World Bank to end financial support for oil and gas exploration

The World Bank has announced that it is planning to end its financial support for oil and gas exploration projects after 2019, in a bid to help countries meet their 2015 Paris Climate Agreement goals. However, consideration will be given to financing upstream gas projects in the poorest countries where there is a clear benefit in terms of energy access for the poor, but only if the project does not conflict with Paris Agreement commitments to reduce greenhouse gas emissions, according to World Bank Group President Jim Yong Kim, speaking at the One Planet Summit in Paris.

The Bank also announced that it is on track to meet its target of 28% of its lending going to climate action by 2020 and to meeting the goals of its Climate Change Action Plan, which was developed following the Paris Agreement. In line with countries submitting updated and potentially more ambitious nationally determined contributions (NDCs), the World Bank Group is to present a stock-take of its plan and announce new commitments and targets beyond 2020 at COP 24 in Poland in 2018.

Furthermore, in order to increase transparency and disclosure to drive its own decarbonisation, the World Bank Group is planning, from next year, to start reporting annually the greenhouse gas emissions from the investment projects it finances in key emissions-producing sectors, such as energy. It also plans to apply a shadow price on carbon in the economic analysis of all IBRD/IDA (International Bank for Reconstruction and Development/International Development Association) projects in key high emitting sectors where design has begun since July 2017. IFC (International Finance Corporation, a member of the World Bank Group) started using carbon pricing in key sectors in January 2017 and will mainstream the same starting January 2018.

In addition, the World Bank Group is looking to accelerate the mobilisation of finance for transformation in mitigation and climate resilience. Its sister organisation, IFC, will invest up to $325mn in the Green Cornerstone Bond Fund, a partnership with Amundi, to create what is claimed to be the largest ever green-bond fund dedicated to emerging markets. This is a $2bn initiative aiming to deepen local capital markets, and expand and unlock private funding for climate-related projects. The fund is already subscribed at over $1bn.

Meanwhile, the World Bank and the government of Egypt recently signed a $1.15bn development policy loan aimed at reducing fossil fuel subsidies and creating the environment for low-carbon energy development.

The World Bank Group also plans to continue to support investments aimed at accelerating energy efficiency in India and scaling up solar energy in Ethiopia, Pakistan and Senegal among other countries.