he latest IPCC report showed again how dire our situation is when it comes to our climate and planet. The science is not new–the report pulls together what the Intergovernmental Panel on Climate Change (IPCC) has already set out in a cluster of other reports. This will almost certainly be the last of the assessment reports while the world still has a chance to keep global temperature rise under 1.5 degrees. As the UN Secretary General Antonio Guterres said: “The climate time-bomb is ticking”.
A New World Bank Roadmap?
In April the World Bank Group (WBG) will come together for its Spring Meetings. Recent developments show the WBG is catching up, realizing climate science can no longer be ignored and that the group has a big role to play. The international organizations are in a transitional phase, poised to select a new head and working to reset their priorities to achieve the mission to end extreme poverty and promote shared prosperity in a sustainable way. A new document came out last December on the basis of which the World Bank Group kicked off their discussion on a roadmap to evolving their work. It rightly stated that “the fight against poverty is affected by a series of structural trends that will make good development outcomes much harder to achieve”.
It is therefore notable however the WBG’s new roadmap does not include a mention of Paris alignment to keep global warming below 1.5 degrees or a mention of fossil fuels specifically. The World Bank Group has invested $14.8 billion supporting fossil fuel projects and policies since the Paris Agreement. The WBG continued to use more public money to finance fossil fuel projects than any other Multilateral Development Bank (MDB), including $930 million in 2022 alone. Reports that suggest this is changing have surfaced, with revelations of new internal communication, guidelines, and training for staff to make the World Bank Group’s policy more aligned with the fight against climate change.
Revising these priorities and guidelines could potentially be transformational–but to be truly transformational these must clearly emphasize the importance of Paris agreement alignment and should include a complete stop to funding fossil (coal, oil, and gas) projects. The new IPCC report showed we need to cut emissions by 60% by 2035–there is no time for half measures. Critics of the shift to climate friendly investment argue that this distracts from the WBG’s mission of poverty reduction. Such criticisms create a false dichotomy between development and climate. People living in poverty are hit harder by climate change, and an additional 132 million people could be pushed into extreme poverty by 2030 if we stay on the current trajectory. Addressing climate change by transitioning to renewable energy will prevent worsening effects as well as provide a vehicle for sustainable development.
By lending money to develop new fossil fuel projects the World Bank Group is investing in soon to be stranded assets in the name of development. But fossil fuel projects have more negative effects than just increased CO2 emissions–they are responsible for air and water pollution and perpetuate environmental injustice, because the burdens of climate change and pollution fall more heavily on low-income communities. Furthermore, there is no evidence that investing in fossil fuels improves the situation of people living in low-income countries. Workers in these industries often do not receive fair treatment, instead being subjected to unsafe working conditions and unfair wages. When it comes to energy access, the International Renewable Energy Agency (IRENA) stated that the cheapest way to provide energy access is via off-grid or distributed renewables. Investing in renewable energy also creates more jobs than investing in fossil fuel projects, and a larger percentage of those jobs go to women. Public finance serves a role in de-risking a sector, in directing capital to the right cause. By investing in new gas projects for example, we are investing in soon to be stranded assets that will not help elevate people out of poverty. You create a market that was not there, and you divert funds from renewable energy projects.
The IPCC report also confirmed that it is not too late. We have all the solutions necessary already available to us. It is a matter of political will and bold action. We need the World Bank Group to move fast and take the lead. If the World Bank Group takes fighting climate change and extreme poverty seriously, the WBG needs to stop investing in fossil fuel projects. Instead, the Bank should focus on adaptation and investment in a just transition. Locally-led adaptation projects ensure communities adapt to the climate change already wrecking their surroundings. A just transition to clean energy is needed to elevate people out of poverty and create opportunities for everyone.
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The World Bank Group’s Road Map Should Lead Away from Fossil Fuels
Photo by Kristina Wagner on Unsplash
April 14, 2023
Recent developments suggest the World Bank Group (WBG) has begun to take climate change much more seriously, and it has begun developing a roadmap of how its work should evolve. That road map needs to steer the WBG away from fossil fuel investment entirely, writes Jessica Antonisse.
T
he latest IPCC report showed again how dire our situation is when it comes to our climate and planet. The science is not new–the report pulls together what the Intergovernmental Panel on Climate Change (IPCC) has already set out in a cluster of other reports. This will almost certainly be the last of the assessment reports while the world still has a chance to keep global temperature rise under 1.5 degrees. As the UN Secretary General Antonio Guterres said: “The climate time-bomb is ticking”.
A New World Bank Roadmap?
In April the World Bank Group (WBG) will come together for its Spring Meetings. Recent developments show the WBG is catching up, realizing climate science can no longer be ignored and that the group has a big role to play. The international organizations are in a transitional phase, poised to select a new head and working to reset their priorities to achieve the mission to end extreme poverty and promote shared prosperity in a sustainable way. A new document came out last December on the basis of which the World Bank Group kicked off their discussion on a roadmap to evolving their work. It rightly stated that “the fight against poverty is affected by a series of structural trends that will make good development outcomes much harder to achieve”.
It is therefore notable however the WBG’s new roadmap does not include a mention of Paris alignment to keep global warming below 1.5 degrees or a mention of fossil fuels specifically. The World Bank Group has invested $14.8 billion supporting fossil fuel projects and policies since the Paris Agreement. The WBG continued to use more public money to finance fossil fuel projects than any other Multilateral Development Bank (MDB), including $930 million in 2022 alone. Reports that suggest this is changing have surfaced, with revelations of new internal communication, guidelines, and training for staff to make the World Bank Group’s policy more aligned with the fight against climate change.
Revising these priorities and guidelines could potentially be transformational–but to be truly transformational these must clearly emphasize the importance of Paris agreement alignment and should include a complete stop to funding fossil (coal, oil, and gas) projects. The new IPCC report showed we need to cut emissions by 60% by 2035–there is no time for half measures. Critics of the shift to climate friendly investment argue that this distracts from the WBG’s mission of poverty reduction. Such criticisms create a false dichotomy between development and climate. People living in poverty are hit harder by climate change, and an additional 132 million people could be pushed into extreme poverty by 2030 if we stay on the current trajectory. Addressing climate change by transitioning to renewable energy will prevent worsening effects as well as provide a vehicle for sustainable development.
By lending money to develop new fossil fuel projects the World Bank Group is investing in soon to be stranded assets in the name of development. But fossil fuel projects have more negative effects than just increased CO2 emissions–they are responsible for air and water pollution and perpetuate environmental injustice, because the burdens of climate change and pollution fall more heavily on low-income communities. Furthermore, there is no evidence that investing in fossil fuels improves the situation of people living in low-income countries. Workers in these industries often do not receive fair treatment, instead being subjected to unsafe working conditions and unfair wages. When it comes to energy access, the International Renewable Energy Agency (IRENA) stated that the cheapest way to provide energy access is via off-grid or distributed renewables. Investing in renewable energy also creates more jobs than investing in fossil fuel projects, and a larger percentage of those jobs go to women. Public finance serves a role in de-risking a sector, in directing capital to the right cause. By investing in new gas projects for example, we are investing in soon to be stranded assets that will not help elevate people out of poverty. You create a market that was not there, and you divert funds from renewable energy projects.
The IPCC report also confirmed that it is not too late. We have all the solutions necessary already available to us. It is a matter of political will and bold action. We need the World Bank Group to move fast and take the lead. If the World Bank Group takes fighting climate change and extreme poverty seriously, the WBG needs to stop investing in fossil fuel projects. Instead, the Bank should focus on adaptation and investment in a just transition. Locally-led adaptation projects ensure communities adapt to the climate change already wrecking their surroundings. A just transition to clean energy is needed to elevate people out of poverty and create opportunities for everyone.
