In a significant move towards addressing climate change, the World Bank, under President Ajay Banga, announced on Wednesday a substantial reduction in fossil fuel funding while defending its $170 million investment in natural gas as part of its climate strategy. The bank's reforms could potentially boost its funding capacity to $150 billion over the next decade. However, Banga cautioned that this might not be enough to meet global needs.
The announcement came during the World Bank and International Monetary Fund's annual meetings in Marrakesh, Morocco, where climate change reforms are being prioritized. Banga, who took over from David Malpass amid queries about his stand on climate change, engaged with civil society and non-governmental organizations about the bank's transition from fossil fuels since 2019 and its cessation of direct coal plant funding since 2010 from a total commitment of $120 billion. Meanwhile, the bank's investments in renewable energy projects have seen a threefold increase to $39 billion. Banga also highlighted the small yet significant role of natural gas in energy transition and development.
On the same day, at the G-24 Ministerial Meeting, Finance Secretary Benjamin Diokno called on the World Bank and Multilateral Development Banks (MDBs) to reinforce concessional financing for low and middle-income countries. He emphasized its critical role in post-pandemic recovery and ongoing crises such as climate change, food insecurity, public health challenges, and learning poverty.
Diokno commended the World Bank's successful implementation of G20 Capital Adequacy Framework measures, which have created an additional $50 billion lending capacity over a decade. He also underscored the need for improved financing terms due to rising interest rates and international borrowing costs, highlighting the increasing Secured Overnight Financing Rate's (SOFR) risk to International Bank for Reconstruction and Development (IBRD) countries like the Philippines.
He further welcomed proposed additional measures aimed at enhancing the World Bank's financing capacity, especially towards providing concessionality for low- and middle-income nations. Diokno championed more concessional funding for climate-related projects, underlining 'climate justice' and the $4 trillion to $6 trillion investment required for a global transition to a low-carbon economy.
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