World Bank Criticized for Coal, Oil and Gas Funding

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Byย Natalie Sauer, Climate Home News.ย This article originally appeared on Climate Home News.

The World Bank Group faces criticism for continuing to back fossil fuel development, despite moves toย clean up itsย portfolio.

It has earnedย greenย credentialsย for ending direct lending to coal-fired power plants,ย promising to axe support for oil and gas exploration and increasing its clean energyย budget.

Yet over the last five years, the groupโ€™s support toย oil and gas actually increased, while coal benefitted from indirect subsidies, according toย analysisย fromย German NGOย Urgewald.

The study, which covers 675 active investments, found $21 billion went to fossil fuels between 2014 and 2018. Whileย clean energy financeย grew rapidly, it did not catch up. The figure was $7 billion or $15 billion, depending on the inclusion of large-scale hydropower and other projects with disputed environmentalย benefits.

โ€œIt is a big disappointment to find that the World Bank Group continues to provide such vast amounts of public finance for fossil fuels,โ€ said report author Heike Mainhardt. โ€œThe bank thereby completely undermines its own efforts for renewable energy sources as well as the Paris climateย goals.โ€

A spokesperson for the World Bankย defended its record, saying the Urgewald report โ€œpaints a distorted picture of our energy sector work.โ€ย The inclusion of โ€œlegacy projects where financing was approved many years agoโ€ย means it โ€œdoes not reflect the substantial changes that have happened in World Bank energy financing over the past decade,โ€ heย said.

Inย the last fiscal year, the bank approved $20.5 billion in finance for climate action, he added, meeting a 2020 target two years ahead ofย schedule.

The report comes days after the World Bank confirmed its new president, David Malpass, Donald Trumpโ€™s choice for theย job.

Environmentalists have voiced fears the former U.S. treasury official might deprioritise climate change, in line with Trumpโ€™s politics. But Malpass offeredย early assurancesย he saw climate change as a โ€œkey problemโ€ wouldย not seek to reverseย the ban on coalย finance.

โ€œLooking at his background, we are very curious how seriously he will lead the bankโ€™s climate efforts,โ€ย Moritz Schrรถder-Therre, a spokesperson for Urgewald, told Climate Home News. โ€œThe bankโ€™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 bankโ€™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 politicalย elites.โ€

The Urgewald report found World Bankย gas finance increased from $1.5 billion in 2014 to $2.2 billion. Oil projects also saw a slight increase. Renewables funding, including large hydropower, boomed from $0.5 to $2.0ย billion.

It also identified backdoor support for coal. In March 2016, the Multilateral Investment Guarantee Agency (MIGA), a bank subsidiary, lent $783 million to the German Deutsche Bank and the Japanese Mizuho Bank. The funds were earmarked for the South African energy group Eskom to support a โ€œcapacity expansion program.โ€ย Among other purposes, they will finance transmission lines to transport electricity from Eskomโ€™s new coal-fired powerย plants.

The bank encouraged coal, oil, and gas investments in Ghana, Kenya, Mauritania, Cote dโ€™Ivoire, Mozambique, Senegal, Egypt, Tanzania, Nigeria, and Burkina Faso, according to the study. Fossil fuel projects in those countries benefited from tax breaks, consultations, or assistance to draftย legislation.

Among the controversial projects highlighted by the study isย the Trans Anatolian Pipeline (Tanap), a 1,800-kilometerย gas pipelineย through Azerbaijan and Turkey.ย The bank has providedย $800 million in loans and aย $1.1 billion guarantee to the project, which has beenย heavily criticizedย over climate, corruption, and human rightsย concerns.

The development institute also granted $935 million of loans and credits to an offshore gas field in Ghana, paving the way for associated oilย fields.

The World Bank and the International Monetary Fundย are holding spring meetings from April 12 to 14ย inย Washington.

Published under aย CC BYND 4.0 license.

Main image: Activists protest fossil fuel project financing outside the 2017 UN climate talks in Bonn, Germany. Credit: Ashley Braun,ย DeSmog

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