Developing countries which want to set up carbon trading schemes are to get financial and technical support from the Wold Bank.
World Bank group president Robert B. Zoellick announced the initiative, called the Partnership for Market Readiness, at the UN Framework Convention on Climate Change conference in Cancun yesterday.
But it was straight away criticised by environmental campaigners as a “deeply disturbing” move.
The partnership is backed by a multi-million dollar fund from all regions of the world: $20m from Australia, $5m from the European Commission, and further €5m commitments from the US and Norway. Germany, Japan and the UK have also announced their intention to support the initiative financially.
The partnership is aiming for a total capitalization of $100m and is expected to become operational in early next year. It will support a range of carbon market readiness initiatives ranging from technical to policy to institutional interventions.
“This new partnership – which brings together developed and developing nations – will help countries get ready to put in place domestic trading schemes and other market-based instruments to meet national mitigation objectives,” said Mr Zoellick.
“The fact that developing countries are looking for market-readiness support is testament to the drive for climate action at the national level – these countries are not waiting, they’re getting on with it as part of their development goals.”
China, Chile, Indonesia and Mexico are exploring the use of carbon market instruments and emissions trading mechanisms as a way of encouraging investment in alternatives to carbon-emitting technologies.
But Friends of the Earth’s International Climate campaigner Sarah-Jayne Clifton said it was “deeply disturbing that the World Bank is promoting carbon markets in developing countries”.
She said: “Carbon trading has already proved ineffective in cutting the emissions of rich countries at the pace needed to avoid catastrophic climate change – and nor will it provide the reliable source of funding developing countries need to grow cleanly and adapt to the impacts already affecting hundreds of millions of people.”
She said new carbon trading schemes looked set “to duplicate the serious flaws of the old, and are likely to lock developing countries into a future dependent on dirty fossil fuels instead of green sources of energy”.
And she claimed an expansion of carbon trading would “widen the escape hatch for rich countries to wriggle out of cutting their own emissions and risks a speculative bubble which could cause a double whammy of financial and environmental ruin”.