World Bank, Now Led by Trump Pick, Ramps Up Fossil Fuel Development
The World Bank Group faces criticism for continuing to back fossil fuel development, despite moves to clean up its portfolio.
It has earned green credentials for ending direct lending to coal-fired power plants, promising to axe support for oil and gas exploration and increasing its clean energy budget.
Yet over the last five years, the group’s support to oil and gas actually increased, while coal benefitted from indirect subsidies, according to analysis from German NGO Urgewald.
The study, which covers 675 active investments, found $21 billion went to fossil fuels between 2014 and 2018. While clean energy finance grew rapidly, it did not catch up. The figure was $7bn or $15bn, depending on the inclusion of large-scale hydropower and other projects with disputed environmental benefits.
“It is a big disappointment to find that the World Bank Group continues to provide such vast amounts of public finance for fossil fuels,” said report author Heike Mainhardt. “The bank thereby completely undermines its own efforts for renewable energy sources as well as the Paris climate goals.”
A spokesperson for the World Bank defended its record, saying the Urgewald report “paints a distorted picture of our energy sector work.” The inclusion of “legacy projects where financing was approved many years ago” means it “does not reflect the substantial changes that have happened in World Bank energy financing over the past decade,” he said.
In the last fiscal year, the bank approved $20.5 billion in finance for climate action, he added, meeting a 2020 target two years ahead of schedule.
The report comes days after the World Bank confirmed its new president, David Malpass, Donald Trump’s choice for the job.
Environmentalists have voiced fears the former US treasury official might deprioritise climate change, in line with Trump’s politics. But Malpass offered early assurances he saw climate change as a “key problem” would not seek to reverse the ban on coal finance.
“Looking at his background, we are very curious how seriously he will lead the bank’s climate efforts,” Moritz Schröder-Therre, a spokesperson for Urgewald, told Climate Home News. “The bank’s member states outside the USA, especially the powerful European shareholders, which are currently reconstructing their own energy systems at home to decrease their climate impact, should make sure that Malpass stops the bank’s fossil business and increases its assistance for developing countries [to form] climate-resilient energy systems that benefit the poorest rather than the business and political elites.”
The Urgewald report found World Bank gas finance increased from $1.5bn in 2014 to $2.2bn. Oil projects also saw a slight increase. Renewables funding, including large hydropower, boomed from $0.5 to $2.0bn.