World Bank boosts climate funding, but activists fret over gas deals

The World Bank will increase the amount of money it allocates for combating climate change to 35% of its financing on average, according to a new multiyear plan released Tuesday, and has also agreed to regularly issue updates on the plan’s implementation.

The move raises the bank’s climate finance target from 28% and comes as the institution seeks to align its financing activities with the objectives of the 2015 Paris climate agreement by July 2023. The Climate Change Action Plan for 2021-2025 also targets allocating at least 50% of the climate financing from the International Bank for Reconstruction and Development and International Development Association for adaptation, to help bolster countries most impacted.

The bank has been exceeding its previous target in recent years, hitting 31% of financing for projects with “climate co-benefits” in fiscal year 2019, for example.

The plan is designed to more deeply integrate development with climate programs and “ensure climate is central to everything we do in the World Bank Group,” said Genevieve Connors, who oversees tracking and reporting on climate finance at the bank. It signals a shift to a more “whole-of-economy approach” toward climate change, she told Devex.

However, there is concern that the bank has not yet set clear metrics to gauge its projects and their success, despite alarms raised by watchdogs in the months since an initial proposal for the plan was first presented to the bank’s board in April.

“While climate finance targets give a snapshot of the financial inputs to projects, they are silent on whether the desired results were achieved, whether in terms of reducing emissions or reducing climate risks,” the World Resources Institute said last month in an analysis of the draft proposal.

Connors said Tuesday that the bank was developing methodologies to assess alignment with the Paris Agreement. According to the plan, the bank aims to “present an approach” for implementation in November, when the 26th United Nations Climate Change Conference of the Parties is set to take place.

It will also release reports showing road maps for working with countries on the Paris goals, Connors added. As many as 25 are slated to go out over the next year, focusing on lower-income countries facing heavy emission loads and climate change vulnerabilities.

But environmentalists are also worried the bank is not moving quickly enough to ensure fossil fuels are rapidly phased out globally.

The World Bank stopped directly financing utility-scale coal-fired power plants in 2010 and halted funding for upstream oil and gas operations more recently. The latest plan says the bank will “significantly step up financing and advisory support for a just transition from coal to client countries that request it.”

However, the bank will support natural gas projects “in specific cases” and as a medium-term solution, according to the plan, with an eye on avoiding “long-term carbon lock-in.”

“The World Bank is leaving open a huge loophole,” said Luisa Abbott Galvao, a campaigner with advocacy group Friends of the Earth.

The plan’s wording is not specific enough, she said, adding that gas can be as polluting as other fossil fuels. She rejected the idea that it should be used as a bridge.

“The World Bank Group’s selective approach to phasing out fossil fuels is about as effective as throwing both water and gasoline at a house fire,” the campaigner said.

Activists also said the climate plan does not focus enough on gender issues, even as the U.N. has warned that women face greater risks from the impacts of climate change.

The plan notes that the world’s poorest are often the ones suffering the most, highlighting that in the last decade there have been nearly eight times as many natural disasters in IDA countries as in the 1980s.

With the previous multiyear plan, which ran from 2016-2020, the bank said it provided $83 billion in climate finance. An increase in the amount allocated for this goal is meant to help countries shift from green projects to a more encompassing green economy.