World Bank to Stop Funding Upstream Oil and Gas
The World Bank Group will stop funding upstream oil and gas projects after 2019.
The announcement was made during this week's One Planet Summit by World Bank President Jim Yong Kim. The World Bank has justified the decision by saying that technological shifts and evolving markets mean that for many countries there are now a wider set of low-cost options to strengthen energy supply and extend access to energy. In the past decade, solar photovoltaic costs have fallen by 80 percent and wind power costs have fallen 60 percent. For those countries with oil and gas resources, commercial financing is often readily available for exploration and production. In exceptional circumstances in the poorest countries where there is a benefit to energy access, the World Bank Group will consider upstream natural gas projects.
The World Bank will continue to support and finance midstream and downstream natural gas investments for transport and distribution to consumers and for power generation. In some countries, natural gas still plays an important role during the energy transition, says the Bank, and gas has the lowest CO2 emissions of any fossil fuel. “We support natural gas as a flexible energy source that can help countries make the transition more quickly to renewables, expand access to energy for the poor, and displace carbon-intensive coal.”
Kim made a number of other announcements aimed at supporting the effective implementation of the Paris Agreement’s goals. Starting next year, the World Bank will report greenhouse gas emissions from the investment projects it finances in key emissions-producing sectors, such as energy. The results will be published in late 2018, and annually thereafter.
The World Bank will also be applying a shadow price on carbon in the economic analysis of all International Bank for Reconstruction and Development and International Development Association projects in key high-emitting sectors where design has begun since July 2017. The International Finance Corporation started using carbon pricing in key sectors in January 2017 and will mainstream the same starting January 2018.
The World Bank is on track to meet its target of 28 percent of its lending going to climate action by 2020 and to meeting the goals of its Climate Change Action Plan - developed following the Paris Agreement.
Last week, the World Bank and the Government of Egypt signed a $1.15 billion development policy loan aimed at reducing fossil fuel subsidies and creating the environment for low-carbon energy development.
Canada and the World Bank will work together to accelerate the energy transition in developing countries and, together with the International Trade Union Confederation, will provide analysis to support efforts towards a just transition away from coal.
The World Bank will support a unique partnership between Caribbean leaders and people, multilateral organizations, and local and international private sector to define a vision for the world’s first climate-smart zone. The key priority areas for action include renewable energy, resilient infrastructure, innovative financing and capacity building.
The World Bank Group will support, through the Carbon Pricing Leadership Coalition, the proposed Carbon Markets of the Americas initiative.