World Bank announces it will discontinue its support towards the oil industry
The World Bank which currently provides nearly $60 billion USD a year in financial support to developing nations has announced it will be removing its support towards the oil and gas industry.
The World Bank has highlighted its focus on climate change and meeting the requirements set within the Paris agreement. Experts have suggested that nations and communities worldwide are more serious about tackling the challenges of climate change and the World Bank intends to play a leading role in this process. This comes at a significant time when the largest shareholder, the US is showing a lack of support and investment into environmental campaigns.
For some time now, environmental activists have urged the World Bank to position itself further away from the oil and gas industry and become more of a leader in the environmental and clean energy industry. Back in 2013, the World Bank made the decision to remove investment in the development of coal-powered facilities, except in exceptional circumstances.
More recently, the World Bank has shown its support towards the clean energy industry by investing in a range of solar and wind project and encourages all borrowers to develop projects that will reduce their overall carbon emissions.
The largest shareholder of the World Bank, the US has declared they would be withdrawing from the Paris agreement, a pact signed by nearly every country worldwide. More recently, Trump has admitted that this decision may be changed but in the meantime, the Trump administration has reduced their funding towards the World Bank.
Whilst the World Bank has made it relatively clear that they intend to focus on clean energy and support environmental projects that tackle climate change, their private sector associates have an alternative standpoint. The International Financial Corporation (IFC) and the Multilateral Investment Guarantee Agency have both continued to invest in fossil fuel projects, including support towards the coal industry. Over 40 projects have been funded by the IFC across Asia. The IFC also invested over $200 million USD into a Mexican Oil Company in 2016.
Whilst the World Bank intends to remove its support towards the oil industry, the President Jim Yong Kim has suggested continued support towards gas investment in regions where it would be appropriate.With an underlying mission to eradicate global poverty, there is a potential that the World Bank will continue to invest in fossil fuel projects via private sector partners. Developing countries are likely to continue to utilize oil and gas reserves, whether the World Bank provide assistance or not.
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