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.
