The World Bank Is Making Bad Economic Decisions: U-Turning On Its Energy Policies

12 June

Yesterday the World Bank’s board voted to end a longstanding ban on funding nuclear energy projects and now the Bank looks as if they are reconsidering their energy strategy altogether. We are appalled to hear that the Bank is now considering funding the production of fossil gas projects that will put communities and the planet on the line. At a time when communities in Canada, Kashmir, and South Africa, are fighting for their lives as a result of the climate crisis, the World Bank is turning up the heat.

As already stated by the International Energy Agency, ‘no new oil and gas fields are needed on the path to net-zero emissions by 2050.’ Not only is the World Bank making poor economic decisions by choosing to fund projects that are often more expensive than renewable energy alternatives, but it is locking countries into decades of pollution and fossil fuel extraction, which will lead to stranded assets and technologies that will need to be phased out in the near future.

Rajneesh Bhuee, Campaign Manager from Recourse said, “The World Bank’s move to reconsider its 2019 moratorium on upstream gas finance is deeply troubling. That policy acknowledged that new fossil fuel extraction is incompatible with a 1.5°C pathway. Reversing it now, amid escalating climate impacts, would severely undermine the Bank’s credibility. Recourse’s latest analysis shows fossil fuel-only energy finance rose eightfold between 2022 and 2024, reaching nearly USD 500 million last year. Gas continues to receive indirect support through mixed projects, policy lending and financial intermediaries, locking countries into high emissions, volatile prices and rising debt. With almost 90 percent of the Bank’s energy finance still issued as loans, this approach risks deepening the debt crisis while failing to deliver a just transition. The Bank must instead prioritise public, grant-based investment in decentralised renewable energy that delivers real energy access and climate resilience.”

Jon Sward, Environment Project Manager from Bretton Woods Project said, “A World Bank return to financing ‘upstream’ gas projects in the middle of an accelerating climate crisis would show that its new mission to promote development on a ‘liveable planet’ rings hollow. The IEA’s analysis clearly shows that new oil and gas extraction projects – which have a decades-long lifespan - are not aligned with global climate goals. All countries must phase out support for new fossil fuels production, and the Bank’s wealthy shareholders must finally step up and pay the ‘climate debt’ they owe, through providing additional grant and concessional finance at scale to fund a clean energy future in the Global South.”

Sophie Richmond, Global Lead from Big Shift, “The World Bank’s move to reconsider upstream gas financing is just the most recent example of an institution that is not committed to ‘ending poverty on a livable planet’. Instead the Bank seems intent on fuelling the greatest crisis we may ever collectively face, through its continued funding of fossil fuels and sidelining of clean, sustainable, and equitable solutions. Investing in more fossil gas, whether ‘transitory’ or not, is a bad investment, in terms of its climate, environmental, and health impacts, and it fails to consider the real impacts it will have on countries’ economies. The Bank is buying into a misinformed narrative - gas is good for energy access and development - they only need look at the numerous examples of their funded gas projects previously that have failed to increase energy access to local communities, or alleviate their debt burden. These projects have caused destruction in their areas, it is astounding that the World Bank wants to fund more.”

The Big Shift Global Campaign is calling on the world's biggest public development banks to shift finance out of dirty fossil fuels and into sustainable, renewable energy to provide energy access for all. For more info visit: bigshiftglobal.org

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