BWP’s new briefing finds year one of World Bank’s Paris Agreement alignment in the energy sector deepened ‘green conditionalities’
•
Article summary
New BWP briefing on the World Bank’s Paris Agreement alignment in the energy sector finds that, in its first year, the focus was on deepening ‘green conditionality’ and structuring a private sector-led energy transition.
30 June marked one year since the World Bank started aligning its financing approved through the International Development Association (IDA), its low-income country arm, and the International Bank for Reconstruction and Development (IBRD), its middle-income country arm, with the Paris Agreement.
BWP’s new briefing reviews all ‘energy & extractives’ projects funded through IDA and IBRD from 1 July 2023 to 30 June 2024. It reveals a continued shift in the Bank’s energy financing towards Development Policy Financing (DPF) – general budget support linked to policy reforms (see Inside the Institutions, What is World Bank Development Policy Financing?). A review of these DPFs showed how the Bank is structuring its energy-sector conditionalities to promote a private-sector-led energy transition in the Global South, though with private investment not materialising at scale and costs of de-risking falling on states and citizens (see Briefing, Gambling with the planet’s future). Meanwhile, the Bank provided only $2.34 billion in direct financing for renewable energy projects in its first year of Paris-aligned lending, with the lion’s share going towards a controversial hydropower dam.
The briefing recommends the Bank must transform its Paris alignment approach to deliver a just energy transition, including conducting an expert-led review of its private-sector-led approach to guarantee fiscal space for green industrial transformation.
