Last week, at the One Planet Summit in Paris, World Bank President Jim Yong Kim announced that the World Bank will cease funding upstream oil and gas after 2019. BIC welcomes this commitment from the World Bank, but cautions that the there is still more work to be done to climate-proof the Bank’s portfolio.
This latest pledge most certainly sets the World Bank apart from other development finance institutions—as well as many governments—and sets an important new standard for investing in fossil fuels. It also reflects growing global support for a low-carbon future. However, the exceptions–namely, that the World Bank will continue to fund oil and gas projects in the poorest countries as long as they provide energy access, and adhere to the borrowing country’s Paris Agreement commitments–could result in locking in a fossil-fuel powered future for developing countries.
President Kim’s statement comes on the heels of pressure not only from President Macron of France, as Kim quipped during his spoken statement, but from civil society and communities from around the world, who have for years been united in their urging that the World Bank assume leadership in the fight to save the climate and divest completely from fossil fuels.
BIC will be monitoring closely how the Bank evokes the exception to this new rule, including and especially where renewable, off-grid alternatives have also been considered. We will also be watching to see how the Bank operationalizes the new ban on oil and gas in its indirect lending through financial intermediaries, as well as through development policy loans, which are not subject to the same environmental and social safeguards as investment projects.
In the official World Bank press release following President Kim’s announcement, the Bank cited a recently-approved $1.15 billion development policy loan, the final loan in a series of three to the Government of Egypt “aimed at reducing fossil fuel subsidies and creating the environment for low-carbon energy development.” Early this year, BIC co-published a report with the Egyptian Initiative for Personal Rights that details how the first loan in the series has failed to create the right incentives to attract renewable energy investment over fossil fuels.
We hope that the Bank will keep up the momentum in addressing the climate impacts of its projects across its lending portfolio and look forward to its ramped-up Climate Change Action Plan to debut at COP24 in Poland in 2018.
 For more information on the World Bank’s performance on energy access and the fulfillment of SE4ALL between FY2000-2014, see the Independent Evaluation Group report “World Bank Group Support to Electricity Access, FY2000-2014” at http://ieg.worldbankgroup.org/sites/default/files/Data/reports/chapters/Electricity_Access_1.pdf