World Bank to Stop Funding Oil Production by 2019

Oil Refinery
Oil Refinery

Oil Refinery/CC

The World Bank will stop funding after 2019 the exploration and exploitation of oil and gas, the organization said Tuesday at the climate summit in Paris.

The multilateral institution hopes to “align with the objectives of the Paris agreement” the funding it grants to states around the globe, the group says in a statement, a decision hailed by the NGO Greenpeace.

While more and more financial players are showing their willingness to disengage from coal, the most polluting energy source, the World Bank is the first multilateral bank to make such a commitment to distance itself from oil and gas exploration and production.

“It was time for the World Bank to take action on this issue, it was time to pave the way,” Jim Yong Kim, president of the World Bank, told the press.

“We must try to look at what energy production will be in the world in the future,” he added, referring to the rise of solar power, electricity storage technologies and geothermal energy.

In 2016, World Bank financing in the oil and gas industry accounted for nearly $ 1.6 billion, less than 5% of all funding in the same year.

Financing for exploration and production accounted for about 2% of the Bank’s portfolio, which claims to be “in line” with its goal of dedicating 28% of its loans to the fight for climate change by 2020.

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However, in certain “exceptional circumstances”, the Bank may continue to finance projects in gas “in the poorest countries where there is a clear benefit in terms of access to energy”, and provided that they are not in contradiction with the commitments of these countries in the international agreement of Paris on the climate, signed in 2015.

Last month, the Central Bank of Norway also recommended the withdrawal of the country’s sovereign wealth fund, the largest in the world, from the oil and gas sector.

“The end is clear for the oil and gas industry,” Greenpeace responded. Believing that the World Bank’s decision is a clear “no-confidence motion” to the fossil fuel industry. The NGO is now calling on other financial institutions to follow suit.

In addition, starting next year, the institution, which is the largest multilateral bank in the world, will publish annually the greenhouse gas emissions of the projects it finances in the most emitting sectors, like energy.

It will also generalize the inclusion of an internal price of carbon in its future investments.

The World Bank is the co-organizer, with the UN, of the climate summit which was held in Paris on Tuesday.

The objective of this meeting, initiated by French President Emmanuel Macron, is to strengthen the mobilization of global finance, private and public, to fight against global warming.

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Many experts (associations, economists) have called in recent days to remove fossil fuel subsidies (coal, oil, gas) in order to finance the development of renewable energy and thus limit global warming below 2 degrees, the objective of the Paris Agreement.

Shakes Gilles

Editor of The Talking Democrat. He enjoys bike riding, kayaking and playing soccer. On a slow weekend, you'll find him with a book by the lake.