{"id":105105,"date":"2018-01-22T12:00:11","date_gmt":"2018-01-22T12:00:11","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=105105"},"modified":"2018-01-29T10:59:25","modified_gmt":"2018-01-29T10:59:25","slug":"signaling-more-independence-from-the-us-the-world-bank-phases-out-its-support-for-fossil-fuels","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2018\/01\/signaling-more-independence-from-the-us-the-world-bank-phases-out-its-support-for-fossil-fuels\/","title":{"rendered":"Signaling More Independence from the US, the World Bank Phases Out Its Support for Fossil Fuels"},"content":{"rendered":"
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World Bank President Jim Yong Kim, left, and French President Emmanuel Macron.
AP Photo\/Francois Mori<\/p><\/div>\n

17 Jan 2018 – <\/em>The World Bank<\/a>, which provides developing countries about US$60 billion<\/a> a year in financial assistance, is officially phasing out its support for the oil and gas industries<\/a>.<\/p>\n

This move brings its actions<\/a> more in sync with its overarching commitment to slowing the pace of climate change<\/a> and keeping the Paris agreement<\/a> on track. Based on my research regarding international relations, I see this move \u2013 which World Bank President Jim Yong Kim announced in December \u2013 as significant for two reasons.<\/p>\n

The bank has signaled that the international community is taking the fight against global warming more seriously than ever. And it shows that the bank intends to keep playing a leading role<\/a> in that battle at a time when its most powerful shareholder<\/a>, the U.S., is turning its back on global environmental leadership.<\/p>\n

Climate leadership<\/strong><\/p>\n

Kim has been taking the World Bank in a direction that climate change activists and other critics have long advocated<\/a> by positioning the institution as a global environmental leader since he became its president in 2012.<\/p>\n

In 2013, the bank decided to stop financing the construction of coal-fired power plants<\/a>, except in cases where no viable alternatives existed.<\/p>\n

Three years later, the World Bank pledged that it would make 28 percent of all of its transactions<\/a> by 2020 advance climate action<\/a>.<\/p>\n

The bank\u2019s climate efforts<\/a> are wide-ranging. It lends money to build solar and wind farms, requires its borrowers to take steps to shrink their carbon footprints, and has a goal of \u201cgreening the whole financial system<\/a>.\u201d<\/p>\n

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World Bank Group President Jim Yong Kim, former U.S. Vice President Al Gore and other leaders speak during a panel on climate-related finance during a meeting hosted by the bank and the International Monetary Fund.
Grant Ellis \/ World Bank, CC BY-SA<\/p><\/div>\n

U.S. relations<\/strong><\/p>\n

Kim\u2019s announcement, which rules out new lending but does not affect loans made in the past or in the next year or two, may portend some political drama. But President Donald Trump has not yet commented on it.<\/p>\n

That could change, given that Trump has declared that the U.S. would withdraw from the Paris agreement<\/a>. Exiting the world\u2019s most far-reaching global climate compact<\/a>, signed by nearly every country on the planet, until now has appeared to be a largely symbolic gesture. Trump has even said that he might \u201cconceivably\u201d change course<\/a>.<\/p>\n

However, his administration has sought to cut some of the funding for the World Bank<\/a> and similar institutions<\/a>.<\/p>\n

Although the U.S. wields veto power<\/a> over changes to the World Bank\u2019s structure and has historically selected its top leader<\/a>, Kim\u2019s tenure is apparently safe. He began a second five-year term in July 2017, and Trump has supported him so far<\/a>.<\/p>\n

On Jan. 10, 2018, President Donald Trump said that the U.S. \u201ccould conceivably go back in\u201d and rejoin the Paris climate agreement.<\/p>\n

httpv:\/\/www.youtube.com\/watch?v=jnZHY_kFRNw<\/p>\n

The fine print<\/strong><\/p>\n

When the bank swore off coal in 2013, Kim argued<\/a> that \u201cpoor people should not pay the price with their lives of mistakes that people have been making in the developed world for a very long time.\u201d<\/p>\n

Since then, the bank\u2019s primary lending division has only considered one loan<\/a> for a coal project, a Kosovo power plant<\/a>.<\/p>\n

But the World Bank Group\u2019s two private sector arms, the International Finance Corp.<\/a> and the Multilateral Investment Guarantee Agency<\/a>, have continued to support new fossil fuel ventures<\/a>, including coal, in African<\/a> and Asian<\/a> countries \u2013 and elsewhere.<\/p>\n

For example, the IFC, has indirectly funded 41 new coal-fired power plants<\/a> in countries like Bangladesh and the Philippines by financing banks that lent money to build them \u2013 despite the bank\u2019s refusal to directly make loans like those.<\/p>\n

The IFC also directly invested $200 million in Citla Energy, a Mexican oil company<\/a>, in 2016.<\/p>\n

Likewise, when Kim made this announcement, he did not completely rule out all future support for gas investment. Instead, he held open the possibility of continued support<\/a> for natural gas \u201cin the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within the countries\u2019 Paris Agreement commitments.\u201d<\/p>\n

To be continued<\/strong><\/p>\n

For an institution whose mission seeks a \u201cworld free of poverty<\/a>,\u201d the impulse to continue lending for fossil fuel projects could be strong. Recent experience with coal suggests that while the bank\u2019s direct lending indeed may end in all but isolated cases, its indirect support for private sector investment may continue.<\/p>\n

The alternative to this support for poor countries is usually to partner with private investors<\/a>, including corporations and big countries such as China<\/a>, which is lending developing countries about $40 billion a year<\/a>, according to economist David Dollar.<\/p>\n

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IFC and MIGA support Sankofa Gas Project https:\/\/t.co\/N70xeZzkIN<\/a> #BFT<\/a> pic.twitter.com\/ipHbr9DTLm<\/a><\/p>\n

— Business & Financial Times (@bftghana) December 17, 2016<\/a><\/p><\/blockquote>\n