U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

44–182 PDF 2008

EXAMINING THE ADMINISTRATION’S 

PROPOSAL TO ESTABLISH A 

MULTILATERAL CLEAN TECHNOLOGY FUND 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

DOMESTIC AND INTERNATIONAL 

MONETARY POLICY, TRADE, AND TECHNOLOGY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 5, 2008 

Printed for the use of the Committee on Financial Services 

Serial No. 110–117 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

ROBERT WEXLER, Florida 

JIM MARSHALL, Georgia 

DAN BOREN, Oklahoma 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

SPENCER BACHUS, Alabama 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

DEAN HELLER, Nevada 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON DOMESTIC AND INTERNATIONAL MONETARY POLICY, TRADE, AND

TECHNOLOGY

LUIS V. GUTIERREZ, Illinois, Chairman 

CAROLYN B. MALONEY, New York 

MAXINE WATERS, California 

PAUL E. KANJORSKI, Pennsylvania 

BRAD SHERMAN, California 

GWEN MOORE, Wisconsin 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

WM. LACY CLAY, Missouri 

KEITH ELLISON, Minnesota 

CHARLES A. WILSON, Ohio 

ROBERT WEXLER, Florida 

JIM MARSHALL, Georgia 

DAN BOREN, Oklahoma 

RON PAUL, Texas 

MICHAEL N. CASTLE, Delaware 

FRANK D. LUCAS, Oklahoma 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JEB HENSARLING, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

KENNY MARCHANT, Texas 

DEAN HELLER, Nevada 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

June 5, 2008 ...................................................................................................... 1 

Appendix: 

June 5, 2008 ...................................................................................................... 23 

WITNESSES 

THURSDAY, JUNE 5, 2008 

Blackwelder, Brent, President, Friends of the Earth US ..................................... 12 

Deutz, Dr. Andrew, Director of International Institutions, The Nature Conservancy ..................................................................................................................... 18 

McCormick, Hon. David H., Under Secretary for International Affairs, U.S. 

Department of the Treasury ................................................................................ 3 

Werksman, Jacob, Program Director, Institutions and Governance Program, 

World Resources Institute ................................................................................... 16 

Wheeler, David, Senior Fellow, Center for Global Development ......................... 14 

APPENDIX 

Prepared statements: 

Gutierrez, Hon. Luis V. .................................................................................... 24 

Carson, Hon. Andre .......................................................................................... 32 

Blackwelder, Brent ........................................................................................... 33 

Deutz, Dr. Andrew ............................................................................................ 40 

McCormick, Hon. David H. .............................................................................. 47 

Werksman, Jacob .............................................................................................. 51 

Wheeler, David ................................................................................................. 60 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Blackwelder, Brent: 

‘‘Global Civil Society Statement on World Bank Climate Investment 

Funds,’’ signed by over 100 international organizations ........................... 75 

(1) 

EXAMINING THE ADMINISTRATION’S 

PROPOSAL TO ESTABLISH A 

MULTILATERAL CLEAN TECHNOLOGY FUND 

Thursday, June 5, 2008 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON DOMESTIC AND

INTERNATIONAL MONETARY POLICY, 

TRADE, AND TECHNOLOGY, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 1:40 p.m., in room 

2128, Rayburn House Office Building, Hon. Luis V. Gutierrez 

[chairman of the subcommittee] presiding. 

Members present: Representatives Gutierrez, Moore of Wisconsin, Clay; and Paul. 

Ex officio present: Representative Frank. 

Chairman GUTIERREZ. This hearing of the Subcommittee on Domestic and International Monetary Policy, Trade, and Technology 

will come to order. Good afternoon and thank you to all of the witnesses for agreeing to appear before the subcommittee today. 

Today’s hearing will focus on the Bush Administration’s proposal 

to establish and provide funding for a multilateral Clean Technology Fund. We will hear more detail from Mr. McCormick today, 

but the Administration has indicated that the purpose of the Clean 

Technology Fund will be to ‘‘help fund deployment of clean technology to reduce greenhouse gas emissions in major developing 

economies.’’ 

As envisioned by the Administration, the multilateral Fund 

would exceed $10 billion in total funding and would be administered by the World Bank. President Bush is seeking authorization 

from Congress for a U.S. contribution of $2 billion over 3 years, 

starting with a $400 million appropriation in Fiscal Year 2009. 

With our jurisdiction over international financial institutions, including the World Bank, the subcommittee and the full Committee 

on Financial Services will be responsible for any funding authorization. 

Testifying on our first panel today, we have David McCormick, 

Under Secretary for International Affairs at the U.S. Department 

of the Treasury. Our second panel is made up of representatives of 

several international environmental organizations, whom I will introduce later in the proceedings. 

2 

We will be limiting opening statements to 10 minutes per side, 

but without objection, the record will be held open for all members’ 

opening statements to be made a part of the record. 

I understand that Under Secretary McCormick is under some 

time constraints, so in order to expedite this process, I will submit 

my opening statement for the record and recognize Mr. Frank, the 

chairman of the full Financial Services Committee. 

The CHAIRMAN. Thank you, Mr. Chairman. 

I appreciate this. I am not going to be able to stay for the whole 

hearing, so I do want to make my statement now. 

First, I think it is a sign of progress that everyone should welcome that this proposal comes to the Administration. We progress 

at different rates, but progress still should be noted. 

The fact that we have here a proposal from this Administration 

to put funding behind clean technology is, of course, based on the 

recognition that climate change is a serious issue and that significant improvement in environmental impacts are a very, very high 

priority. 

There are some concerns that have been expressed that we need 

to address. To begin with, we should be clear that part of the problem here is that we don’t come free of history. Historically, the 

World Bank has not been seen as an institution which is friendly 

to environmental concerns. 

Now, I think progress has been made here as well, and there 

have been substantial improvements. In some cases, this committee 

has played a role in that, for example, in our insistence on the establishment of inspection panels, which have contributed. 

But part of the problem that remains is the concern about the 

World Bank being the most suitable entity to do this. 

People want to see some movement forward here, but we can’t 

always get what we want. The choice may be, given the reality between the World Bank and nothing, there may be some argument 

for doing it elsewhere. But then there is a second set of issues 

which is, if it is going to be the World Bank, under what conditions, and subject to what rules? 

I do think, if this is going to work, it is going to be incumbent 

upon the Administration and the Bank to allay fears that are wellgrounded in history, that are not paranoia, and I think there is the 

burden of proof to be shown that the Bank will take this mandate 

and do it in a way that significantly improves the situation. 

Another concern is that we don’t really do enough in this world, 

and this country does not do nearly enough, to alleviate poverty. 

There are far too many malnourished children in this world, proportionately more in Africa than elsewhere, but an awful lot, for 

any of us to feel good about it. 

Any suggestion that these funds would be diverted from public 

remediation and economic development in general will also be a severe obstacle. So we are going to need some very strong commitments that this will be wholly additive. 

I say that because we are in a situation where, when we draft 

our budget, we are sometimes told—I guess, by ‘‘sometimes,’’ I 

mean once every year—by the Administration that here is an absolute dollar limit above which we cannot go. 

3 

We say, if these funds are going to come out of an already too 

constrained budget for development purposes, then there is an obstacle to that. Unless we can get an agreement that these will be 

additive and will not come at the expense of other issues, again, 

I think, this does not go forward. 

There are some more fundamental issues about what types of 

technology would be dealt with, but assuming it is going to go to 

the World Bank—and that is obviously by no means guaranteed— 

those two are absolutely minimum conditions. Assurances that this 

will be done well and a guarantee that there is no diversion, and 

I would say that finally, one way in which you do that is to shorten 

the period in which it is allowed to go forward. 

So, at this point, I think the shorter the authorization period, the 

more we may feel that we will be able to see whether or not this 

works. 

Obviously, you do have, at some point—you need a longer term 

to get projects going. But that wouldn’t be an argument in the first 

year because you are not going to be making huge commitments in 

the first year. So I think there is going to be an argument strongly 

that many of us will feel that, given the sort of experimental nature of this, we should not have a very, very long time in which 

it is authorized, because whatever assurances we get now on the 

two points I mentioned, they are only assurances, and we can’t 

take them literally to the Bank, even if we get them from the 

Bank. 

So, what I think people may look forward to is a testing period 

of a year or so in which the two points that I mentioned will have 

to be established if this is to go further. 

I thank you, Mr. Chairman. 

Chairman GUTIERREZ. Thank you, Mr. Chairman. 

Our first panel consists of only one witness, Mr. David McCormick. Mr. McCormick is the Under Secretary for International Affairs for the U.S. Department of the Treasury. We welcome him 

and ask him to please proceed. 

STATEMENT OF THE HONORABLE DAVID H. McCORMICK, 

UNDER SECRETARY FOR INTERNATIONAL AFFAIRS, U.S. DEPARTMENT OF THE TREASURY 

Mr. MCCORMICK. Thank you, Chairman Gutierrez, Congressman 

Paul, and members of the committee. Thank you for the opportunity to discuss an issue of global importance with you today, and 

that is the Clean Technology Fund, also referred to as the CTF. 

The CTF is a new multilateral effort to reduce the growth of 

greenhouse gas emissions in developing countries by financing the 

additional cost of deploying clean technologies over dirtier, usually 

cheaper, alternatives. The President’s Fiscal Year 2009 budget includes a $400 million appropriations request for the initial U.S. 

contribution to the CTF, which will be housed at the World Bank 

where it will leverage the capital bases of multilateral development 

banks and the donations of other contributing countries. The Administration has requested authorization from Congress to commit 

$2 billion to the Fund over the next 3 years. 

4 

We are aiming, along with our donor partners in the G8 and beyond, at a global effort of up to $10 billion over the next 3 years, 

with the United States as the lead donor. 

Now, what is the problem we are trying to solve here? Let me 

outline for you the magnitude of the problem that this new multilateral aims to address and why it is so critical that the United 

States be a part of it. 

Since 2002, emerging and developing economies have been responsible for about two-thirds of global GDP growth. While this unprecedented expansion has brought economic opportunities and 

higher standards of living to desperately poor people from around 

the globe, it has also led to a surging demand for energy. That energy has come in the power industry in the transport, building, and 

industrial sectors. 

According to the International Energy Agency, by 2030, global 

demand for energy will have increased by over 50 percent, with almost three-fourths of this increase coming from a handful of developing countries. Now, currently, most developing countries are focused on the most cost-effective way to grow their economies, feed 

their people, and raise their standard of living. 

They tend to invest in the available energy technology that can 

provide the most economic impact at the least cost. But each time 

they invest in dirty technology, such as a subcritical coal plant with 

a 30-year life span, the harder and more expensive it will be to 

mitigate the resulting climatic effects in the future. 

If we take no action to provide developing countries with the 

right incentives, their investments today could lock in the legacy of 

high-polluting, less-efficient technologies for which we would all 

eventually pay through the accelerated efforts of climate change. 

What is the response? Well, in response to this global challenge, 

the United States, the United Kingdom and Japan have been working multilaterally with the other G8 countries and potential donors 

to create an international Clean Technology Fund to help developing countries deploy these commercially available technologies. 

These are technologies that we in the United States and Japan and 

other developed countries are already using. 

Since September of 2007, Secretary Paulson, at the request of the 

President, has led U.S. efforts to negotiate the development of the 

Fund with our international partners. 

The proposed Clean Technology Fund has three objectives: first, 

to reduce emissions growth in developing countries through the accelerated deployment of existing commercially available clean technologies; second, to stimulate and leverage private-sector investment in these existing technologies; and, third, to promote international cooperation on climate change in the broader context of 

pursuing a future climate change agreement. 

The Clean Technology Fund will help developing countries finance the additional cost of deploying clean technologies over dirtier ones. The Clean Technology Fund will not cover the entire cost 

of any project. It will help cover the portion of the cost needed to 

reach the point of economic viability. National governments and 

private sponsors will be responsible for the bulk of project financing. 

5 

The Clean Technology Fund will be a multilateral fund administered by the World Bank and implemented through all the multilateral banks. It will be able to leverage the resources of the MDBs, 

which collectively lent over $55 billion in 2007 for international development. The Fund will invite developing countries with an emphasis on those with expected high emissions growth, and they will 

be invited to submit requests for CTF support to finance energy, 

transport, or other projects with significant emissions reduction potential, including large-scale energy efficiency projects. 

To be eligible to receive such funds, developing countries will be 

required to work with the World Bank to develop investment strategies that are based on national plans for low carbon growth. 

Projects would be evaluated based on their consistency with these 

national plans, their expected reduction of greenhouse gas emissions, and their capacity to transform sectors onto cleaner energy 

pathways. The Fund will use a mix of concessional loans, grants, 

equity investment, and credit guarantees to finance any additional 

cost of deploying clean technologies. 

Mr. Chairman, the status of the Fund—we have talked to many 

other countries. The United Kingdom and Japan already expressed 

publicly their contribution or their willingness to commit, and we 

recently had a CTF design conference in Germany where potential 

donor and recipient countries came together and reached general 

agreement on the parameters of the Fund. We believe donor support will go well beyond the G8 to include a number of countries 

in Europe and throughout the Middle East. 

A final comment, Mr. Chairman, for U.S. leadership and involvement, I believe the CTF will do more than make an immediate impact on emissions growth in the developing world. I believe it can 

contribute to building the kind of trust between developed and developing countries, trust that I am sorry to say has been lacking 

for some time, that will be necessary for a new U.N. climate arrangement to be reached in the years ahead. Thank you very much. 

[The prepared statement of Under Secretary McCormick can be 

found on page 47 of the appendix.] 

Chairman GUTIERREZ. Thank you very much for your testimony. 

Mr. McCormick, I only have one question. There is significant 

concern in the environmental community regarding the lack of a 

definition of ‘‘clean technology’’ in the Administration’s proposal. 

Has Treasury ruled out certain technologies and projects that others might be pushing for eligibility under the CTF? 

In other words, are there technologies or projects that some 

might promote as clean or transformational that would not, in your 

view, be appropriately funded by the CTF? What about the supercritical coal plants? 

Mr. MCCORMICK. Thank you, Mr. Chairman. 

The projects that would be considered, first, would only be those 

projects from countries that had already developed and had the approval for national plans for reaching low-carbon economic growth. 

Within that continuum of projects, we would expect that there 

would be a number of those projects that would be retrofitting existing infrastructure, trying to make existing infrastructure, whether it be buildings or transportation networks, much cleaner. 

6 

We would also expect that there would be some of the projects 

that we would consider which would be new energy infrastructure. 

Within that new energy infrastructure there may, in some instances, be proposals for coal-related technologies. 

In those instances, those projects would be considered. I wouldn’t 

expect that to be a significant portion of the portfolio, but it might 

be part of the portfolio. This, I think, does bring to the forefront 

a difference among many here. From a very practical standpoint, 

in some of these developing countries, they are moving forward 

with the development of coal-fired plants. 

The only question, really, is whether we may, in certain circumstances, within the context the of a low-carbon plan that they 

have agreed to, finance the deployment of the cleanest available 

coal technology possible, but those economies are going to develop, 

in some cases, coal infrastructure with or without our support. 

We think there may be cases that do, in fact, justify the deployment of the cleanest available coal technology possible, just as we 

would advocate that under certain circumstances in our open country. 

Chairman GUTIERREZ. Thank you, Mr. Under Secretary. 

The ranking member, Dr. Paul, is recognized for 5 minutes. 

Dr. PAUL. Thank you, Mr. Chairman. 

Programs like this are always based on the assumption that 

without a program like this, no good can come of it; there is no 

other alternative, that there is never a market force, there is never 

a profit incentive to accomplish some of these goals. 

There is also the fact that some of these programs, if not most 

of them, programs of the multilateral development banks, aren’t always that successful. Sometimes there is a lot of money wasted, 

and there are a lot of special interests who benefit. 

It is always designed to do good to help the poor and to clean 

up the environment, but sometimes we know that it feathers the 

pockets of some special interests. Of course, I have always had concerns about that. 

The other thing, of course, that we shouldn’t ignore is the cost 

of a program like this. We are talking about just a piddling sum, 

you know, $2 billion, throw that out there. That is not much in a 

big budget. But we never talk about where the money is coming 

from, and I would like to find out what the Administration is 

thinking. Is this going to be part of the deficit? Is this going to be 

borrowed money, or is this going to be paid for by taxes? 

For a $2 billion program, the odds are, it will be a lot more. So, 

could you tell me, has anybody considered how we are going to pay 

for this, and what we should do? What are the considerations on 

paying for this? 

Mr. MCCORMICK. Congressman Paul, thanks for that question. 

We certainly, I think, have a common agreement on the commitment to market forces, and in the area of the environment, particularly in the area of greenhouse gas emissions, that has typically 

been pointed to by many as a public goods issue, where we don’t 

have market forces that are essentially operating at some of these 

developing countries where there is enough of an incentive for the 

investment in the cleanest available technologies possible. 

7 

The reason for that is these governments are making trade-offs 

in some cases—not in all cases—between basic human needs and 

incremental investment in clean technology, and they are making 

a trade-off that ultimately means dirtier technologies, which creates the public goods problem for us all. So that is what the Fund 

is designed to highlight. 

As Chairman Frank noted in his opening remarks, we are committed to this not being a trade-off between ODA funding, existing 

ODA funding for poverty reduction and environmental funding, so 

it is, indeed, additive. And it would be part of the overall President’s budget. It is additive to our development funding. 

I recognize your concern, Mr. Paul, with overall deficit concerns 

and deficit spending. I can’t point to a specific trade-off that is 

being made within the budget as a consequence of this or a specific 

tax, but I certainly do note your concern on that point. 

Dr. PAUL. Yes, and I think this is probably typical. You know, 

the programs get started, and we don’t pin it down, and it does 

contribute. You have a program here and there, and soon we have 

a national debt increase. This year, the national debt increase 

could be three-quarters of a trillion dollars at the rate we are 

going. It is close to 600 now. 

So if the economy continues down, it could be a major factor. 

But back to this idea about the market, you argue that, you 

know, in these circumstances, the market isn’t available and 

doesn’t work. Well, that almost guarantees bad decision-making because instead of picking and choosing, let’s say, nuclear over wind 

and all these difficult things, if you don’t have a market factor in 

there, somebody has to make the decision, and it has to be a bureaucrat. It has to be a politician, and it is going to be slower, and 

it is going to be more costly. 

So I guess, from what I am saying, I lack enthusiasm and belief 

that something like this can be successful, although, politically, it 

has a lot of appeal. I understand this, but I would caution everybody that someday we, as a country, will have to wake up and be 

responsible for paying these bills. 

Thank you. 

Mr. MCCORMICK. May I respond? 

Chairman GUTIERREZ. Yes, if you would like to respond. 

Mr. MCCORMICK. Certainly I think part of the issue here—and I recognize $2 billion is a great deal of money. However, within the 

overall scheme of this gap, between existing infrastructure that is 

being deployed today, just in the energy sector alone, it is $30 billion. That is the differential in cost between the technology that is 

being deployed and the cleanest available technology. 

So if you think about the global implications of that from a car- bon emissions standpoint, it is quite enormous. While $2 billion is 

a lot, it is, frankly, just a fraction of addressing the overall problem. 

Now, why we think this $2 billion is a worthy investment for the taxpayers is because the $2 billion becomes $10 billion, hopefully, 

if we are able to get multilateral support for it, and then is leveraged much more significantly than that by the fact that privatesector investment comes into this further, the countries’ investment. 

8 

So I don’t mean to suggest market forces won’t be at work here. 

They will be, because companies will compete for projects. Projects 

will complete among themselves for funding opportunities. 

I am simply saying the market is not working today in terms of 

helping countries make that trade-off because they are opting to 

address near-term poverty needs as opposed to the long-term implications of global warming. That is something we have a common 

interest in addressing as Americans. 

Thank you. 

Chairman GUTIERREZ. Congressman Frank. Please, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Chairman. 

I won’t intrude into a family dispute over the market between 

the gentleman from Texas and the Department of the Treasury, 

but I am interested in the budgetary implications. You were asking 

for a $400 million appropriation. 

Now, if I am correct, this is different than our usual financing 

of World Bank activities with the lending and leveraging, etc. 

There is leveraging in that we expect others to contribute, but this 

is a dollar-for-dollar appropriation, correct? 

Mr. MCCORMICK. Yes, Mr. Chairman. 

The CHAIRMAN. This is money, unlike World Bank or other IFI 

funds that we have the dollar-for-dollar out-of-pocket spending, so 

you can assure me that the $400 million being requested is purely 

additive to what was otherwise being requested in the foreign aid 

budget? 

Mr. MCCORMICK. Yes, sir, Mr. Chairman. 

The CHAIRMAN. Okay, the reason it is important for this to work 

is that—and I know a couple of the witnesses mentioned this as 

well—this is money that is going to be spent in middle-income 

countries, because poor countries are too poor to bother the environment very much, certainly not from their emissions. 

So we have the continuing scandal of starving children in Africa. 

This is not money that is going to go to Africa. It is not money that 

will go to the poorest countries, so that makes it especially important that we be very clear about that, and I will be talking to the 

budget and appropriation people. 

And I will tell you, I am ready to support this if we work this 

out—the way this would probably work is, if we do agree with it, 

we will be recommending it, in effect, if we pass it out of the Financial Services Committee, to the Foreign Operations Subcommittee. 

But I will be prepared to tell them that if they get into a budget 

crunch with the Administration and we are told we are spending 

too much, you go over this side first. I want to be very clear about 

that. I am prepared to support this but not at the expense of poverty alleviation. I don’t like to have to make that trade-off, and I 

hope I am not forced to. You know, we do this, but my advice to 

the Foreign Operations people will be, okay, if you can do it that 

way. 

Then the other issue I would raise is—and I noticed this in some 

of the testimony—one of the things that could make it easier for 

us to get this done would be—you know, we talk about trade-offs. 

The World Bank has not compiled a record that most environmentalists approve of in its general operations, and there is a danVerDate Aug 31 2005 12:25 Sep 09, 2008 Jkt 044182 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\44182.TXT TERRIE
9 

ger that we would have an ongoing World Bank operation that was 

not environmentally sensitive, and then this, you know, it is like 

they do their environmental work 1 day a month, and then they 

undo it the other 29 days. 

A commitment from the World Bank, or a commitment from us 

to work to see that the World Bank does better on environmental 

issues, in general, could be very helpful. That is, again, why, I 

think we may be talking about a trial period here. 

But that would be important, that the World Bank not be funding projects, for example, that would go counter to a concern for 

clean technology. I think that is another issue that we would ask 

you to address and that we may address when we legislate on this. 

Now, let me ask you, one of the most controversial questions, 

controversial within this body as well, and that is clean coal. What 

is your sense about that, because that is probably the issue that 

causes the most controversy, because it causes it within this body 

as well? 

I would say to my environmental friends, obviously, there is not 

yet a consensus here on the issue the way they would like, but 

what would your sense be, would a significant amount of this go 

to clean coal, some part? What is your sense? 

Mr. MCCORMICK. Mr. Chairman, thank you. 

First, just a word on the Bank. I think I would be the first to 

admit that there is a real tension in the Bank’s poverty reduction 

mandate and also a growing prioritization within the Bank on an 

environmentally friendly energy and, in particular, climate change. 

I know President Zoellick has made this one of his top six priorities. 

And what you should take confidence in from the Fund is that, 

unlike other funding mechanisms at the World Bank, we would 

have, as the United States, as one of the members of the Fund 

trust committee, an ability to veto any project that is inconsistent 

with a mandate that we are discussing today. 

The CHAIRMAN. Well, I appreciate that, Mr. McCormick. 

And I mean no personal disrespect, but the fact that this Administration has a veto does not always fill me with joy. 

Mr. MCCORMICK. Understood, Mr. Chairman. 

The second point is that, I think within these projects that would 

be funded, there is absolutely—and our friends from the NGO community have reinforced the importance of this many times—there 

needs to be a focus on retrofitting existing infrastructure, on efficiency and those types of projects, every bit as much as new infrastructure. Within the category of new infrastructure— 

The CHAIRMAN. You mean, the ongoing activity of the World 

Bank and the other MDBs, that this would have to be accompanied 

by some sensitivity there. 

Mr. MCCORMICK. Yes, sir, and also within the Fund. 

The CHAIRMAN. I understand that, but if this is confined only to 

the Fund, you will run into trouble. One of the ways you can help 

is if a trade-off for the existence of the Fund is some more sensitivity within the main operation as well. 

Mr. MCCORMICK. We think this is a critical way to help the Bank 

become more green in its outlook and how it thinks about projects, 

absolutely. 

10 

There will be new infrastructure projects that we would expect 

this Fund to support. I wouldn’t expect a disproportionate amount 

of that to be coal, but I do think that the Fund may, on occasion, 

consider projects that are clean coal technology and may, in fact, 

in some cases, support those. 

Again, Mr. Chairman, the argument that I would make to you 

is that those coal-fired facilities are going to be built in some countries anyway. We want to discourage that, but there may be cases 

where, if that is going to happen, we want to help finance a project. 

The CHAIRMAN. Let me call for this then, and this isn’t going to 

satisfy everybody, but one potential trade-off that could help you 

would be if the Bank would say, okay, we are going to go ahead 

with this, but we would be much less likely now to finance existing 

coal technology, absent some improvement, so that, again, there is 

an interplay between what is done in the Fund and what is done 

in the main activity of the Bank. 

Mr. MCCORMICK. Mr. Chairman, I couldn’t agree more. The point 

I would make, just knowing this was an issue of concern, just looking back over the last 10 years, in terms of the Bank support for 

energy infrastructure, only about 10 percent of that has been coal. 

Of that 10 percent, roughly 75 percent has been retrofitting 

versus 25 percent of new infrastructure. I know, for many people, 

that 25 percent of the 10 percent is still much too much, but I 

think it would be unfair to represent coal as a major portion of the 

energy infrastructure today. 

I think, in the future, it can become less or probably should become less, and I think the Fund contributes to that. 

The CHAIRMAN. Thank you, Mr. Chairman. 

Chairman GUTIERREZ. I thank the gentleman. 

I now recognize Congresswoman Moore for 5 minutes. 

Ms. MOORE OF WISCONSIN. Thank you, Mr. Chairman. 

Thank you, sir, for appearing today. 

I have questions that really relate to the questions that have already been asked by the subcommittee Chair and our full committee Chair, and perhaps you have answered them by saying that 

clean coal technology would, in fact, be regarded as part of this— 

eligible for the Fund. 

I suspect that we are going to hear testimony later on today 

which indicates that it is very inefficient, that there won’t be anything brought on board until 2030. Yet other resources are going 

to be spent for technology that is really not clean. What is the 

thinking in terms of including that in this Fund? 

Mr. MCCORMICK. Congresswoman, there was a real focus on not 

prejudging what technology would be most appropriate. So, again, 

I think we agree with Congressman Paul in the sense that we don’t 

think the government should be in the process of developing or advancing technology. It is only supportive—just to be clear—of those 

technologies that are broadly available and already commercially 

deployed. 

So this is not meant to advance the development of the new technology but rather the deployment of assistant technologies. The 

trade-off, in terms of collecting, selecting, or willing to consider new 

projects—again, Congresswoman, I consider this to be a very small 

percentage of this—was based on the fact that some countries that 

11 

are so heavily dependent on coal, to suggest that they wouldn’t be 

deploying coal technology as part of supporting their energy technology just wasn’t practical, just wasn’t pragmatic. 

Ms. MOORE OF WISCONSIN. All right. Thank you. 

The World Bank, as has been indicated before, is probably a suspect source of funding this project. What would be wrong with the 

United Nations framework? I realize that their limited capacity, 

perhaps, will not start till 2012. But if we could put this in place 

and perhaps turn the portfolio over to them, there would be a more 

global systematic deployment of these resources. 

The World Bank, as recently as April, did a major fossil fuel 

lending program, and there may be some conflicts of interest, we 

think, the huge portfolio that they have with fossil fuel projects 

and really using some due diligence in administering this program. 

So what was your thinking in terms of the World Bank, given 

their record and their portfolio, doing this lending? 

Mr. MCCORMICK. Again, Congresswoman, I think this was just 

very practical and pragmatic so the UNFCCC is essentially then 

negotiating—or the Secretary oversees negotiation. It doesn’t have 

the practical organizational capabilities for oversight of implementation, where that has traditionally been a role of the MDB. So we 

thought the Bank would be in a position to do that. 

We also thought sharing many of the things that have been said 

today about the need for the Bank to become more green, we 

thought the Clean Technology Fund housed within the Bank would 

give us greater influence in moving in that direction. 

Ms. MOORE OF WISCONSIN. Let me just ask you this, countries, 

like Sub-Saharan Africa, as our chairman has already indicated, 

wouldn’t initially be part of this concessional funding. But as other 

countries become more clean, and the World Bank has invested 

heavily in fossil fuel programs in Sub-Saharan Africa, and we see 

climate change and floods and other problems, what would happen 

with the debt that those Sub-Saharan countries have pursuant to 

fossil fuel creation and then, at some point, some imperative for 

them to come on board with clean coal technology? 

In other words, I am not clear as to how this two-track lending 

is going to work in the real world. 

Mr. MCCORMICK. Congresswoman, we certainly haven’t ruled out 

any country being a participant, any developing country being a 

participant. I simply said that we expect that the initial focus 

would be on some of those major economies that account for the 

most significant portion of greenhouse gas emissions. 

So it doesn’t rule out the poor of the poorest countries, and we 

also share your concern, as Chairman Frank has outlined, and that 

was the reason for the President’s increased request on ODA of 

about 30 percent win this budget. 

Ms. MOORE OF WISCONSIN. I know, but they won’t be able to afford the exploratory kind of clean technology in Sub-Saharan Africa, but they are going to have the debt on their books at whatever 

point they join the program. I see my time has expired. 

Chairman GUTIERREZ. You can answer the question, if you want. 

Ms. MOORE OF WISCONSIN. Yes, thank you. 

Mr. MCCORMICK. Congresswoman, they would be eligible. In 

other words, if they are financing energy infrastructure today, they 

12 

would be potentially eligible for asking for support to finance the 

incremental gap between the clean technology and the dirty technology, so they would be eligible potentially for that program. 

Ms. MOORE OF WISCONSIN. That is kind of an underwater loan. 

They are borrowing today, knowing that it is going to be inadequate. Thank you. 

Chairman GUTIERREZ. First of all, let me thank you for coming 

and testifying before the committee. We look forward to having 

more conversations as we move forward and try to define just what 

the moneys will be used for with a little more specificity. Hopefully, 

you will get to testify before your term has expired. I have a funny 

feeling this money might not get spent while you are there. 

I am not saying that in a negative way. It is just the reality of 

time, and the Administration is closing—you know, this is going to 

be 2009 by the time things go. I want to thank you. You have always been so kind and generous with your explanations before the 

committee and your answers. I want to thank you for your testimony this afternoon. 

Mr. MCCORMICK. Thank you, Mr. Chairman. 

Chairman GUTIERREZ. Thank you, Mr. Under Secretary. 

We have a second panel, and we would like to welcome Mr. Brent 

Blackwelder, a senior environmental lobbyist and president of 

Friends of the Earth since 1994. 

Mr. Blackwelder founded the Environmental Policy Institute, 

which merged with Friends of the Earth in 1989, and the American 

Rivers, the national leading river-saving organization. 

Next we have Dr. David Wheeler, senior fellow of the Center for 

Global Development. As lead economist in the World Bank’s development research group from 1993 to 2006, Mr. Wheeler directed 

environmental policy and research issues in collaboration with policymakers and academics from South America and Southeast Asia. 

Third, we have Mr. Jake Werksman, program director of the Institutions and Governance Program at the World Resources Institute. Dr. Werksman served as a lawyer, program director, and 

managing director at the Foundation for Environmental Law and 

Development for 10 years. 

Finally, we welcome Dr. Andrew Deutz, senior policy advisor of 

the Nature Conservancy. He currently heads the International Institutions and Agreements Team, which oversees relationships with 

a variety of multilateral and bilateral agencies. 

We welcome you all, and we ask Mr. Blackwelder to proceed. 

STATEMENT OF BRENT BLACKWELDER, PRESIDENT, FRIENDS 

OF THE EARTH US 

Mr. BLACKWELDER. Good afternoon, Mr. Chairman. 

I am Brent Blackwelder, president of Friends of the Earth, 

United States. We are part of Friends of the Earth, International, 

with member groups in 70 countries. We are the world’s largest 

global environmental advocacy network. 

We certainly commend you for holding this hearing on the Clean 

Technology Fund, and we also appreciate the role that this committee has played over the last 25 years. Going back to June of 

1983, when we asked the committee to do the first oversight hearing on the lending of the World Bank—and I testified that June beVerDate Aug 31 2005 12:25 Sep 09, 2008 Jkt 044182 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\44182.TXT TERRIE
13 

fore this committee—and you proceeded to take my testimony and 

that given by my colleagues to heart. Many, many things were 

done to try to improve the lending of the Bank so that it actually 

didn’t create big winners and losers; that it improved environmental quality; that it did not fund projects that spread disease or 

extinguished the lives of indigenous peoples, or displaced hundreds 

of thousands of people. We raised all those issues. Some steps have 

been taken. 

What I want to focus on in my testimony here are two questions: 

One, what is the definition of clean technology; and two, is the 

World Bank the right entity to be pursuing that? 

We are very concerned, in the first, place that coal, even when 

you try to use the most efficient plants, has a very dirty cycle from 

start to finish, whether it is the mining process, whether it is 

burned or the ash, when it is left, how it is disposed of. It is not 

only in the United States where we are blasting the mountain tops 

of West Virginia to smithereens and leaving little for the future of 

the people who would hope to reside there, or whether it is the 

power plants that we have focused on and testified about that have 

been financed by the Bank with our tax dollars—in India and 

China, most recently. One was referred to in earlier testimony. We 

have brought all those to your attention. 

The world is now burgeoning with many, wonderful clean technologies, whether it is getting rid of energy waste through efficient 

appliances, motors, gears, lights and the like, or whether it is going 

solar, wind technology and geothermal. There is no shortage. 

If the technologies of the past were not subsidized in one way or 

another, through the Tax Code and through appropriations, these 

things would be absolutely competitive. The problem has been that 

there is not a level playing field, and all the externalities of these 

dirty technologies are shoved off on others. 

So, in particular, if you allow a ‘‘clean’’ coal to come in with 

money going to carbon sequestration, which is decades away from 

commercial viability, it is another subsidy to coal. And that is not 

acceptable if we want to go in a new direction that does not have 

the adverse economic and social environmental consequences of 

this fossil-fuel lending. 

So in summary, we have to exclude coal and be very clear on 

what constitutes an acceptable recipient here. And furthermore, 

there are abundant possibilities. 

Let me next turn to the World Bank itself as an entity. Having 

looked at and tried to convince the World Bank, with the bipartisan support of Congress, to shift the energy lending over 25 years 

into newer technologies that were appropriate and that countries 

actually wanted, they have actually refused and continue to this 

day to fund very damaging projects. 

And over the years—I will just relate one incident. One of the 

Bank staffers said, ‘‘We have some wonderful energy conservation 

loans that Tunisia wants, but we can’t fund them; it is too small. 

The Bank doesn’t want to do this.’’ And it says, ‘‘We can’t manage 

a series of smaller projects.’’ Well, McDonalds manages 28,000 

small franchises; they found a managerial model that works. 

So I am trying to lay the grounds by saying, what has the World 

Bank done that would justify any confidence whatsoever that now 

14 

it has changed its ways? The lending for fossil fuels hopped big 

time from Fiscal Year 2005 to Fiscal Year 2006. They are going in 

the wrong direction. Rather than coming to you and saying, ‘‘Oh, 

we have changed our ways and look at what we are doing, look at 

the results we are getting, put more into us,’’—no, they can’t make 

this claim. 

We have no confidence at Friends of the Earth that this money 

would be spent wisely at the World Bank. There are other mechanisms which we lay out in our testimony that would be suitable. 

In summary, we would urge you not to proceed to give the World 

Bank the authority to do this, but to look at other ways to quickly 

accelerate the technologies that are available. 

[The prepared statement of Mr. Blackwelder can be found on 

page 33 of the appendix.] 

Chairman GUTIERREZ. Thank you. 

Dr. Wheeler, please. 

STATEMENT OF DAVID WHEELER, SENIOR FELLOW, CENTER 

FOR GLOBAL DEVELOPMENT 

Mr. WHEELER. Thank you, Mr. Chairman. 

I am here today for the Center for Global Development, which 

really works on issues that have to do with poverty in the developing world. And so we have an environment component, but it is 

not our main line as an organization. It is my main line. 

I worked in the World Bank for 17 years before coming to the 

center a year-and-a-half ago. So I thought I would offer you some 

remarks today to provide you a perspective, at least my perspective, on the World Bank and its candidacy for this Fund and also 

some conditions that might be useful in trying to steer the World 

Bank towards responsible governance in this context. 

I think I could frame this by trying a couple of retrospective stories on you. Suppose it is 2015. The money has been appropriated 

for the Clean Technology Fund. The World Bank has been designated as a steward for that Fund. We ask ourselves, what happened with that money? 

I think there are two stories we can tell here. At this point, they 

are equally credible stories, and the outcome will depend largely on 

the decisions you make. 

The first story we might call, ‘‘Business As Usual.’’ In that story, 

the World Bank, guided by the current draft for the Clean Technology Fund, pursues its normal course, which is to try to please 

everybody and all of its member countries and pass out the money 

on a number of demonstration projects which make people feel 

good, pass some of the money out to countries that want to clean 

up their coal technology a little bit. People feel pretty good about 

that. 

But at the end of 7 or 8 years, having spent billions of dollars, 

we ask ourselves where did we get for the money? The answer is, 

not far, because during that entire period, in all of these countries, 

dirty technology remained cheaper than clean technology. 

Without any regulation, the private sector, which is going to propel most of the investment of the power sector, continued right 

along investing in coal-fired power and fossil-fired power. So this 

15 

was a feel-good project, but in the final analysis, I don’t think the 

taxpayers’ money was well spent. 

Now there is an alternative, and that will really depend on this 

committee, and that is to insist that this money will be focused 

where it can do the most good. The only credible argument here for 

a Clean Technology Fund is to find renewable sources of power 

whose costs you can drive down to competitiveness with fossil-fired 

power in fairly short periods of time. 

There are technologies out there, as we know. Solar thermal 

technology is one; wind is another. We are at the cusp here, and 

we can do this. Now if the money had been spent, as we look back 

in 2015, on that course, then what we would expect to have seen 

is the private sector with some subsidies coming into these sectors, 

coming in to these clean power sources. We would expect them to 

come down the learning curve, and we could fully expect that some 

of them would have met cost parity with dirty power by 2015. Then 

the private sector would take over, and we would have a very hopeful story. 

Now those are two equally plausible outcomes. I think the conditions that you put on this arrangement will determine which way 

we go. 

Perhaps I can offer you a few quick thoughts about the Bank, 

which I think I know pretty well. I have tremendous respect for the 

Bank. I have many good friends there. And the Bank has done 

some good work on the environment, and I can provide some details if you are interested. 

Fundamentally, it is a powerful organization with a global reach 

and a lot of experience in big projects. Those are the pros. 

What are the cons? Well, as some colleagues have said here, the 

Bank has a problem with focus. What we need for this Clean Technology Fund is focus, but the Bank has many constituencies. It has 

many agendas. It has a very hard time focusing and disciplining 

itself to do one thing well. 

Secondly, it is a bureaucracy. It is very natural for people in a 

bureaucracy to want to perpetuate business as usual. If you read 

the drafts of the proposals for the Clean Technology Fund, you will 

see all the voices in that bureaucracy weighing in, in various ways. 

And the drafts tend to wander around as different constituencies 

weigh in. It is a very natural thing. It has to be fought. 

Now, as my colleagues here have said, the Bank right now 

doesn’t seem well-positioned as a steward for this Fund for two reasons. The first is—as has been said by several—it is still funding 

big coal-fired power projects. Now there is a rationale for that, but, 

honestly, it doesn’t withstand much scrutiny. It is just business as 

usual. It has been doing it for a long time. 

The second thing is that the Bank is not into carbon accounting. 

It can’t account for the carbon consequences of its own actions. 

Even though we have U.S. investment banks now doing the carbon 

accounting, thinking about the projects and valuing the carbon output to those projects, the Bank is not doing it. 

So, my conclusion, if you let this thing move forward as an authorization and appropriation without any conditions, what you are 

going to get is a bunch of feel-good projects that won’t amount to 

16 

anything in the final analysis that will solve the desperate problem 

that we face. 

But there are three conditions you can impose that will help a 

lot. The first is a mission focus; the purpose of this Fund should 

be to make clean power as cheap as dirty power, full stop. If we 

can’t do that, we lose. That means you have to find sources of clean 

power that are near cost parity now and push those down the 

learning curve. 

And, finally, the World Bank cannot position itself to play well 

in this sphere if it is not doing carbon accounting. So the third condition I would propose would be, put carbon accounting in place. 

That is a prerequisite for doing this work. If you can’t do it, you 

don’t qualify. 

Thank you very much. 

[The prepared statement of Mr. Wheeler can be found on page 

60 of the appendix.] 

Chairman GUTIERREZ. Thank you very much. 

Mr. Werksman, please. 

STATEMENT OF JACOB WERKSMAN, PROGRAM DIRECTOR, INSTITUTIONS AND GOVERNANCE PROGRAM, WORLD RESOURCES INSTITUTE 

Mr. WERKSMAN. Thank you, Mr. Chairman, it is an honor to 

present these observations on the proposal before you. 

I am speaking on behalf of the World Resources Institute, an environmental think tank based in Washington but with a network 

of hundreds of partners throughout the world dedicated to developing practical solutions to the world’s most pressing environmental problems. 

We make our observations from a point of view of principle rather than prescription, because we understand that this decision is 

being weighed in the context of several layers of very complex multilateral negotiations, and even a body as powerful as the U.S. Congress can’t prescribe outcomes. 

Nevertheless, a sizeable appropriation for clean energy could 

demonstrate that the United States is finally taking the leadership 

on climate change that the world has been waiting for. If these resources are invested wisely, the benefits will reach underserved 

communities in developing countries in desperate need of clean 

sources of energy. 

Successful investments could also demonstrate to audiences here 

in this country that these kinds of investments could, in fact, reshape our own energy sector. If combined with U.S. caps and domestic reductions obligations that support a global deal on climate 

change, that could help us build the resilience of communities vulnerable to climate change, and this appropriation could, in fact, 

lead to genuine U.S. leadership on combatting global warming. But $2 billion, as others has have said, is a small part of the trillions of dollars that are necessary to meet global energy demand. 

Congress must therefore engage in a process that ensures that 

these resources are committed to leveraging the greatest possible 

impact. 

Money for new technologies is not enough. In most countries, energy policies focus on short-term costs and supply, and overlook the 

17 

longer-term benefits through cost savings, energy security and better environmental performance that can be offered by clean technologies. Only policy innovations can really lead to this long-term 

change. 

These could include things like demand-side management systems, incentives to encourage energy efficiency, feed-in tariffs for 

renewable energy, and renewable energy portfolio standards. And 

these policies can really open the door to long-term introduction of 

renewable energy sources. 

Policymaking in the energy sector tends to be closed, and tends 

to be dominated by interests that have a stake in business-as-usual 

practices. So if policy reforms are able to take hold in these countries that we care about, they must be developed and implemented 

through transparent, open, and credible processes. But support for 

new technologies or policy reforms in developing countries should 

not be tied to narrow prescriptions or strategies designed to force 

unregulated reforms. 

Approaches based on conditionalities or on coercion could backfire and could undermine U.S. efforts to broker a global deal on climate change. 

This is, in other words, Mr. Chairman, a very complex challenge. 

We, therefore, believe that any U.S. investment in a CTF administrated by the World Bank needs to leverage transformation in the 

Bank itself as well as in the developing countries that are the target of these resources. 

We have basically three principles that we think should guide 

these investments: 

First, the Clean Technology Fund should leverage investments in 

transformational technologies of the kinds that David Wheeler just 

described, policies that fundamentally shift away from carbon-intensive fuels to renewable resources. 

Second, we think that this transformation needs to begin with 

the World Bank’s core energy portfolio if the World Bank is, in fact, 

going to be administering these funds. 

Any congressional appropriation for a CTF should promote this 

transformation and should be seen as an opportunity to actually 

monitor and verify that the Bank is, in fact, following through on 

its commitments to be a significant steward of the planet’s future 

with regard to climate change. 

Therefore, all of the multilateral development banks that have 

access to the Clean Technology Fund should rigorously measure 

and manage their greenhouse gas emissions along the lines that 

Mr. Wheeler suggested. 

Third, we think that the CTF itself, wherever it is housed, needs 

to operate in accordance with widely accepted principles that are 

reflected in the U.N. Framework convention and elsewhere. 

Donor governments should be prepared to demonstrate, as the 

co-chairman suggested, that CTF funds are indeed new and additional to development assistance that would otherwise be targeted 

at poverty alleviation; that the source of the technology used in 

these investments should not be tied to the nationality of any particular donor; and that the governance of the Fund itself needs to 

be guided by the principles of transparency, inclusiveness, and accountability by disclosing the information upon which the decisions 

18 

are based by including a balanced representation of both donors 

and recipients and to provide opportunities for a meaningful, civil 

society participation in its decisions. 

We think that the governance, in order to succeed, must be selected on the basis of independence and expertise of the people involved in those decisions, as well as their ability to represent a diversity of interest. 

Overall, the United States and other donors involved in the design and implementation of the CTF need to take an approach that 

is based on genuine partnership that leads to the reform of the 

banks involved; that creates credible and legitimate governance 

structures; and that incentivizes the developing countries to take 

meaningful actions to reduce their emissions while allowing them 

to promote their sustainable development plans. 

And we stand by ready to help the committee with those issues. 

[The prepared statement of Mr. Werksman can be found on page 

51 of the appendix.] 

Chairman GUTIERREZ. Thank you. 

STATEMENT OF DR. ANDREW DEUTZ, DIRECTOR OF 

INTERNATIONAL INSTITUTIONS, THE NATURE CONSERVANCY 

Mr. DEUTZ. Good afternoon, Mr. Chairman, and members of the 

subcommittee. I am Dr. Andrew Deutz, Director of International 

Institutions and Agreements at The Nature Conservancy, a national nonprofit conservation organization representing about a 

million members in the United States with conservation activities 

in all 50 States and in 34 countries around the world. I would like 

to start by thanking you for the opportunity to testify today on the 

Administration’s proposal to establish a multilateral Clean Technology Fund for climate change to be administered by the World 

Bank. The Clean Technology Fund is part of an emerging package 

to provide short-term incentives and assistance to developing countries to meet the challenge of climate change mitigation and adaptation and to help them take on new commitments in a future 

international climate change agreement. 

The United States has an opportunity to show strong leadership 

by contributing to the Clean Technology Fund, as well as provide 

additional funding for adaptation and reducing emissions from deforestation in developing countries. The World Bank has a comparative advantage to administer these funds in order to disperse 

large amounts of money to create the right incentives quickly. But 

the World Bank needs to ensure that it effectively leverages the 

Clean Technology Fund to both green its own lending portfolio and 

to green the development trajectory of its client countries. I would 

like to frame the discussion in terms of how the Clean Technology 

Fund can help catalyze global action of climate change. The Bali 

climate convention last December agreed to initiate a new round of 

global climate change negotiations to develop a new international 

agreement to reduce emissions by the end of 2009. 

One of the significant outcomes of that conference was that developing countries agreed to take on new commitments, but it is 

contingent on industrialized countries like the United States taking 

on further emissions reduction commitments and providing the 

technology and financial incentives to make that happen. In order 

19 

to get a global deal by the end of 2009, we will need to construct 

a suite of incentives to bring developing countries on board. Some 

of the developing countries, the poorest of the poor, and sub-Saharan Africa and South Asia, will require new and additional resources to help them adapt to climate change. The forest-rich countries in the south, countries like Brazil, Malaysia, and Indonesia 

can be incentivized through a funding mechanism to reward their 

efforts to reduce emissions from deforestation. The rapidly industrializing countries, countries like China, India, and South Africa can 

be incentivized by providing funding to spur uptake of low carbon 

technologies across a wide range of sectors. 

And hopefully, that is what the Clean Technology Fund is there 

to do. The Nature Conservancy endorses the Administration’s request for funds to contribute to the establishment of the Clean 

Technology Fund administered by the World Bank. We do, however, have a few qualifications: First, the funding must be new and 

additional to existing U.S. contributions for international climate 

change and biodiversity aid; second, we would like to see the 

United States contribute to and be an investor in the World Bank’s 

forest carbon partnership facility to help reduce emissions from deforestation; third, we would also like to see the United States show 

real international leadership, and also provide similar funding for 

other critical incentive packages to enable a global deal, namely, 

funding for adaptation to help the poorest of the poor and for forests. 

Lastly, I would like to address the proposal for the World Bank 

to administer the funding. TNC believes that the World Bank, together with the other regional development banks, are capable of 

managing the clean development technology, but with caveats. The 

World Bank does have several comparative advantages, but the 

ability of the World Bank to manage these should be—the World 

Bank should be accountable against these comparative advantages. 

The success of the Clean Technology Fund and the future role of 

the World Bank in any evolving international climate change financing regime should be contingent on the ability of the World 

Bank to do two things: First, green its own lending portfolio; and 

second, help to green the pathway of the developing country clients 

that the World Bank serves. The World Bank has the ability to influence national development frameworks in developing countries. 

The World Bank is in dialogue continually with ministries of finance and planning, as well as line ministries, and thus in a position to ensure that clean energy pathways, as well as climate 

change resiliency and forest conservation are mainstreamed into 

the core development planning framework of the countries where 

it works. 

Unfortunately the World Bank’s track record to date has been 

fairly poor in mainstreaming environmental concerns into poverty 

reduction strategies to developing countries. This will be a critical 

test of the World Bank’s credibility going forward if it is to be a 

good environmental steward. 

Finally, the World Bank has the ability to use the Clean Technology Fund as a way to leverage its own much larger transportation and infrastructure lending portfolios. To be a credible part 

of any future international financial architecture for climate 

20 

change, the World Bank will need to clean its own portfolio and 

demonstrate that it facilitates policy change in its client countries. 

The Clean Technology Fund should enable it to do this. The key 

point for the World Bank is that the percentage of low carbon technology in its portfolio has grown from 28 percent to 40 percent over 

the last few years at a time when the World Bank lending for energy sector has increased from roughly $4 billion to $8 billion. 

The good news is that the percentage of lending for clean technology is increasing, but the total amount of money for dirty technology is also increasing. And the World Bank will need to correct 

that if it is going to be a credible partner in a future international 

climate change financial architecture in 2012 and beyond. Thank 

you, Mr. Chairman. 

[The prepared statement of Dr. Deutz can be found on page 40 

of the appendix.] 

Chairman GUTIERREZ. This is the first panel I have had where 

the minority witnesses and the majority witnesses don’t have a 

great degree—I mean, there are differences, but I can see you are 

all headed in the same direction. That is unusual in my 16 years 

here in Congress. We have about 9 minutes, and then we are going 

to be voting for nearly an hour. So taking that into consideration, 

I would ask the members to take into consideration that the witnesses would have to wait for us for an hour. I will be back here 

in an hour, but I am going to try to see if we can’t wrap this up. 

I am just going make two quick—Mr. Blackwelder, we hope to take 

your testimony and the testimony of your panelists as seriously as 

it was taken 25 years ago, and hopefully be as good today as you 

suggest we were 25 years ago. 

We understand our responsibility, so I thank you for that comment. And secondly, to Mr. Wheeler, we are going to work on the 

second outcome that you suggested for this money. We are going 

to take into consideration all of the witnesses, because I think everybody, as I listened to all four of you, it is the second outcome 

that you all agree we should work on, and obviously, there is going 

to be some differences. With that, I would like to hand it over to 

my ranking member, Dr. Paul. 

Dr. PAUL. Thank you Mr. Chairman. I only have a brief comment, and maybe one question. I was pleased to hear Mr. 

Blackwelder mention his reservations about the World Bank being 

the best vehicle for doing this, and I certainly agree with that. I 

also want to raise the question about the potential use of these 

funds for development of better technologies. Once again, I am always concerned about economic decisions being made and directed. 

It is sort of like politicians deciding, well, the very best way to have 

ethanol is to subsidize farmers and prohibit people from raising 

hemp, and hemp is so much better. We make these foolish things 

and we get off track. And in another area, I think we have done 

the same thing, and that has to do with nuclear power. 

We put up big road blocks to nuclear power. Everything I read, 

the evidence is pretty clear; it is clean, it is safe, it is efficient, but 

we don’t even talk about it. It seems to me even in this country, 

which would apply to every country, if we had nuclear power and 

cheap electricity, maybe we would have a lot of electric cars running around the country today. Why is it that we hear no mention 

21 

of nuclear power when the evidence is so overwhelmingly in favor 

of this being a very efficient and clean and cheap fuel? Does anybody care to make a comment? 

Mr. BLACKWELDER. I would be glad to speak to that because 

Friends of the Earth has been working on that issue now for almost 40 years. The problem is even if you had no radioactive waste 

disposal issues, even if there was no proliferation of bomb making 

material, even if terrorists weren’t targeting nuclear power plants, 

which they have on their menu, and you said with none of those 

problems, nuclear power plants can’t be built fast enough to do the 

job. If you had $20 billion to spend, you could go 4 to 10 times further in terms of greenhouse reductions by putting it into cost-effective on-the-shelf technology available today. So why financially, 

economically would you want to go the nuclear route? 

Dr. PAUL. Well, because after so much time, you can look back 

and say, why didn’t we open up the door to allow it to develop? But 

we haven’t done anything in 20 years. So if we do nothing but encourage the world and ourselves to stay away from it, 20 or 30 or 

40 years, you will just say, well, it takes too long, we have to keep 

doing these things, then you get the pressure from the coal people. 

And they will say, we will clean up the technology, we will clean 

up the coal, we can be totally energy independent. 

Their arguments are powerful, and you have to come back and 

say, well, it really isn’t all that clean. I am just saying that overall 

when we talk about energy, I think we are just harming ourselves. 

Even though these potential dangers exist, they all exist for mining 

coal. And oil and everything else has potential danger. But just 

think of the record. Think, we have had 50 years of nuclear submarines, men sleeping beside a nuclear reactor, and still no cancer 

in the people who have been on nuclear submarines. To me, it is 

rather miraculous, and all we seem to do is get in the way of it. 

So I am just throwing that out as a suggestion. I understand the 

time involved, it is true. But some day we have to plan for the future rather than planning for the next year or two. And I have no 

further follow-up. 

Chairman GUTIERREZ. Thank you, Dr. Paul. We have about 4 

minutes before the vote is over. 

The CHAIRMAN. I just want to say to the panel that I appreciate 

it. As you may have gotten from my questions, I read some of your 

testimony. My sense is that the Administration cares strongly 

about—something that is likely to happen. I think we will be glad 

to work with you on the conditions, including maybe a 1-year timetable. Beyond that, I don’t want to get into the substance on the 

question of men’s sleeping habits; that is one that I have tried to 

stay away from in public, so I won’t comment further. 

Chairman GUTIERREZ. Thank you Mr. Chairman. Congresswoman Moore, do you want to make a comment before we close off? 

Ms. MOORE OF WISCONSIN. Thank you. I appreciate all of your 

testimony. I was particularly taken by how thoughtful you all were. 

I think it was Dr. Deutz who talked about this being a three-part 

kind of process considering all the different economic statuses of all 

the countries, and saying that we would have to give a lot more 

foreign aid to more developing countries in order to keep pace with 

22 

this technology. Thank you. And I will be thoroughly reviewing 

your testimony. 

Chairman GUTIERREZ. Let me thank the witnesses and the members for their participation in this hearing. The Chair notes that 

some members may have additional questions for the witnesses 

which they may wish to submit in writing. Therefore, without objection, the hearing record will remain open for 30 days for members to submit written questions to the witnesses and to place their 

responses in the record. The subcommittee is now adjourned. 

Mr. BLACKWELDER. Mr. Chairman, may I submit a 2-page statement signed by over 100 international organizations, a global civil 

society statement for the record? 

Chairman GUTIERREZ. Without objection, it is so ordered. 

Mr. BLACKWELDER. I would also like to furnish the committee 

with two copies of ‘‘Carbon-Free Nuclear-Free by 2050’’ to show 

that it can be done. 

Chairman GUTIERREZ. Thank you so much, gentlemen, for your 

testimony. 

[Whereupon, at 2:45 p.m., the hearing was adjourned.] 

(23) 

A P P E N D I X 

June 5, 2008 

24 


44182.001
25 


44182.002
26 


44182.003
27 


44182.004
28 


44182.005
29 


44182.006
30 


44182.007
31 


44182.008
32 


44182.009
33 


44182.010
34 


44182.011
35 


44182.012
36 


44182.013
37 


44182.014
38 


44182.015
39 


44182.016
40 


44182.017
41 


44182.018
42 


44182.019
43 


44182.020
44 


44182.021
45 


44182.022
46 


44182.023
47 


44182.024
48 


44182.025
49 


44182.026
50 


44182.027
51 


44182.028
52 


44182.029
53 


44182.030
54 


44182.031
55 


44182.032
56 


44182.033
57 


44182.034
58 


44182.035
59 


44182.036
60 


44182.037
61 


44182.038
62 


44182.039
63 


44182.040
64 


44182.041
65 


44182.042
66 


44182.043
67 


44182.044
68 


44182.045
69 


44182.046
70 


44182.047
71 


44182.048
72 


44182.049
73 


44182.050
74 


44182.051
75 


44182.052
76 


44182.053
77 


44182.054
78 


44182.055