Despite the international pressure by environmentalists and members of the Organization Economic Cooperation and Development (OECD), the World Bank and its affiliate lenders will still maintain a lean funding opportunity for fossil energy development.
According to leaked presentation originally reported by Reuters, the World Bank has revised its climate policy to conform to the Paris Agreement of 2015 but the new position of the bank did not totally close the doors against fossil fuel funding.
The World Bank in 2013 reduced its new coal power investments to “only in extremely rare circumstances,” and stopped funding upstream oil and gas operations in 2019. It has not directly financed a new coal-fired power plant since 2010, and has no active coal-fired power generation in its pipeline.
Board members of the bank from Europe had in February urged the management to use the new climate plan to halt all investments in oil- and coal-related projects, and to gradually phase out investment in natural gas projects.
The bank, according to the report, would instead of phasing out funding for petroleum projects assess gas projects on a case-by-case basis to select and support projectrs leading to the transition away from coal.
Nigeria is among the 200 countries that adopted the Paris Agreement which pledges to stop global average temperatures from rising more than 2.0 degrees Celsius above preindustrial levels. The accord 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.
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.
Oracle Intelligence reports that sourcing funding for governments gas programmes in Nigeria has remained the challenge in realizing the full objectives as financial institutions associated with the World Bank as well as local banks with foreign ties come under increasing advisory to disconnect from petroleum and coal projects.
A recent advisory by Moody’s declared that energy and agriculture projects in Nigeria and sub-Saharan Africa pose great risk exposure to local and international lending agencies. The investment risk advisory firm cited global environmental sentiments against fossil fuel development projects as well as impacts of desertification on African agriculture.
World Bank had in December pledged to increase its lending climate related lending from 26 percent in the last five years to an average of 35% over the next five fiscal years. The bank and its sister organizations, according to the report, exceeded its target in the last three years to increase climate finance to 28% by 2020, spending $21.4 billion on climate finance last year.
Since 2015 Paris Agreement, the World Bank has continued to shrink down its financing portfolio for fossil fuel developments, making it increasingly difficult for affiliate institutions to advance credit facilities for project promoters.
The bank’s sister organizations, the International Finance Corporation and Multilateral Investment Guarantee Agency, are set to align 85% of their direct financing with the Paris Agreement by July 2023 and 100% by July 2025.
The new administration of the United States which is the bank’s largest shareholder is working on parallel plans to end U.S. financing for international fossil fuel projects.