The World Bank and the European Bank for Reconstruction and Development (EBRD) both made new commitments during the One Planet summit this week in a bid to speed up financial support for global climate action.
The World Bank said it would cease to finance oil and gas drilling and production projects from 2019. The move has been hailed as “huge” and one that could lead the way to a major change.
“Today we are announcing that the World Bank Group will no longer finance upstream oil and gas, after 2019,” the bank’s president Jim Yong Kim said at the summit. “We’re determined to work with all of you to put the right policies in place, get market forces moving in the right direction, put the money on the table, and accelerate action.”
Meanwhile, the EBRD announced that it has teamed up with the Global Covenant of Mayors for Climate and Energy (GCoM) to speed up and increase the delivery of finance and support for climate action across cities.
The bank launched the Green Cities Climate Finance Accelerator and said it will provide over US$500mn-worth of financing aimed at encouraging additional third-party contributions for the development and implementation of city action plans and projects worth a total of US$1.5bn.
The new initiative can be applied across different regions and, as well as having direct involvement with local governments and utilities, seeks to engage the private sector in infrastructure and financing.
Speaking at the launch in Paris, EBRD president Suma Chakrabarti said: “The structure and specific targets of this financing accelerator provide a working operational model which can be replicated with other financial institutions across regions of the world and built-up to a global scale.”
More than 50 world leaders were present in Paris this week, on the second anniversary of the Paris climate accord, during which French President Emmanuel Macron warned delegates that the world was “losing the battle” against climate change and not reducing its carbon dioxide emissions fast enough.
In a statement released during the summit, major development finance institutions promised to step up their collaboration to achieve goals set under the 2015 Paris Agreement.
Heads of major multilateral development banks and members of the International Development Finance Club (IDFC) said they would work to direct capital towards sustainable investments by demonstrating the opportunities and potential returns, and by reducing the risks associated with them.
Earlier this month French bank Société Générale said it would raise €100bn for the financing of energy transition projects between 2016 and 2020 and that it would stop investing in oil sands and Arctic oil projects.
This follows HSBC’s pledge to provide US$100bn to sustainable finance and investment by 2025 as part of a new raft of commitments to tackling climate change. The banks say that the new commitments will strengthen their support for the implementation of the United Nation’s Sustainable Development Goals.
The International Energy Agency estimates that the world needs to spend a total of US$359tn by 2050 to avoid catastrophic climate change.