World Bank no longer financing oil, gas projects

MANILA, Philippines — The World Bank will no longer finance oil and gas exploration and extraction projects beginning 2019 as it strives to meet goals under the 2015 Paris Agreement to limit global warming.

 “As a global multilateral development institution, the World Bank Group is continuing to transform its own operations in recognition of a rapidly changing world.  To align its support to countries to meet their Paris goals, the World Bank Group will no longer finance upstream oil and gas, after 2019,” the international financial institution said in a statement following the One Planet Summit in Paris this week.

It said, however, that it would give consideration to financing upstream gas projects for poor countries where discovery of new resources would be beneficial to reducing poverty.

“In exceptional circumstances, consideration will be given to financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within the countries’ Paris Agreement commitments,” it said.

The One Planet Summit convened by French President Emmanuel Macron and co-sponsored by the World Bank Group gathered development finance institutions for the purpose of aligning climate finance with goals under the Paris Agreement, foremost of which is to limit the average global warming to 1.5 degrees Celsius above pre-industrial levels through the shift to clean energy.

The World Bank announced that it is on track to meeting its target of allocating 28 percent of its lending to climate action by 2020.

To accelerate the mobilization of climate finance, World Bank said its private sector arm International Finance Corp. (IFC) will invest up to $325 million in the  $2-billion Green Cornerstone Bond Fund to help deepen local capital markets and expand private sector funding for climate-related projects. The fund will buy green bonds issued by banks in developing countries.

In a joint statement issued shortly after the summit, development finance institutions (DFIs) and multilateral development banks (MDBs) committed to increase climate financing and mobilize external investments for climate action.

They also committed to “redirect financial flows in support of transitions towards low-carbon and climate-resilient sustainable development.”

“Poverty eradication and sustainable development goals cannot be met unless there is a collective push to address climate change at the same time. To accelerate impact, it is particularly important for all development partners to come together, move forward on their enhanced commitments, and raise the internal and external ambition on climate,” the statement said.