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[MANILA] The World Bank announced last week that it will stop funding upstream oil and gas projects after 2019 to align its lending practices with existing global climate change goals.
The Bank’s plan was announced during the One Planet Summit in Paris on 12 December, which marked the two-year anniversary of the landmark Paris Agreement on climate change.
World Bank president Jim Yong Kim said that given the interest in renewables and the fact that climate change is advancing more quickly than earlier thought, the Bank felt it was “the right time to take this step." However, the Bank said in a statement that it was willing to make exceptions for the poorest countries with access to upstream natural gas projects.
The Bank’s move was welcomed by civil society groups which also found the announcement inadequate at the same time.
“To truly align itself in practice with the Paris agreement and its own purported values, the World Bank needs to stop all support for all fossil fuels”
Karen Orenstein, Friends of the Earth
"That the Bank has really started to stigmatise oil and gas, and not just coal, is a game changer as it sends a signal to public and private financiers, the fossil fuel and renewable industries, and policymakers worldwide," says Karen Orenstein, deputy director of Economic Policy at the non-governmental organisation Friends of the Earth.
But Orenstein insists that it should be a full stop and no exemption. “To truly align itself in practice with the Paris agreement and its own purported values, the World Bank needs to stop all support for all fossil fuels," she tells SciDev.Net.
Agus Sari, chief executive of Landscape Indonesia, an advisory company that bridges sustainable landscape management with investment financing, tells SciDev.Net that he suspects the Bank's announcement is not only for environmental reasons but also for financial reasons. "Finding new fields is proving to be increasingly more expensive and with higher risks," he notes.
"ADB has not financed any fossil fuel projects for a while," says Sari. "They stopped financing coal power plants as a matter of environmental principle, although for political reasons they don’t announce it openly. It is indeed a sign of the end of the fossil era."
This piece was produced by SciDev.Net’s Asia & Pacific desk.