April 22, 2016
Despite Climate Commitments, World Bank Still Funding Fossil Fuels
by Robert Kropp
Oil Change International reports that the World Bank Group’s investments in fossil fuel exploration actually increased in 2015, to $313 million.
SocialFunds.com — Even before the potentially historic COP21 agreement in Paris—and well before today’s Earth Day signing—the World Bank signaled its commitment to a significant increase in climate funding. By 2020, the bank stated, a combination of direct financing and leveraging of private investment is expected to total $29 billion.
“We are committed to scaling up our support for developing countries to battle climate change, as we move closer to Paris, countries have identified trillions of dollars of climate related needs,” World Bank Group President Jim Yong Kim announced last October. “The Bank, with the support of our members, will respond ambitiously to this great challenge.”
Multilateral development banks, Bank Group Vice President Rachel Kyte added, “will continue to be an extremely important part of the solution for low carbon growth and resilient development.”
Despite the announced commitments, a recent analysis by Oil Change International found, the World Bank continues to provide significant financing of fossil fuel exploration projects. According to the analysis, “the World Bank Group continues to invest in exploration for new fossil fuel reserves despite clear signs that we already have far more fossil fuels than we can afford to burn, and over the last five years, the World Bank Group’s total fossil fuel finance has trended upwards, with finance into the billions of dollars nearly every year.”
In 2015 alone, investments in projects including a fossil fuel exploration component by the World Bank actually increased, to more than $313 million, while its overall financing of fossil fuel projects totaled over $2 billion. The analysis by Oil Change International contrasts the World Bank’s policy to that of the Asian Development Bank (ADB), which states, “ADB will continue its policy of not financing any oil and gas field exploration projects because of the associated risks.” In order to limit global warming to less than two degrees Celsius, more than three-quarters of fossil fuel reserves already counted as assets in the books of fossil fuel companies will have to remain unburned.
“In a post-Paris Agreement landscape,” the analysis concludes, “the World Bank Group should establish an immediate and explicit ban on financing fossil fuel exploration activities, in light of climate concerns and to protect against stranded asset risk, and to send a signal to the global community that the World Bank Group is as serious about climate change as its President’s statements suggest.”
“Given the urgency of climate change, we can no longer afford to prop up fossil fuel infrastructure with public finance. The World Bank Group should develop a clear policy to phase out finance for fossil fuel projects as soon as possible.”
“Under the Paris climate agreement, governments around the world agreed that shifting finance away from dirty fossil fuels and toward renewable energy is an urgent task, yet public finance institutions like the World Bank are using our tax money to bankroll dirty energy investments,” said Alex Doukas, Senior Campaigner at Oil Change International. “The Asian Development Bank has had a ban on financing fossil fuel exploration projects for years. There’s no reason the World Bank couldn’t adopt a similar policy as a first step toward phasing out all finance for polluting fossil fuel projects. Nobody in their right mind should be funding fossil fuel exploration projects; it’s time for the World Bank to stop funding fossils.”
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