No halt on funding of fossil fuel by the World Bank

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The revised draft of World Bank policy commits to making financing decisions in line with efforts to limit global warming but breaks the promise of halt of funding of fossil fuels.

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The World Bank is finalizing a new five year climate action plan amid growing political impetus in the United Kingdom, the United States and other countries for stopping public financing of high-emission fossil fuel projects.
US administration is devising plans under President Joe Biden to end US financing for international fossil fuel projects. The plan consigns to “align its financing flows with the objectives of the Paris Agreement” by July 2023. The plan is yet to be finalized.

The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016.

Its goal is to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.

To achieve this long-term temperature goal, countries aim to reach global peaking of greenhouse gas emissions as soon as possible to achieve a climate neutral world by mid-century.

Scientists have predicted that meeting the 1.5 degree Celsius (2.7 degree Fahrenheit) goal that would prevent the most catastrophic climate impacts, would require the world’s net greenhouse emissions to drop to zero by 2050.

The International Finance Corporation and Multilateral Investment Guarantee Agency, sister agency of World Bank will connect 85% of direct financing with the Paris agreement by 2023 and 100% by 2025.

Trillions of dollars of investment is required to meet the goals of Paris agreement so as to shift from burning fossil fuels for energy to expanding renewable electricity along with low-carbon transport and manufacturing technology. World Bank and its sister organization had decided to provide 35% of funding to be climate related for the next five fiscal years.

The World Bank in 2013 has reduced its new coal power outlays to “only in extremely rare circumstances,” and stopped financing upstream oil and gas operations in 2019.

It has not directly financed a new coal-fired power plant since 2010, and has no active coal-fired power generation in its pipeline.

It was requested to the bank to halt all investments in oil and coal-related projects and to slowly phase out investment in natural gas projects. Bank has decided to evaluate gas projects on individual basis and will support the change away from coal.

Environmental campaigners were not in support of this draft plan and said that it was not in true sense an alignment with the Paris pact. The plan needs to be more specific in its goals.