The Big 7 multilateral development banks (MDBs) are dropping the ball when it comes to financing green energy. A new report, called “Small Steps Are Not Enough,” from Christian Aid’s Big Shift Global, ranks the MDBs on their efforts to move finance from fossil fuels to green energy.
The Big Shift Global campaign’s remit is to call for “an end to public financing of fossil fuels and a shift to investing in sustainable, renewable energy to provide energy access for all.” They continue:
Multilateral development banks such as the World Bank manage billions of dollars of public money. They are key to financing the shift to a sustainable, renewable global energy system. As major funders of fossil fuels in the past, these Banks have a responsibility to lead the way on phasing out fossil fuels and shifting investment to distributed renewable energy.
So The Big Shift Global evaluated how the banks are doing, and the results aren’t good. The bottom line: “All the MDBs need to be taking much bigger action to achieve their goals of stopping climate change and ending poverty.” Further, all seven banks are still including natural gas as a key part of their current energy strategies. While it’s cleaner than coal, it’s still a fossil fuel.
The grades
Here are the report card results of energy policies of progress toward phasing out fossil fuels completely. (Let’s just say that no one is graduating valedictorian of their class):
- World Bank: C (withdrew from its last coal-fired power plant in October 2018)
- European Bank for Reconstruction and Development: D (still considers upstream gas projects)
- Inter-American Development Bank: D
- Asian Development Bank: D (has not ruled out investment in coal)
- African Development Bank: D (has not ruled out upstream oil and gas exploration)
- Asian Infrastructure Investment Bank: F (has not ruled out investment in coal, still financing oil and gas)
- European Investment Bank: F (If the European Investment Bank phases out all fossil fuel finance by the end of 2020, based on the draft of its new economic policy, it will receive an A grade.)
Development banks are on the front lines of the debate as they are often one of the biggest suppliers of risk capital to infrastructure and energy-production projects in developing countries.
“There are two main points,” Kat Kramer, global lead on climate change for advocacy group Christian Aid and the report’s coauthor, told Fortune. “One is that funding for green energy projects is growing too slowly, and the other is that the development banks continue to fund fossil fuel energy.”
Fossil-fuel project financing nearly matches financing for green energy. No MDBs are currently fulfilling the needs of climate science on limiting global heating to 1.5 degrees Celsius.
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