Multilateral Development Banks have financed at least $3 billion in fossil fuels during COVID-19 recovery

FOR IMMEDIATE RELEASE

March 30, 2021

CONTACT:

Paulina Resich, presich [at] iisd [dot] org
Bronwen Tucker, bronwen [at] priceofoil [dot] org

To view the interactive data pages: https://www.energypolicytracker.org/institution_analysis/mdbs
To download the briefing: https://bigshiftglobal.org/MDB-finance-2020

30 March 2021: Today sees the release of the data on project financing from the nine major Multilateral Development Banks on the Energy Policy Tracker and a new Big Shift Global briefing, showing that, since the beginning of the pandemic, the Banks provided at least $12 billion to clean energy and $3 billion for fossil fuels. 2020 was also the first year where there might be no project financing for coal from the MDBs, although transparency from the Banks on their finance flows remains an issue.

The analysis shows that overall project finance spending on fossil fuels in 2018-2020 fell by 40% in 2018-2020 compared to the period 2015-2017. While this is a welcome step as a result of many of the Banks’ exclusion policies on coal and specific areas of oil & gas, experts highlight that the 2020 drop is partially a result of the pandemic-fueled decline for major oil and gas project approvals as well as less transparent spending towards general recovery packages.

In 2020, the nine MDBs combined provided at least $3 billion in support for fossil fuels, a figure that is fundamentally at odds with the many statements of support for a green recovery and a transition to the green economy that all the Banks have made.

Gas made up more than 75% of known MDB fossil fuel support in both 2020 and the two years preceding it, marking this as the key area to address for all of the Banks.  The available data also shows that 2020 may be the first year the nine major Multilateral Development Banks had zero known finance for coal – but as the IsDB has suspended reporting of its project finance, the publicly-available data might be incomplete.

This data has been released ahead of the UK Global Summit on Climate and Development and the Spring Meetings of the World Bank Group and the International Monetary Fund. As the UK, EU, and US move to end their international public finance for fossil fuels, pressure is mounting on the Banks to do so as well. This release also follows two letters calling on the World Bank to make a whole-of-institution commitment to end all types of support for fossil fuels at their 2021 Spring Meetings — one from nine Executive Directors of the World Bank and another from more than 150 civil society organizations and academics.

Lucile Dufour, Senior Policy Adviser, International Institute for Sustainable Development said: “The addition of MDBs to the Energy Policy Tracker allows policymakers to have a clearer picture over the direction of the recovery from COVID-19. The drop in MDBs’ project finance to fossil fuels demonstrates that when there’s a will, there’s a way: the recovery from COVID-19 can help build back better, by supporting clean energy projects in developing countries. However, MDBs still have a long way to go to provide fully fossil-free international support aligned with the Paris Agreement. The shift observed in 2020 should be the first stepping stone to make 2021 the year in which the public finance balance finally tips from fossils to clean.”

Sophie Richmond, Big Shift Global Coordinator, said: “This shift by the MDBs in investing more finance in renewable energy is a welcome step but it is not enough. To tackle the climate crisis, we need to see all finance shifted out of fossil fuels and into sustainable, renewable energy that doesn’t hurt the planet or communities. The MDBs’ current investments are locking in decades of emissions, and damaging the environment in which the most vulnerable people live. We call on all the MDBs to lead the way in urgently shifting all remaining finance out of coal, oil & gas, and invest in sustainable, renewable energy that will help provide energy access for everyone.”

Bronwen Tucker, Research Analyst, Oil Change International said: “The MDBs first pledged to align their finance with the Paris Agreement in 2017, and in 2021 we’re still waiting. As the Asian Development Bank and World Bank Group draft new climate and energy policies this Spring, we’re looking to them to join the European Investment Bank, the EU, UK, US, and others who have recently committed to end their public finance for fossil fuels. These first movers should work together to change global norms towards ending public finance for fossil fuels ahead of the UN Climate Summit in November. At this point in the climate emergency, we don’t just need leadership, we need leadership that’s strategically aimed at creating a domino effect across institutions.”

Out of the nine MDBs, the EIB stands out for its clean energy funding: $6 billion, almost 9 times what it spent on fossil fuels. The World Bank still provides the majority of fossil fuel funding: $5.7 billion across the 2018-2020 period. The EBRD and AIIB are the only outliers, as their spending on fossil fuels did not reduce across the 2018-2020 period, despite both banks having clear mission statements on supporting a transition towards clean energy.

Notes

The Multilateral Development Banks (MDBs) that are included are: World Bank Group (WBG), European Investment Bank (EIB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), Islamic Development Bank (IsDB), Inter-American Development Bank (IaDB), Asian Infrastructure Investment Bank (AIIB), African Development Bank (AfDB) and New Development Bank (NDB).
The Energy Policy Tracker classifies policies depending on the type of energy they support, such as fossil fuels or clean energy, and assesses whether they were approved with or without environmental strings attached. The database does not classify policies according to the environmental impact of recovery measures. There may be differences in research findings provided by the Energy Policy Tracker and other recovery trackers due to the diversity of methodological approaches. More information about the Energy Policy Tracker methodology can be found here.
The MDB data used in the report and the Energy Policy Tracker site is from Oil Change International’s Shift the Subsidies database, which also tracks public finance for energy projects from G20 public finance institutions.

Energy Policy Tracker: The EnergyPolicyTracker.org provides real time data on public finance for energy around the world. The website is updated regularly to reflect current climate and energy policy commitments from 31 major global economies and 9 MDBs. Regular updates can be received by signing up here. The data is provided by a consortium of 23 organizations across the world. The full list is available here.

The Big Shift Global Coalition: The Big Shift Global Coalition is made up of over forty civil society organizations from across the globe calling for an end to public financing of fossil fuels and a shift to investing in sustainable, renewable energy to provide energy access for all. The full list of members is available here.