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The Actuary The magazine of the Institute & Faculty of Actuaries
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World Bank undermining its own climate change commitments with fossil fuel subsidies

The World Bank’s $5bn (£3.99bn) policy loans are creating subsidies for coal, gas and oil, undercutting initiatives to build wind, solar and geothermal power infrastructure, according to the Bank Information Centre (BIC).

27 JAN 2017 | CHRIS SEEKINGS
Bank is "helping to weaken vital environmental laws" ©Shutterstock
Bank is "helping to weaken vital environmental laws" ©Shutterstock

Its new report reveals that funds intended to boost low-carbon growth are instead supporting investment incentives for projects that put the climate, forests and people at risk.

These findings are hoped to shed light on the bank’s Development Policy Finance (DPF) operations, which provide funding in exchange for national policy and institutional reforms.

BIC Europe and Central Asia manager, Nezir Sinani, said: “The World Bank has pledged to help countries adopt a low-carbon development path specifically by phasing out fossil fuel subsidies and promoting a carbon tax.

“However, the bank’s policy lending does the opposite by introducing tax breaks for coal power plants and coal export infrastructure.

“We want a more rigorous climate-related assessment of DPFs before they are approved.”

The study involved examining seven World Bank policy operations from 2007 to 2016, which provide $5bn worth of funding across four countries.

The countries and operations that DPF subsidies support are:


Peru – A liquid petroleum gas pipeline, a diesel/gas power plant, and in the Amazon, three natural gas pipeline networks, and 26 new oil and gas concessions.
Indonesia – Four coal power plants and three coal transport railways
Egypt – 12.5GW of new coal power plants and 12 pending oil and gas exploration agreements
Mozambique - Four coal power plants, three coal port terminals and two coal transport railways.

DPF funding also supports two energy efficient street lights, and the development of hydropower in Peru, as well as one hydropower plant in Mozambique.

“Rather than using its development policy lending muscle to protect forests and combat climate change, the bank is helping to weaken vital environmental laws and governance and undermine local communities’ rights to the resources they rely on for their livelihoods,” BIC forest campaign manager, Kate Geary, said.

The report calls on the World Bank to support incentives for more renewable energy through DPFs, and to be transparent about the measures and incentives tied to DPFs, as well as the projects they support.