TI: CC CORRUPTION

COCOO STRATEGIES to tackle CC [climate change]

• ANTICORRUPTION LAW (AL)
• ENVIRONMENTAL LAW (EL)
• HUMAN RIGHTS LAW (HRL)
• COMPETITION LAW (CL)

3 grand corruption CC risks

• energy transition, [including decarbonisation policies, renewable energy and critical minerals]: unequal access to lobbying, institutionalised grand corruption and the transnational component of grand corruption
• biodiversity loss:  the transnational component of grand corruption and institutionalised grand corruption.
• climate finance:  the transnational component of grand corruption and institutionalised grand corruption

MANIFESTATIONS OF GRANDCORRUPTION

• State capture: efforts of powerful individuals, firms, or groups to influence the formation of rules, laws and regulations to benefit their own private interests at the expense of public interest (see Transparency International 2009; National Resource Governance Institute, no date).
• Regulatory capture: cases “where the regulations and regulators for an industry are rendered subordinate to the interests of the industry, with the consequence that regulation is designed and operated primarily for the benefit of the industry” (Philp 2001).
• Institutionalised grand corruption in public contracting: the bending of rules and principles of good public procurement, to benefit the interests of a closed network while denying access to others (Fazekas and Tóth 2016). A subtle difference compared to state capture is that, while the former refers to efforts to influence the formation of laws, rules and regulations, the latter refers to influencing their implementation. The concept has a clear application for climate change policies, as there is broad evidence documenting these practices in relation to climate finance, subsidies, incentives for renewable energy transition and others

negative consequences of CC corruption 

• environmental degradation
• negative health consequences
• suboptimal allocation of resources
• delays in green transition
• human rights violation

 Transnational component of grand corruption

For example: foreign actors (e.g. multinational firms) exerting undue influence on policymaking in a particular country, this means that state capture has a transnational aspect

Grand corruption in energy transition

energy transition is the “green industrial revolution” 

As with any significant economic transformation, energy transition creates new winners and losers…thus, some (the polluters) will resort to grand corruption as a way to limit their losses.

Decarbonisation : After the 2015 Paris Agreement, an international treaty with the goal of keeping global warming well below 2°C and preferably 1.5°C relative to pre-industrial levels, many countries have declared ambitions to reduce GHG emissions 

state capture has been identified in carbon tax policies. Carbon tax is one of the most efficient policies to  to move towards alternative energy. Carbon tax is susceptible to corruption/lobbying risks at all stages of the policy cycle

Regulatory capture, favouring narrow business interests over WPI (eg trump)….revolving door= coi: eg a former British Gas director became responsible for setting the energy price cap at Ofgem, the UK’s energy regulator

<> COCOO WILL END FOSSIL FUEL SUBSIDIES [FFS]

Fuel subsidies often help to sustain patronage networks in non-democratic regimes, as the example of Nigeria: The Nigerian National Petroleum Corporation (NNPC) siphoning public funds to politically connected interest groups… in 2016, auditors revealed that the NNPC failed to pay US$16 billion to the government as officials from the previous administration engaged in siphoning… Further, auditors revealed that between 2007 and 2009 the NNPC over-deducted subsidy claims to the amount of  US$650 million) …oil importers (are also corrupted) act as middlemen between the NNPC and the international oil market, to procure refined fuel and then distribute it to local consumers at subsidised rates

oil and gas companies spend huge amounts of money on lobbying to block cc policies. Unequal access to lobbying can lead to the undue influence , anticomps, and reverse decarbonisation….this unequal access to decision-making is crucial: 

Research by the Influence Map estimates that, in three years following the Paris Agreement, the top five oil and gas companies invested more than US$1 billion on “misleading climate related branding and lobbying”. Close to US$200 million of this is spent yearly on lobbying to control, block or delay climate change policies  According to the Influence Map, tactical use of social media by oil and gas giants is a key trend in these efforts, specifically ads that promote fossil fuels.. oil giants and their agents spent US$2 million on Facebook and Instagram ads to win key decisions around the US mid-term elections in 2018.

Plan and immunity from all cc claims  

Since the Russian invasion of Ukraine and increased uncertainty in gas supplies in Europe, US exporters of fossil gas made huge financial gains…eg: Cheniere, the US’s biggest exporter of liquified natural gas (LNG) increased its cash earnings by US$3.8 billion in the first six months of 2022….the LNG Allies, a secretive lobby group, demanded and was granted five important concessions from US president Joe Biden after the Russian invasion on Ukraine……BUT these concessions were not necessary to help Europe’s efforts to respond to the Russian invasion of Ukraine. …but only benefits the gas industry, while it negatively affects local communities and stalls efforts to move away from fossil fuel 

Influence Map (2017) has found that the oil and gas industry successfully lobbied the UK government to get a minimum tax on North Sea operations…the Treasury is making key tax policy decisions followed by consultations open only to oil and gas firms and their lobbyists. Close relationship between the industry and the UK government is ensured via revolving door practices, industry secondments and political party funding …risks of corruption and unequal access to decision makers 

<> COCOO WILL CHALLENGE THOSE TREASURY DECISIONS…AS THEY BREACH CL,COL,EL,HRL

the Vitol Group, the world’s biggest oil trading company, agreed to pay a hefty fine for oil bribes in Brazil, Mexico and Ecuador. For almost 15 years, Vitol was paying bribes to government officials to win lucrative business contracts

Switzerland based mining company Glencore pleaded guilty to multiple accounts of bribery of government officials in West Africa and Latin America in exchange for preferential access to oil 

 while most countries suffer from inadequacies in their legislation and institutions, which negatively affect enforcement against foreign bribery 

<> COCOO WILL CHALLENGE THESE INADEQUACIES, AS THEY BREACH CL,COL,EL,HRL

• overburden government budgets, thus limiting resources for more efficient use
• decrease the competitiveness of low-carbon industries, thus blocking the energy transition
• compromise energy national security
• damage public health (e.g.increased air pollution)
• delay efforts to decarbonise the economy

Renewables

two groups:

A. dispatchable, such as solar, biomass and hydropower

B. non- dispatchable, such as wind power, photovoltaic cells and ocean power

evidence of grand corruption in renewable energy technologies: there is a strong positive relationship between control of corruption and green energy efficiency 

institutionalised grand corruption:

diff:

a. state capture:  illicit influence on the formation of rules

b. institutionalised grand corruption:  illicit influence on their implementation (bending existing rules and regulations to achieve narrow benefits)

Critical minerals

• There are more and more mining companies willing to operate in countries that were previously perceived as risky to invest in. That means many more companies, which either have poor anti- corruption safeguards or do not care for corruption altogether, will enter the critical mineral markets.
• There is a greater participation of the state in the critical minerals boom. govs tailormake regulatory standards to attract investment
• The increase in critical mineral demand is increasing risks of bribery 

threats to biodiversity caused by mining may be higher than those averted by climate change mitigation 

the mining industry performed surprisingly well during the pandemic, as it was deregulated in many countries and received incentives to mine critical minerals 

climate (blended) finance. challenges:

0/ while climate finance budgets may not directly become a prey of corrupt actors, they may partly go to waste due to corruption in other aspects relevant to the project …eg:in 2019, the European Anti-Fraud Office (OLAF) has discovered that a European Research Consortium of enterprises from France, Ireland, Romania and Spain tried to defraud the European Commission’s Research Executive Agency of more than €400,000: Instead of working on a forest fire detection project, the money was siphoned into a casino and hotel project

1/ the large number of participants and complex financing arrangements, make monitoring much harder

2/ the different priorities of donors and recipient countries, which may result in projects favouring narrow interests of western donors and firms…eg:the United Nations Climate Change Conference (COP21) were largely influenced by fossil fuel lobby groups 

3/REDD+ projects are vulnerable to corruption, as discussed in the section on biodiversity loss. An example from Indonesia suggests that a project to conserve forests suffered from illegal logging, artisanal mining and palm oil tree planting as private companies paid bribes to local governments and the police….logging companies influence the design of these plans to exclude valuable timber concessions from REDD+

4/multilateral trust funds (MTFs), are a common method of managing funds for climate action…. in 2019,  millions of dollars have been misappropriated from a mtf project in Russia