greater buy-in, in particular, from HM Treasury, FCO, BIS, DECC, DEFRA and MoD.

· DFID needs to use its high global standing to promote environmental sustainability goals among its bilateral and, especially, multilateral aid partners. Contributions to multilateral institutions should be linked to satisfactory outcomes of independent and transparent evaluations of the impact of their programmes on climate and local environment.

· In particular, DFID should put strong pressure on the World Bank to stop funding new coal-powered power stations. The WB has recently funded several, including a very large one in South Africa.

It is both essential and perfectly possible for DFID / HMG to prioritise economic growth and wealth creation in poor countries, while also maintaining a strong commitment to environmental sustainability and climate change adaptation and mitigation. Low growth guarantees ongoing poverty. Climate change is a very direct threat to growth in the poorest countries, which have a comparative advantage in agriculture. Tropical plant sustainability and productivity is very directly affected by climate change. So, too, is human health and productivity, for example by rises in incidence of non-communicable diseases, such as respiratory conditions, in tropical regions.

The solution lies in clean energy generation and green technology. The UK has a comparative advantage in these areas, notably in carbon capture and storage, though further investment in research is needed before such technologies are economically competitive. HMG, at Copenhagen, along with the US, WB and others, called for financial support for clean energy generation in the poorest countries. Until this is delivered, economic logic dictates that poor countries will prefer the cheapest forms of energy, which have the highest carbon emissions.

It is time for HMG, and the multilateral aid it supports through DFID, to make good on this promise. In the UK, this requires BIS to encourage UKTI and ECGD actively to stimulate demand. They should see their role as the active promotion of UK-produced green technology, not just trade facilitation. This would be a win-win for both British business and sustainable development. The purpose of the ECGD should be to underwrite economically risky but potential beneficial export industries, rather than supporting those that are already strong. Its long-standing track record of failing to consider the environmental, developmental and political impact of the export products it assists is reprehensible.

Given the conclusions of the 2010 WB World Development Report on Development and Climate Change – that the advanced economies should provide $400-600 billion to support climate change mitigation in poor countries – it is very disappointing that the WB itself is currently investing more in high-carbon energy generation than low, and more than ever before. As a major shareholder and highly-respected voice, DFID needs to put strong pressure on the WB to change its strategy on funding for energy generation, including a clear and credible threat to withhold funds if WB fails to reduce the harmful environmental impact of its grants and loans.

9 February 2011