The World Bank has provided nearly $15bn of finance directly to fossil fuel projects since the Paris agreement was signed in 2015, and is likely to have spurred far greater investment indirectly, new research has found.
Funding for “upstream” oil and gas projects from the World Bank was meant to stop from 2019, but the Big Shift Global, a coalition of more than 50 NGOs, has found the bank and its subsidiaries funding oil refinery and gas processing since then.
As the bank is also instrumental in helping to catalyse investment from other donors and the private sector, its direct funding of $14.8bn to fossil fuel since the Paris agreement is likely to be the tip of the iceberg when it comes to assistance to high-carbon development, according to the report published on Thursday.
The findings heap further pressure on the World Bank president, David Malpass, who was appointed by then US president Donald Trump in April 2019. He faces an uncertain future, as the World Bank prepares for its annual meetings explaining its strategy, beginning 10 October.
Last month, Malpass refused to affirm climate science when confronted by a journalist. Though he subsequently sought to clarify his position, the former US vice-president Al Gore has called for his resignation, and the White House “condemned” his words. The Guardian also understands that several leading governments are engaged behind the scenes in exploring ways in which he could be removed from post.
Many countries and green campaigners have been increasingly unhappy for several years with what they perceive as the World Bank’s lack of action on the climate under Malpass, who replaced Jim Yong Kim, who was appointed by former president Barack Obama and took a keen interest in the climate crisis.
The World Bank has responded by pointing to the $109bn it provided in climate finance from 2016 to 2021, and the $25bn funding a year on average promised to 2025.
The Big Shift Global report, entitled Investing in Climate Disaster: World Bank Group Finance for Fossil Fuels, covers the World Bank Group’s activities in detail from 2018 to 2021. It found that the bank was using financial intermediaries, in the form of banks or financial institutions, sometimes private equity funds or commercial banks. These indirect funding streams were a “major loophole” in the bank’s climate policy, the report said.
Kat Kramer, author of the report, told the Guardian: “It’s pretty damning. The World Bank takes a leadership role, and in some cases can provide just a small amount of support that facilitates much bigger investment from elsewhere. They have huge amounts of leverage, and we have found many cases where that has been used unhelpfully, in climate terms.”
Many of the instances of fossil fuel funding uncovered by the report concern gas projects, which some countries have argued can be a “transition fuel”, between coal and renewable energy. Kramer rejected this, pointing to advice that says no new gas development should be allowed if the world is to hold to the temperature limit of 1.5C above pre-industrial levels, which was targeted at the Cop26 UN climate summit last year in Glasgow.
“Methane [the main component of natural gas fuel] is about 80 times stronger than carbon dioxide as a greenhouse gas – it’s hugely potent, so if there are leaks from production or transport that’s going into the atmosphere, and that applies to LNG [liquefied natural gas] or other forms of gas,” she warned.
Funding gas made little financial sense when alternatives in the form of renewable energy generation were cheap and widely available, she added. “It seems really silly,” she said. “Renewable energy can reach people that fossil fuel infrastructure can’t, and we should be taking the opportunity of leapfrogging dirty energy.”
She added: “There is a massive role for the World Bank to facilitate the global clean energy transition. We are not seeing that. They should not be investing in fossil fuels.”
The report also found the Bank was involved in helping with indirect funding for coal projects, despite ending direct funding for coal in 2010.
A spokesperson for the World Bank Group told the Guardian: “We dispute the findings of the report: it makes inaccurate assumptions about the World Bank Group’s lending. In fiscal year 2022, the Bank Group delivered a record $31.7bn for climate-related investments, to help communities around the world respond to the climate crisis, and build a safer and cleaner future.” (The Guardian)