What the World Bank can do for climate change

On Tuesday, leaders from a group of seven developed countries conclude the summit in Germany, and climate was considered to be one of the main items on the agenda. Unfortunately, that didn’t happen. The conference was dominated by the war in Ukraine at the expense of the climate.

I thought it was a good time to talk about what rich developed countries can really do to help poor countries prepare for a warmer world.

In these countries, a system of financial institutions known as multilateral development banks is already in place to fund economic and social development projects, including climate initiatives. The most powerful is the World Bank. There is also a small regional development bank.

The World Bank has the unique power and tools to help developing countries prepare for climate change. But critics say it’s not doing enough. Last year, UN Secretary-General Antonio Guterres and the Biden administration repeatedly called on these banks to step up their efforts to tackle climate change.

It’s not just about avoiding human suffering. The ability of large emerging economies such as South Africa and India to grow less dependent on fossil fuels is also crucial to our collective future. This is what critics say the World Bank can do better with the climate.

Improved transparency

The World Bank claims to be the largest source of climate funding for developing countries among these institutions. According to its own calculations, it contributed $ 26 billion to climate funding in developing countries in 2021.

But researchers and activists say banks aren’t transparent enough to see where all the money is heading and whether it’s actually effective.

John Seward, who tracks the environmental aspects of World Bank policy at the Bretton Woods project, a London-based nonprofit, provides an example of poor transparency for banks to support their programs. Said that it was a budget loan.

The World Bank does not track how countries are spending their money, but states that it is very wise about which policies are eligible and how they have affected them. .. We also publish databases and reports explaining them.

“It accounts for more than half of the multilateral climate funding for developing countries and more than two-thirds of the long-awaited adaptation,” a spokeswoman for the bank said in a statement. They refused to address a particular question on record.

But Mr Seward said it’s not very clear how policies are considered to bring climatic benefits and how to scrutinize where money actually goes.

“It is tagged as climate change finance, assuming that policy reform has a positive impact on climate change measures,” he said. “And some are better than others.”

More ambitious leadership

In 2019, the World Bank calculated that more than $ 90 trillion would need to be invested by 2030 to move to a low-carbon economy that limits warming to the Paris Agreement’s goal of 2 ° C.

This is the way the world desperately needs leaders to help raise money and direct those money to the right places.

But the World Bank is not a climate change lender, but a development bank. Its client countries tend to be as interested in poverty reduction as or even more than climate change. But the planet needs both, and critics say the World Bank is one of the few institutions with the tools to become a leader in climate finance, and probably the only one.

Experts say this may mean investing more in climate-related projects such as renewable energy power plants and early warning systems. It is also very likely that wealthy countries will require the World Bank to provide more funding to make further investments, requiring banks to coordinate additional climate investments with other financial institutions. ..

Scott Morriss, Senior Fellow at the Center for Global Development, says that “even the World Bank” has no single body to address needs of this size. “So there is a feeling that better adjustments are needed.”

Close the door to fossil fuels

The World Bank has so far avoided stopping all support for fossil fuel projects.

The company has not funded coal-fired power plants for more than a decade and has not funded new projects to produce more oil and gas since 2019. Banks calculate that 92% of loans to power generation projects have been in the last four years.

However, it still funds downstream projects such as gas power plants. Gas is considered a transition fuel from dirty things such as coal.

Proponents of World Bank policy say closing the gas door means delaying access to energy in poorer countries. Still, some experts believe there is room for better work.

Gaia Larsen, a climate finance expert at the World Resources Institute, said: “We need to move from coal to renewable energy.”

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thank you for reading. I’ll be back on Friday.

Claire O’Neill and Douglas Alteen contributed to Climate Forward.

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