The World Bank’s recently released Climate Action Plan reiterates the risk of climate change to development gains, and adds another document to a long list of cleaner energy strategies published by the Bank since the turn of the century. But will the global development institution’s rhetoric be matched by action this time?
Last fall, the Institute for Policy Studies and Brown University’s Climate and Development Lab reviewed the Bank’s major plans for tackling climate change released since 2000 and surveyed its energy sector financing through the branches specifically targeting poverty reduction.
In comparing energy funding from 2000 to 2004 and 2010 to 2014, we found some good news. The number of new renewable energy (geothermal, wind, solar, small and run of river hydro-power) and demand-side energy efficiency projects is on the path to reaching parity with fossil fuel projects and lending to new renewables increased almost five-fold.
That achievement was somewhat marred by the fact that, despite evidence of their negative environmental and social impacts, financing for large hydroelectric projects has enjoyed a renaissance at the Bank, growing more than 10-fold, from $373 million to $4.3 billion between the two periods.
But the really bad news was that financing for oil, coal, and gas grew almost four-fold in that time frame. The World Bank was still providing more than 1.5 times the funding for fossil fuel projects as for renewable energy projects. That number doesn’t even include dirty energy lending through the Bank’s private sector arm, the International Finance Corporation.
The new climate plan commits the World Bank to linking nearly 30 percent of its total portfolio –financing in all sectors, through all four arms – to climate in the next five years. But climate change affects 100 percent of the world’s population, and the poorest are hit by its impacts first and worst. In a world where the consequences of climate change are being experienced more rapidly than predicted, shouldn’t the other 70 percent of the Bank’s lending address climate change, too?
If the World Bank is serious about putting its money where its mouth is, it must immediately end coal financing, quickly phase out oil investment, and reassess its approach to financing natural gas expansion infrastructure – even those improving the efficiency of fossil fuel facilities. To do this, the Bank must make specific commitments to reduce absolute fossil fuel financing within specific timelines, and devote more resources to renewable energy development.