World Bank and other multilateral development banks have recently startedReconsiderationThis change is being motivated in partNew US administrationAnd also supported byDeveloping country expert,
Nevertheless, the reality remains that fossil fuel emissions, and especially climate change they inspire, can be severely weakMultilateral development bank projectsAndOverall developing country development possibilities,
Most emissions, however, come from rich big economies, not poor developing people. Given the negative effects of these emissions, multilateral development banks need to push rich economies away from fossil fuels, even they consider softening restrictions on lending for fossil fuel projects in poor countries.
In the last decade, multilateral development banks began to ban funds for fossil fuel projects due to concerns about emissions, but also Under pressure from America, European and other major stakeholders,
For example, World BankAnnouncedIn 2017, it will stop funding massive gas drilling and extract projects. OtherMultilateral development banks follow the suit,
many These restrictions have denied economic benefits to poor countries, such as Export revenue And Domestic gas reserves fuel power plantSub-Sahara Africa and South America have contributed very little to historical global emissions- 2 percent and 3 percent respectivelya trend It is estimated to continue,
As International energy agency Highlights in its climate scenarios, from the world’s largest economies, should reduce emissions required to avoid dangerous levels of climate change. It also includes China, with 33 percent carbon dioxide emissions in 2022, followed by the US with 13 percent, the European Union took a block, Russia and then as Japan. Together, these countries generate 60 percent of the global clan. India is also a big emitter, but its level is more than a large scale population than wealth.
These emissions, and especially climate change they drive, offer two important risks to multilateral development banks. First, they weaken Development benefits The multilateral development bank was sought by projects. Second, they pose financial risks for these banks Potential Developing countries to repay their loans to borrowers.
The massive 2022 flood in Pakistan shows the possible disastrous economic impact of climate change, as the country faced $ 30 billion In disadvantage – about 10 percent of its GDP. It is not possible to plan or adapt for this degree of destruction. It needs to be postponed.
Unfortunately, various factors appreciate the potentially disastrous effects of climate change. First, the future is inability to see. Does not provide a full meaning to look back or in the present Climate change potential disastrous effects of future,
Second, the effect of climate change increases over time, producing more destruction in a more distant future. Its small impact on today’s stock market occurs to a large extent with its potentially large -scale economic damage from 15 to 20 years after the climate change deteriorates.
This long -term is particularly relevant to multilateral development banks, whose projects often take years to mature, and whose related loans are more than 15 years.
Third, this is a feeling of uncertaintyClimate minimizer exploitedTo play long -term crises of emissions relative to short -term benefits of fossil fuel projects.
As a result, multilateral development banks are caught in a difficult dynamic: reply to pressures from major shareholders – especially America – to loosen restrictions on financing for fossil fuels, work to limit greenhouse gas emissions that affect development negatively.
Earlier this year, the President of the World Bank proposed Changes in “all above” approachAlong with more natural gas development projects -with nuclear power and other options. Although this proposal Was welcomed by someWorld Bank Board in June A decision on natural gas postponed, even it approves nuclear power,
The writing is on the wall because the US pushes multilateral development banks to fund more fossil fuel projects. This debate will continue, including the upcomingWorld Bank annual meetingsNext month.
To reduce the risks of climate change for multilateral development banks, these organizations must initiate an initiative to encourage the largest greenhouse gas violers to reduce their emissions.
Although these countries are not susceptible to affecting by multilateral development bank borrowings, they are all major shareholders and are active on multilateral development bank boards. This participation provides multilateral development banks an Avenue to join these countries.
The initiative for change can be built around analytical function, abbreviation and outreach about the negative development effects of rich country emissions. It can also be launched in the annual meetings of October.
Is this likely in today’s political environment? No, but this does not mean that it has no meaning.
Philip is Managing Director at BenoitGlobal Infrastructure Advisory Services 2050He first worked as a division head at the World Bank and International Energy Agency, as a director at the SG Investment Bank and as a senior assistant research scholar at the Columbia University-SIPA Center on a Global Energy Policy.
