Cross Purposes: After Paris, Multilateral Development Banks Still Funding Billions in Fossil Fuels
Oil Change International
Note – unless otherwise indicated, all years refer to the fiscal years of the studied banks.
A new briefing by Oil Change International reveals that despite the historic Paris Agreement that was reached in December 2015, multilateral development banks have continued to fund billions in fossil fuels, threatening global climate goals.
Clean energy finance made up less than one-third of total energy finance by development banks in 2016, and exploration-related finance for new oil and gas projects more than doubled from 2015 to 2016.
The Paris Agreement laid clear the tough road ahead for the world to avert catastrophic global warming and limit temperature increase to 2ºC at absolute maximum. Multilateral development banks have repeatedly claimed that they acknowledge these goals and are adjusting their portfolios accordingly. But based on their recent lending trends in energy finance, it seems the message has not gotten through.
Key Findings and Recommendations include:
- Multilateral development banks provided over $9 billion in public finance for fossil fuel projects in 2016 – with the vast majority of transactions approved after the Paris Agreement was reached. Clean energy still made up less than a third of multilateral development bank energy finance in 2016.
- Despite the Paris Agreement in December 2015, multilateral development banks approved over $5 billion in fossil fuel finance in 2016, not even including World Bank Group transactions for the last six months of the year.
- Total multilateral development bank finance for oil and gas exploration more than doubled from 2015 to 2016, from $1.05 billion to $2.15 billion.
- The World Bank Group, European Investment Bank, and Asian Development Bank were the largest financiers of fossil fuels in 2016.
- To catalyze the energy transition required to meet global climate commitments, multilateral development banks must end fossil fuel finance by 2020 – starting with finance for fossil fuel exploration and remaining coal finance – and rapidly shift energy finance toward clean energy.