World Bank Group Increases Spending On Fossil Fuels: 2014 Saw $3 Billion For Fossil Fuel
By Countercurrents.org
21 April 2015
Countercurrents.org
Despite repeated calls for urgent action on climate crisis, the World Bank Group (WBG) increased funding for fossil fuels in its last fiscal year. The increase comes during the first full fiscal year following the World Bank’s announced commitment to limit coal financing due to climate concerns. Last year, the WBG provided more than $3bn in financing for fossil fuels.
A report in Oil Change International (OCI) (http://priceofoil.org/2015/04/17/analysis-world-bank-group-increases-spending-fossil-fuels/) said:
A new analysis released on April 17, 2015 by OCI shows: The WBG increased its support for oil, gas, and coal in FY 2014 over previous years, to a total of $3.3 billion USD or 34% of its total energy finance spending for the year.
The review, Still Funding Fossils: World Bank Group Energy Finance FY2014, shows:
The WBG continues to fund projects with fossil fuel exploration components although science suggests keeping more than two-thirds of fossil fuels in the ground. Moreover, some finance went to coal despite the bank group’s pledge to end coal financing except in extreme circumstances.
The main findings of the review include:
# The WBG increased its support for oil, gas, and coal in FY 2014 over previous years.
# Financing for fossil fuel exploration continued at significant levels, in spite of the fact that this lending supports the expansion of projects that threaten the climate.
# WBG financing still went to coal, despite the pledge to end finance for coal power plants except in extreme circumstances.
# Financing for energy access increased somewhat over previous years, with 13 percent of energy financing in FY 2014 going to projects that target increased energy access for the poor.
# Fossil fuels and large hydropower accounted for only 4 percent of energy access financing, showing again that investing in large, conventional energy projects is not an effective way to increase energy access.
# The World Bank’s energy finance practices continue to fall far short of the Bank’s core missions of reducing poverty and tackling climate change. The World Bank must restructure its energy portfolio to end all coal support, stop financing the search for unburnable carbon, and prioritize clean renewable energy and energy access.
The report identified $3.4bn of loans, grants, guarantees, risk management and equity for fossil fuel-related projects in the developing world in the FY2013-14. This was the highest recorded in four years and up 23% on the year before although the bank said it disagreed with lumping in both direct and indirect funding.
A World Bank spokeswoman said: “We have seen the [OCI] report and do not agree with the way it characterizes our work. Critically, the report uses a completely different way of classifying energy projects to the World Bank Group.”
But the bank admitted that its fossil fuel calculation did not include another tranche of funding for governance, called ‘policy and institutional development’ - part of which supports the burning of fossil fuels.
The bank did not provide an estimate of how much it had put towards the fossil fuel industry through this type of funding.
OCI said a $19.8m project in Ghana for “oil and gas capacity building” and one in Mozambique that provided $24.2m to improve the management of coal, oil and gas extraction were examples of finance that could be categorised as policy funding, but facilitated the burning of more fossil fuels.
The OCI said it was its view that projects to build transmission lines to carry fossil fuel-generated electricity still constituted support for fossil fuels.
The bank disputed the claim that financing for transmission was support for fossil fuels. “A significant proportion of bank transmission/distribution financing is used to rehabilitate and upgrade inefficient old grids – improving overall emissions,” said the spokeswoman.
Yet OCI found the bank had put $643m into projects that contained some element of fossil fuel exploration during 2013-14.
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