COURAGE IN THE FACE OF COAL-DRIVEN CALAMITY: The Role of Finance Institutions in A Terrorized Climate

11/13/2017 11:56 am ET

The role of politics and diplomacy in addressing the worsening climate is once again front and center, with the ongoing Conference of Parties (COP23) to the United Nations Framework Convention on Climate Change (UNFCCC). But it is easy to ignore - and it has been made easy to ignore - the role of international financial institutions in the continued destruction of the climate through their support for coal.

This is why last month, history was made when citizens of one of the most climate-vulnerable nations stood up against one of the biggest financiers of the burning of fossil fuels in the world. Through the collective initiative of nineteen coal-affected communities, peoples’ organizations and climate justice advocates, an official complaint was filed in the Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC), the private sector arm of the World Bank Group. The complaint challenged the IFC’s financing of 19 coal plants in the Philippines through its financial intermediary (FI) in the country.

This effort is a response to the insidious irony of coal being proliferated in the Philippines. Coal accounts for 42% of global carbon emissions from fossil fuels, one of the main causes of global warming and man-made climate change. Meanwhile, the Philippines remains to be one among countries most vulnerable to the devastating effects of the climate crisis.

Four years after the nightmare that was Typhoon Haiyan, which affected more than 14% of the country’s then population of 100 million, the massive trail of death and destruction remains fresh in our memories. It is especially fresh for those who continue to suffer because of the displacement and loss of livelihood which two administrations have still yet to fully address.

We are also reminded of Haiyan, Yolanda as we have locally called it, with every typhoon and super-typhoon that came to our country with each year that followed. Our country’s weather bureau estimates that an average of 20 typhoons will hit the Philippines on a yearly basis with at least five developing into super typhoons akin to Haiyan. And as the extreme 10-month El Nino-driven drought of 2015 to 2016 has shown us, we are just as likely to suffer from devastating droughts as we are from storms.

Filipinos live in an era of extremes. And while powerful countries like the United States are still struggling to comprehend this, we have painfully accepted this as the new normal. From the part of Filipinos – or at least from the part of many of us who stand to lose the most – it is much harder to comprehend why in the face of destruction and death, our country still depends on coal as its primary source of energy.

An unlikely couple

At present, the Philippines still relies on coal for more than 40% of its power needs: a total of 7,504 MW installed power generation capacity from its 26 existing coal-fired power plants, with 35 more plants in the pipeline. This is in a time where coal is globally being abandoned for its historical and continued role in the climate crisis, it is unacceptable that such an energy source is alive and well in countries most plagued by climate disasters.

Globally, a 62% drop in the construction of new coal plants has been recorded, while almost 64 GW of coal plants have been retired in the past two years alone. With the advent of the Paris Climate Agreement, countries of the world have pledged to pursue decarbonisation – relying less and less on fossil fuels and other carbon-intensive industries - in order to keep the world’s global temperature below the threshold of 1.5 degrees Celsius by 2040. Industry experts have pointed out that within this period, renewable energy will not only rival but in fact increasingly displace fossil fuels as the world’s main power source.

It is not as if the Philippines is idle in the international discussions on the climate. It has been among the countries demanding industrialized countries to recognize their greater historical responsibility in the climate crisis. The country’s pledged carbon emissions reduction by 2040 is pegged at 70%, conditional upon financial and technological aid from developed nations. Yet, it seems as if it excuses itself from the common but differentiated responsibility of nations in responding to climate change. Coal seems safe in the coastlines of the Philippines. And this is no thanks to the dirty investments the Philippine government is welcoming, even encouraging. This leads us to a damning realization: to demand responsibility and accept relief is not enough. Rather, the proper response for vulnerable peoples in this dangerous context of climate calamities is resistance.

Doublespeak of finance institutions

The collective initiative of 19 coal-affected communities and over a hundred organizations in the Philippines coming together is a testament to the courage and veracity of vulnerable peoples in challenging proponents of a destructive development paradigm and the dirty energy which fuels it, all in the face of climate-related disasters which haunt us every day.

In particular, the complaint indicts the World Bank Group member institution IFC for providing support to a local bank which financed 19 coal plant projects in violation of IFC's performance standards and climate commitment. IFC’s dealings with local coal supporters curiously runs contrary to the pronouncements made by the World Bank Group which supposedly support “working with countries to make renewables cheaper than coal and push forward efforts to mitigate the effects of climate change.”

Calling plans to build more coal-fired power plants in Asia “a disaster for the planet,” World Bank President Jim Yong Kim warned South and Southeast Asian countries against building new coal-fired power plants, as he announced that that Bank will be spending 28% of its spending to climate change projects last year.

Despite this stark pronouncement, IFC has relentlessly provided funding to at least 19 active and proposed coal-fired power plants across the Philippines or to companies that own or operate them, through its local client, Rizal Commercial Banking Corporation (RCBC). Equity investments, loans, and other forms of support and investment were given to RCBC in spite of its failure to comply with IFC requirements.

IFC itself classified RCBC in 2013 as a “substantial financial exposure to business activities with potential significant adverse environmental and social risks or impacts that are diverse, irreversible, or unprecedented.” It also acknowledged that “no environmental and social due diligence or other procedures are yet in place to address the risks and mitigations associated with [RCBC’s] portfolio." It must come to no surprise for the IFC that RCBC would engage in arranging and providing debt investments for ongoing and new coal projects, known to have high environmental and social impacts with high-risk.

The continued financial support being given by the IFC to RCBC even as it failed to meet requirements and set up environmental and social safeguards utterly negates the credibility of the World Bank Group and its affiliate financial institutions in forwarding climate solutions. Its posturing as a climate saviour while continuing to fund coal, most especially in developing countries like the Philippines, exposes its utter disregard for the plight of vulnerable peoples.

The displacement and loss of livelihood caused by climate disasters are only exacerbated by the displacement and loss of livelihood caused by the construction of coal-fired power plants in coastal communities. And the real dangers these projects pose to health and natural resources only augment the suffering vulnerable peoples experience from climate extremes.

Survival and resistance

It is easy to frame the issue of climate as that which necessitates compromise and diplomacy. But for vulnerable peoples, survival is the order of the day, and we can only survive if we resist. The 19 coal plants supported by IFC's can only be viewed as an affront to whatever collective effort we foster in fora where we discuss how to adapt and live under a terrorized climate. While we worry about when the next Haiyan might strike the Philippines, we worry, too, about the adverse impacts precipitated by coal plant operations. We worry, too, about the climate of threat and intimidation pervading the communities who resist the coal projects.

But we shall not be silenced.

Even with the recent announcement of both President Trump and Prime Minister Abe to push for more coal projects in the Asian and Southeast Asian region, we will not be intimidated.

We filed our complaint to challenge IFC to abandon its fossil-laden investment portfolio, directly or through financial institutions. It is no less than a collective assertion of our survival as we stand in solidarity with all communities resisting fossil projects privately funded by development banks and facing intensifying climate change impacts. No bank or institution should be allowed to pollute our communities and compromise our future, whether by itself or through conduits, without being made to answer. The era of "business as usual" is over.

By Aaron Pedrosa, Secretary General of Sanlakas-Philippines and a leader of the Philippine Movement for Climate Justice (PMCJ)

with Gerry Arances and Arvin Buenaagua of Center for Energy, Ecology and Development (CEED)

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