World Bank Group Commits To Phasing Out Financing For Upstream Oil and Gas
Shift the subsidies
Public financing helps fossil fuel projects continue. Take the World Bank Group which provided an average of more than $1 billion a year in upstream oil and gas financing from 2014 to 2016, according to Oil Change International. The good news is that after 2019, financing for those projects will no longer come from the WBG, except in extreme circumstances.
The World Bank Group announced at the One Planet Summit in Paris, France it will no longer finance upstream oil and gas, after 2019. The WBG will consider financing upstream gas in poor countries where a “clear benefit” of energy access for the poor exists and the project fits within the Paris Agreement of the respective country.
The WBG already restricts its support for coal-fired power plants and for thermal coal mining. As Oil Change International stated, the commitment to phase out financing for upstream oil and gas means that the WBG “will no longer finance fossil fuel extraction after 2019, except in extreme cases.”
The Big Shift Global campaign released a briefing a day before the summit, which highlighted 12 fossil fuel projects that benefit from public financing. One of the projects is the Southern Gas Corridor, which includes the Trans-Anatolian Pipeline (TANAP). The WBG funds TANAP with $400 million loans to Turkey and Azerbaijan. The briefing says the Southern Gas Corridor project would “lock Europe into higher fossil fuel dependence for decades, resulting in hundreds of millions of tons of carbon dioxide emissions, with the massive risk that these assets will ultimately be stranded.”
Environmental groups applaud the WBG’s commitment to phase out financing for upstream oil and gas. Stephen Kretzmann, Executive Director of Oil Change International, said, “We congratulate the World Bank, and we look forward to working with them and other partners towards a managed decline of fossil fuel production, and a just, equitable transition to a global clean energy economy.”
“This commitment from the World Bank demonstrates true climate leadership,” said Alex Doukas, Stop Funding Fossils Program Director at Oil Change International.
“This sends a clear signal to the world that the fossil fuel era is ending, and that government money can no longer be used to prop up oil, gas, and coal production.”
“The policies and practices of the World Bank send a strong signal for finance institutions worldwide,” said Karen Orenstein, Deputy Director of Economic Policy at Friends of the Earth. “We now expect all other public and private finance institutions to follow the World Bank’s lead and end fossil fuel financing once and for all.”
The power of public dissent
Public pressure may have played a part in the WBG’s decision to phase out financing for upstream oil and gas projects. Before the One Planet Summit, over 200 civil society groups demanded that all multilateral development banks and G20 nations commit to phasing out subsidies and public financing for fossil fuels. “This ongoing government support for fossil fuels undermines global climate mitigation and adaptation efforts,” the groups stated in a letter.
The WBG also announced at the One Planet Summit that it is increasing its climate ambition through its Climate Change Action Plan. It is on track to meet its target of 28 percent of its lending going to climate action by 2020 and the goals of its Climate Change Action Plan, which it developed after the Paris Agreement. The WBG will announce new commitments and targets beyond 2020 at COP24 in Poland in 2018.
Images courtesy of Wikimedia