WASHINGTON — The World Bank announced it will start reporting the net global greenhouse gas emissions, or GHGs, from all of its projects. Climate experts welcomed the move, but warn the bank must go further and take steps to stop financing fossil fuel projects.
The new commitment means that, for the first time ever, the giant multilateral will measure, aggregate, and disclose data on the quantity of GHGs emitted or avoided as a result of bank-funded projects. It was announced by World Bank President Jim Kim during a civil society town hall meeting on Wednesday, as part of its annual meetings in Washington, D.C.
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Until now, the multilateral development bank only tracked emissions on a project-by-project basis, and the data was often difficult to find, civil society actors say. In contrast, most other MDBs already publish their net carbon emissions, and in September the Asian Development Bank also committed not only to measure its emissions, but also reduce them.
A spokesperson from the World Bank told Devex that “starting next year, the World Bank will report in its Corporate Scorecard aggregate GHG emissions from its investment projects in key sectors,” adding that it has invested $11 billion in renewable energy and $4.5 billion in energy efficiency in the past five years.
Kim has positioned the bank as a leader on climate change, a point he underscored during a speech on Friday when he said: “We’re now the largest funder of climate-related investments in the developing world.” He added that the institution is on track to meet the ambitious target of having 28 percent of its portfolio deliver climate benefits by 2020.
Civil society actors welcomed the news, but warned it must be combined with ambitious targets for reducing the bank’s overall carbon footprint. This will be difficult, they say, if the institution continues to support, either directly or indirectly, fossil fuel projects including oil, gas, and coal.
NGOs have long been lobbying the bank to disclose its carbon footprint, most recently through the “Big Shift Global,” led by a coalition of NGOs lobbying all the multilateral development banks — and not just the World Bank — to end financing for fossil fuels by 2020, to work to keep global warming below 1.5 degrees Celsius, and to enable energy access for all.
"It’s a great development and a great first step,” said Cynthia Cummis, a climate mitigation expert at the World Resources Institute. But she added: “I’d like to also see them setting science-based targets for aligning their portfolio towards limiting global temperature rise to 2 degrees Celsius.”
Achieving such targets will prove difficult if the bank continues to finance fossil fuels, especially coal, oil, and gas, according to Alex Doukas, program director at Oil Change International, an advocacy and research group.
“This new commitment shows progress, but if the bank is serious about tackling climate change, it needs to rapidly move away from funding fossil fuel projects, and stop financing exploration for new fossil fuels immediately,” he said.
Oil Change International released a new report this week alleging that in 2016, bank funding for fossils rose to $4.7 billion, which represents more than a doubling of investment from 2015. In contrast, the bank’s clean energy finance grew only slightly between 2015 and 2016, from $2.6 billion to $3 billion. However, the bank has questioned this data and reports its total climate change mitigation finance (beyond just energy finance) at $7.9 billion in 2016.
While the commitment itself is good news, the devil will be in detail, according to Helena Wright, senior policy advisor at Third Generation Environmentalism, a London-based think tank focused on climate change. A lot will depend on the methodology the bank uses to measure its carbon footprint, and she hopes the bank includes all projects, and not just energy-related ones, in the calculation. In addition, the bank needs to report on the lifetime emissions of each project and not just annual figures, said Cummis.
Accurately measuring emissions should be relatively straightforward for World Bank projects, Cummis said, but will likely prove trickier for other types of support. The International Finance Corporation invests a substantial portion of its portfolio in financial intermediaries, which then sub-lend or invest in other companies, making it difficult to track. NGOs claim some of this money ends up financing fossil fuel projects, including coal power plants. Inclusive Development International also published a new report that found a proposed new coal plant in Bangladesh is indirectly being supported by the IFC through its investments in Indian banks. This is the latest in a series of similar reports by the NGO.
The IFC has repeatedly disputed such claims. In a statement sent to Devex in response to the latest report, Frederick Jones, a spokesman for the IFC, said: “These allegations are not new and they misrepresent our role ... We need to be very clear, IFC does not give credit lines or loans to finance coal related projects.”
Jones also said that the institution was taking steps to measure its clients’ exposure to coal, and was “evaluating options to work with these clients to move toward more renewable energy options,” noting that in the past year alone, the IFC has tripled its climate change commitments through financial institutions to $1.4 billion.
During a town hall meeting with the IFC CEO Philippe le Houérou, activists from the Philippines announced they had submitted a complaint against the institution with its ombudsman. The complaint accused the lender of “fueling global climate change through its opaque investments in a Philippine bank that is a major financier of the coal industry.” More than 100 community groups and local communities from the Philippines signed the complaint.
Le Houérou also published an opinion piece in Devex earlier this week in which he outlined steps the organization has been taking to address concerns about its intermediary lending portfolio, which includes restricting general purpose loans in favor of loans targeted for specific purposes.
In 2013, the bank came out with a new energy strategy stating that coal-fired power stations would only be financed in “rare circumstances,” such as when no other viable source of energy exists, and has not directly funded any new coal projects since.
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