In August, the US Treasury issued new guidance on US support for fossil fuel projects for its representatives at multilateral development banks (MDBs). This will guide the US’s ‘voice and vote’ at the World Bank and other MDBs going forward.
Under the guidance, for future World Bank-funded projects, the US will, “only consider [support for] fossil fuels if [cleaner options] are unfeasible,” per reporting by online news site Climate Home. The US remains the World Bank’s largest and most influential shareholder (see What is the ‘gentleman’s agreement?’).
However, gas projects could still be supported by the US at the World Bank if an ‘options study’ shows no feasible clean energy alternatives. Civil society organisations (CSOs) have voiced apprehension, noting the need for this process to be transparent and credible. Indeed, analysis by Oil Change International showed that up to 40 per cent of fossil fuel finance provided by MDBs from 2018 to 2020 — or $1.6 billion per year — went to gas projects that could potentially be eligible for support under the guidance, depending on how it is implemented.
“While the guidance introduces novel, broad-based restrictions on US support for fossil fuel projects at the MDBs…[it] leaves loopholes for continued fossil fuel financing that are so big, you can drive an LNG ship through them,” said Luisa Galvao of Friends of the Earth US, in response to the guidance.
The new guidance follows the release of the World Bank’s Climate Change Action Plan for 2021-25 in June, which was criticised by CSOs for not going far enough in limiting the Bank’s support for fossil fuels (see Observer Summer 2021).