A revised World Bank policy on climate change commits to making financing decisions in line with efforts to limit global warming but stops short of promising to halt funding of fossil fuels, according to a draft bank presentation seen by Reuters.
The World Bank, the biggest provider of climate finance to developing countries, is finalizing a new five-year climate action plan amid growing political momentum in Britain, the United States and other countries for ending public financing of high-emission fossil fuel projects.
In a sharp reversal from the former Trump administration, the United States, the bank’s largest shareholder, is drafting plans under the new Biden administration to end U.S. financing for international fossil fuel projects.
An internal presentation outlining the World Bank’s new climate plan, seen by Reuters and due to be discussed by the bank’s board on Thursday, commits to “align its financing flows with the objectives of the Paris Agreement” by July 2023.
The plan is not final and must still be approved by the bank’s board. The World Bank declined to comment on the presentation.
The Paris Agreement, adopted in 2015 by nearly 200 countries, pledges to stop global average temperatures from rising more than 2 degrees Celsius above preindustrial levels, and aims to cap warming at 1.5 degrees. Scientists say meeting the 1.5 degree goal, which would prevent the most catastrophic climate impacts, would require the world’s net greenhouse emissions to drop to zero by 2050.
The bank’s sister organizations, the International Finance Corporation and Multilateral Investment Guarantee Agency, will align 85% of their direct financing with the Paris Agreement by July 2023 and 100% by July 2025, the presentation said.
Meeting the goals of the Paris pact will require trillions of dollars of investments to shift quickly away from burning fossil fuels for energy, and expand renewable electricity along with low-carbon transport and manufacturing technology.