Monday 23 June 2008

The UK government recently became the largest single donor to the World Bank's International Development Association (IDA), which gives loans and grants to the world's poorest countries.

However, new research published today by WWF-UK, shows that because of its continued funding of fossil fuel projects, the World Bank has in the last decade financed over 26 gigatonnes of CO₂ emissions. This is approximately 45 times the current annual CO₂ emissions of the UK. World Bank financing of oil and gas alone in the last three years amounted to over US$3 billion.

In July 2008 the World Bank is set to launch a series of multi-billion dollar climate investment funds at the G8 and is currently consulting on a strategic framework on climate change.

But while the World Bank has increased investment in renewable energy, the shift has not been in line with what global climate change predictions require. Financial support for fossil fuel based power and extraction is continuing, with no sign that an urgent phase- out needed to keep temperature increases below 2ºC is being contemplated by the World Bank.

"The World Bank holds significant influence and as a global leader should be setting a precedent for other major public and private financial institutions with its decisions on energy financing. The energy infrastructure that it finances today lays the foundation for the global emissions profile of the future. If the World Bank is truly serious about addressing climate change, it can waste no time in rapidly and fundamentally shifting its energy investment portfolio to one that is both cleaner and greener," said head of international governance at WWF-UK, Toby Quantrill.

The World Bank is uniquely placed through its lending and investment practices in developing countries, to catalyse the necessary transition to economies that minimise greenhouse gas emissions. But while it states in its climate-related reports that it has outperformed its own 'Bonn' target to increase funding of new renewable energy and energy efficiency projects by 20% a year, its figures do not reflect changes in funding on a year by year basis.

WWF-UK calculations show that the actual increase between 2006 and 2007 was only two per cent.

The UK Government, as a major shareholder in the World Bank, now has an opportunity to call for it to transform its energy portfolio and adopt a comprehensive climate change strategy. We believe this strategy should set ambitious and measurable targets for the reduction of support for fossil fuels, adopt the use of a shadow carbon price, and rapidly increase its support for socially and environmentally sustainable low-carbon technologies. It should also include a comprehensive and transparent way of accounting for the World Bank carbon footprint.

"At a time when high oil prices are making oil extraction more appealing, the World Bank should not make it even easier for the private sector. It should instead be playing a key role in the global fight against climate change by giving a clear signal that it is no longer acceptable to invest in carbon intensive fossil fuels," concluded Lies Craeynest, international development policy adviser at WWF-UK.

We are currently in the process of updating the figures in the report to complete the data for 2008.