By MAGGIE I. JARUZEL
While most people see an increasingly dark scenario as oil prices keep climbing, Graham Saul sees something else.
“This is a huge economic opportunity, not an economic problem,” he said. “It’s a chance for oil companies to diversify; to move away from their sole dependence on oil and become energy companies,” said Saul, who cites ever-increasing energy needs as one of two critical global sustainable development challenges. The other is climate change.
The two issues are related because billions of U.S. taxpayers’ dollars are earmarked for oil and gas projects in developing countries, adding to greenhouse gas pollution and making climate change problems worse without alleviating poverty.
Saul is the international program director of Oil Change International (OCI), a research and advocacy nongovernmental organization (NGO) based in Washington, D.C. The organization is a Mott grantee, and was one of several sponsors of the recent conference called Climate Change and International Development.
Those attending the all-day D.C. event met to discuss the impact of climate change for the world’s poorest countries and also to promote strategies to help meet their energy needs without increasing their dependency upon oil.
Mott's Environment program, through its International Finance for Sustainability focus area, promotes environmentally sustainable development and supports greater public participation in the economic decisionmaking process of international financial institutions (IFIs).
In 2006, the Foundation made a two-year, $150,000 grant to OCI to support its international program.
OCI focuses on reforming the energy-related lending practices of IFIs, especially for multi-million dollar infrastructure projects in developing countries. Instead of funding projects that create complete dependence upon oil and gas, it is wiser for IFIs to back initiatives that promote using a variety of energy sources, Saul said.
For example, solar technology could be used in several circumstances. The sun’s power could be tapped to operate refrigerators to chill a rural village’s much-needed medicine, and charge lamps for the world’s 1.6 billion people without electricity. By using solar energy, they would have lights at night so students could study and businesses could remain open longer.
Currently, in several remote locations around the globe, wind and hydro-power also are providing communities with energy because traditional power grids are unavailable. Still, international financial support is usually earmarked for fossil fuels development, such as oil and gas projects, which are non-renewable energy sources, Saul said.
“They (IFIs) have got to stop using scarce foreign development dollars to subsidize oil companies.”
Large international infrastructure projects in developing countries are often funded by IFIs, including the World Bank, the International Monetary Fund, key private banks, and Export Credit Agencies (ECAs). The latter are institutions that serve as finance companies for private domestic corporations conducting business abroad. ECAs provide government-backed loans, guarantees and insurance to private developers.
Saul is quick to say that OCI is not opposed to development. Rather, the NGO works to ensure that projects balance economic growth, environmental protection, and human well-being.
“We are supportive of energy projects that are sustainable and beneficial for the poorest of the poor,” Saul said, adding that by subsidizing fossil fuels the IFIs are working at “cross purposes.”
He explained the funding contradiction: On the one hand, the goal of IFI-funded projects is to improve the standard of living for people in developing countries. But on the other hand, experience has shown that oil and gas extraction projects funded by IFIs make life worse – not better – for the residents they are supposed to help.
Most outsiders falsely assume that wealth generated from oil extraction within a nation translates to a better standard-of-living for its residents, but just the opposite has proven to be true in developing countries.
“It’s called the ‘resource curse.’ Those Sub-Sahara African countries that don’t have oil have grown faster than those that do – and they also have less poverty than the countries with oil,” Saul said.
“Look at Nigeria. It has been getting poorer and more polluted since they discovered oil.”
In addition, he cited studies that show oil-producing countries experience higher incidences of civil war, more repressive governments and greater amounts of corruption.
In the Niger Delta, where Nigerian residents are dependent upon the waterways for their livelihood and also transportation, it is common to see oil slicks and gas flares, Saul said. There are similar environmental concerns along portions of the Amazon River in South American countries, where the local people also are dependent upon the waterways.
“It would be less expensive to take action now by shifting the IFI portfolios away from oil and toward energy sustainability than to deal with consequences later,” Saul said, adding that most major IFIs are struggling with the effects of their past support of fossil fuel projects.
Consequently, OCI often serves as a bridge by bringing diverse interested parties – residents, policymakers, oil and gas industry professionals, financial backers, NGOs, and governmental officials – to the same table to share information and concerns about IFI-funded oil and gas projects, and to discuss alternative energy projects.
OCI also conducts and shares research, and generates public awareness about the benefits of environmentally and socially sustainable energy projects.
Often, OCI partners with groups that have overlapping interests, including those working to address common issues in developing countries such as reducing national debt, global poverty and environmental degradation.
“Where are the poor currently getting their energy from? In many places, the trees are being chopped down by a population of people who have no alternatives. They are dependant upon wood for cooking and heating. The IFIs need to fund alternative energy sources.”