World Bank chief’s ‘slow march’ climate initiatives in trouble

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World Bank chief David Malpass tried desperately on Thursday to convince world leaders that he knew climate change was caused by the burning of oil, gas and coal. But, at that time, the bank itself was under scrutiny for supporting fossil fuel production.

“I’m not a denier,” Malpass said during an appearance on CNN International.

Later, in an email to staff, the World Bank President claimed that comments he made earlier this week cast doubt on mainstream climate science were “incorrect and regrettable”.

His efforts to escape public perception that he is a climate denier have come up against growing concerns that the world’s largest development bank is headed by a Trump appointee who observers say has slowed the organization’s transition away from funding fossil fuel projects in some of the world’s poorest countries. nations.

The World Bank’s board voted nearly a decade ago to limit coal funding to “rare circumstances.” Four years later, the bank announced plans to start phasing out support for oil and gas projects in 2019.

But this drilling restriction had a major shortcoming: “In exceptional circumstances, consideration will be given to financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access for the poor,” the bank said at the time.

Now the bank is offering direct support for oil and gas production and indirect aid for coal projects through budget support to governments like Indonesia, experts say.

Fatih Birol, executive director of the International Energy Agency, said the World Bank and similar institutions have “not necessarily” fulfilled the essential role they play in accelerating the clean energy transition in developing countries.

“I want the board members of these multilateral development banks to place financing the clean energy transition in emerging countries as a top priority for leaders,” he said in an interview. “But where we are today, I don’t see what’s going on.”

Malpass’s comments reverberated through the highest echelons of geopolitics, with high-profile leaders like climate envoy John Kerry warning that climate denial remains a potent ideology years after scientists established that the use of fossil fuels in the world is rapidly raising temperatures.

“The science is clear,” Kerry said Thursday at the Global Clean Action Energy Forum in Pittsburgh. “We must repel those forces that simply deny the reality of science.”

Climate envoy John Kerry at the United Nations General Assembly in New York on Wednesday.  Kerry warned against climate denial Thursday while attending an energy forum in Pittsburgh.
Climate envoy John Kerry at the United Nations General Assembly in New York on Wednesday. Kerry warned against climate denial Thursday while attending an energy forum in Pittsburgh. | AP Photo/Mary Altaffer

The World Bank continued to support oil, gas and coal projects, even passing them off as climate protection efforts in some cases.

In November 2019, for example, the World Bank’s International Finance Corporation approved a $400 million loan for the Basrah Gas Company, half of which would come directly from the IFC.

The money was intended “to prevent more than 9.5 million metric tons of CO2 equivalents per year from entering the atmosphere by reducing gas flaring upstream (compared to 2020 levels),” the agency said. bank in background papers. The Basrah Gas Company is a joint venture between an Iraqi state company, Shell PLC and Mitsubishi.

But the funding could also lead to additional fossil fuel production. The project is “part of a broader expansion plan to increase BGC’s raw gas processing capacity from 1 billion standard cubic feet per day (“bscfd”) currently to 1.4 bscfd by 2024 “, said the bank in other documents.

A more recent example is a $500 million World Bank loan guarantee to Indonesian state power company Perusahaan Listrik Negara. The bank said the loan would support the utility’s renewable energy effort. But a sustainable finance group founded that the money has not funded new projects and instead supports the company’s coal-dominant fleet.

The World Bank did not respond to questions about loans to Iraq and Indonesia.

“Under David Malpass’s leadership, the World Bank Group has more than doubled its climate financing, released an ambitious climate change action plan, and launched country-level diagnostics to support the climate and development goals of country,” spokesman David Theis said in an email.

But some international development experts say the World Bank is part of the problem.

“It’s outrageous that these banks are using global taxpayers’ money, then leveraging it in private financial markets, and then investing in projects that are literally fueling global climate change,” said Sonia Dunlop, who works for the banks. governments and international financial institutions. at E3G, a climate think tank.

“Lack of ambition”

The World Bank is at the apex of the system of multilateral development banks. But Dunlop said the institution has been held back in its efforts to green its operations and phase out fossil fuel funding “by a complete lack of ambition” since Malpass took the helm in 2019.

An example: the bank recently announced that it invested $31.7 billion in climate change programs in fiscal year 2022. That’s more than a third of its portfolio, and it exceeds the the bank’s goal of ensuring that 35% of its financing between 2021 and 2025 will go to supporting direct climate action.

The bank set this target in 2020, when it said it would increase the average amount of bank financing expected to have “climate co-benefits” by 28-35% over the next five years. Fifty percent of this funding should specifically support “adaptation and resilience”.

The World Bank reiterated this goal last year in its Climate Change Action Plan 2021-2025, which touted the $83 billion the institution has committed to related projects between 2016 and 2020, which makes it the largest multilateral funder of climate investments in developing countries.

The increase is a step forward. But experts noted the target is lower than those set by World Bank peers such as the European Investment Bank and the Asian Infrastructure Investment Bank, both of which have green finance targets. 50% by 2025.

“So they hit the mark, but for a less ambitious goal,” said Joe Thwaites, international climate finance expert at the Natural Resources Defense Council, an environmental group.

Dunlop also said the Bank is “too generous” in how it accounts for climate finance internally.

“Highlighting his numbers on climate finance while, on the other hand, he is still funding huge fossil fuel projects and keeping climate ambition going across the MDBs [multilateral development banks] system is a bit like a thief stealing money and giving to charity at the same time,” she said.

Thwaites provided another example of the bank’s “slow march” on climate. He said that under former World Bank President Jim Yong Kim, the institution played a coordinating role among its fellow development banks and generally showed a desire to be “leading the pack”.

But under Malpass, the bank has not been as active or ambitious, experts say. This not only hampers the World Bank’s progress on climate change, but also the progress of other development banks, Thwaites said. They often work together to establish common approaches on issues such as aligning loan portfolios to match the Paris Agreement goal of limiting global warming to 1.5 degrees above pre-industrial levels.

Scott Morris, senior fellow at the Center for Global Development, disagreed that Malpass derailed the World Bank’s climate agenda.

But he noted that the president’s role on issues like climate change is to rally member countries to action. “And I think here we don’t see any evidence that Malpass made it a priority.”

“It’s a legitimate criticism of him, which is different from the fact that he’s actively trying to reverse all the climate commitments the bank has made to date,” Morris said.

For some, however, the World Bank chief’s misstep on climate science was just the most high-profile example of his broader failure to take climate action commensurate with the scale of the problem.

“A leader sets the tone for the organization from the top,” said Jules Kortenhorst, CEO of RMI, a clean energy think tank. “And it’s certainly clear, if you talk to people at the world bank, that this president hasn’t set the tone [necessary to] encourage the organization to place climate change at the heart of its mission.

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