One way to make a huge difference
On Tuesday, leaders of the Group of 7 industrialized countries conclude a summit in Germany, and climate would be one of the main agenda items. Unfortunately it didn’t work out that way. The theme of the meeting was the war in Ukraine, much to the detriment of the climate.
We thought it would be a good time to talk about what rich industrialized nations could actually do to help less wealthy nations prepare for a warmer world.
There is already a system of financial institutions, known as multilateral development banks, to help finance economic and social development projects, including climate initiatives, in these countries. The most powerful is the World Bank. There are also smaller, regional development banks.
The World Bank has unique powers and tools to help developing countries prepare for climate change. But critics say it doesn’t do enough. In the past year, the United Nations secretary generalAntonio Guterres, and the Biden administration have repeatedly called on these banks to step up their climate efforts.
It is not just a matter of avoiding human suffering. It is also critical to our collective future that major emerging economies such as South Africa and India can grow without relying so heavily on fossil fuels. Here’s what critics say the World Bank could do better for the climate.
The World Bank claims to be the largest source of climate finance for the developing world among institutions of its kind. By its own calculations, it contributed $26 billion to climate finance in developing countries in 2021.
But researchers and activists say the bank is not transparent enough to verify where all the money goes and whether the climate projects it finances are actually effective.
Jon Sward, who monitors the environmental aspects of World Bank policies at the Bretton Woods Project, a London-based nonprofit, said an example of insufficient transparency was the budget loans the bank provides to support programs.
The World Bank says that while it doesn’t keep track of how countries use the money, it is very judicious about what policies qualify and what impact they had. It also publishes databases and reports describing them.
“We provide more than half of multilateral climate finance to developing countries and more than two-thirds of much-needed adaptation finance,” a bank spokesman said in a statement. They declined to answer specific questions about the file.
But there’s not much clarity, Sward said, about how policies are supposed to have climate benefits, or research into where the money is actually going.
“It is classed as climate finance on the assumption that the policy reforms have a positive impact on climate action,” he said. “And some are better than others.”
More ambitious leadership
In 2019 the World Bank calculated the planet needed to invest more than $90 trillion by 2030 to transition to a low-carbon economy that would limit warming to 2 degrees Celsius, the target of the Paris Agreement.
This is how desperately the world needs a leader to raise money and direct those funds to the right places.
But the World Bank is not a climate lender, but a development bank. Customer countries are generally just as concerned about poverty alleviation as, if not more than, climate change. But the planet needs both, and critics say the World Bank is one of the few institutions, and possibly the only one, that has the resources to be a leader in climate finance.
Experts say this could mean more investment in climate-related projects, such as renewable energy power plants and early warning systems. It would also most likely require rich countries to give more money to the World Bank to make further investments, and require the bank to coordinate with other financial institutions on additional climate investments.
No institution will address this scale of need alone, “not even the World Bank,” said Scott Morris, senior fellow at the Center for Global Development. “So there’s a sense that we just need better coordination.”
Close the door on fossil fuels
The World Bank has so far avoided ceasing all support for fossil fuel projects.
It hasn’t funded any coal-fired power plants in more than a decade and hasn’t funded any new projects to produce more oil and gas since 2019. According to the bank’s calculations, 92 percent of loans went to power generation projects in the last four years.
But it still funds downstream projects such as gas-fired power plants. It considers gas as a transition fuel from dirtier ones, such as coal.
Proponents of the World Bank’s policy say closing the gas door would delay access to energy in poorer countries. Still, some experts believe there is room to do better.
“In our minds, you wouldn’t finance fossil fuels if you lived in Paris,” said Gaia Larsen, a climate finance expert at the World Resources Institute. “We need to move from coal to renewable energy sources.”
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Essential news from The Times
Coal below, bombs above: Ukraine has the world’s sixth largest coal reserves, the most near the war front lines. Many miners have continued to work despite the danger.
Reducing Russia’s cash flow: Group of 7 leaders are considering a price cap for Russian oil to limit the country’s revenues.
Natural gas risks: A new study found that the gas delivered to homes contains low concentrations of several chemicals linked to cancer.
Beat high fuel prices: Americans are getting creative to cut gas costs. Strategies include changing work hours, carpooling, and using apps to find the cheapest stations.
Keeping Paris cool: Paris officials are planning a redesign of the area around Notre-Dame Cathedral to mitigate the effects of rising temperatures on visitors.
Two ways to enjoy the sun: Some companies are betting on dual-use solar, a technology that allows solar panels to share space with crops on farms to generate electricity.
From outside The Times
A city in eastern Japan has the highest temperature for a day in Junebreaking 104 degrees Fahrenheit, or 40 degrees Celsius, according to Reuters.
The Washington Post reported on how people are doing in the Philippines, a country ravaged by typhoons protect their homes from flooding without spending a lot of money.
An investigation by Bloomberg showed how oil giant BP is paying a poor Mexican community a fraction of the market rate for carbon offsets to offset its emissions†
Drought makes bark beetle infestations deadly to some of the world’s oldest trees. The Los Angeles Times looked at whether the trees have a fighting chance†
From CNBC: Leaders of the Group of 7 pledged to start an international climate club to coordinate efforts to remove fossil fuels from their economies†
Officials from 120 countries are in Lisbon, Portugal, for the United Nations Ocean Conference, the AP reported. They’re looking for a deal to protect the high seas†
Before you go: Italian supercars struggle to go electric
Lamborghini and Ferrari face an existential threat as the auto industry shifts inexorably to battery power. So they’re trying to design battery-powered cars that inspire the same dedication as their expensive internal combustion models. It’s a huge challenge, and it’s not just of interest to a few wealthy car enthusiasts: Italian pride and prestige are at stake.
Thank you for reading. We’ll be back on Friday.
Claire O’Neill and Douglas Alteen contributed to Climate Forward.
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