The World Bank will end it’s financial support for oil and gas exploration and production after 2019.
In response to the growing threat posed by climate change, the World Bank announced that it “will no longer finance upstream oil and gas” after 2019.
The petroleum industry can be broken down into three sectors: upstream, midstream, and downstream. The upstream sector deals with the exploration and production of oil and gas.
The announcement was made on Tuesday at the international One Planet Summitin France to mark the 2 year anniversary of the Paris Agreement.
President Donald Trump – who intends to withdraw the U.S. from the Paris agreement – was not invited to the meeting.
The world bank has been lending $1 billion a year for oil and gas projects in developing countries (about 1-2% of the company’s $280 billion portfolio), but was under increasing pressure from lobby groups to divest.
The bank said that it recognizes the need to change its practices in a “rapidly changing world.”
In addition to ending financial support for upstream oil and gas, the bank announced that 28% of it’s lending will be allocated to climate action by 2020, as outlined in its Climate Action Plan, developed after the Paris accord.
Stephen Kretzmann, the executive director of Oil Change International, praised the World Bank’s latest announcement:
“It is hard to overstate the significance of this historic announcement by the World Bank. Environmental, human rights, and development campaigners have been amplifying the voices of frontline communities for decades in calling for an end to World Bank financing of upstream oil and gas projects.”
“Today the World Bank has raised the bar for climate leadership by recognizing the simple yet inconvenient truth that achieving the Paris Agreement’s climate goals requires an end to the expansion of the fossil fuel industry.”
The Bank already stopped lending to coal-fired power stations in 2010.
The bank admitted that in rare cases it may be willing to lend to oil and gas production, but only in the poorest countries, where it allowed the people to get access to energy, and only if it does not conflict with the commitments to reduce greenhouse gas emissions outlined in the 2015 Paris Agreement.
Other initiatives announced at the One Planet Summit include:
- Climate Action 100+, which is comprised of 225 investment funds managing more than $26 trillion in assets, said it would use its financial clout to raise the issue of climate-related risk with 100 of the world’s largest corporate greenhouse gas emitters.
- More than 200 companies pledged greater transparency on reporting climate-related risks in their businesses as part of a voluntary program led by Michael Bloomberg.
- Dutch bank ING plans to have zero investments in coal power generation by 2025.
- Norwegian pension fund Storebrand said it’s expanding its portfolio of fossil fuel-free investments to more than $3 billion.
- French President Emmanuel Macron proposed raising the minimum price per metric ton of carbon dioxide to 30 euros ($35.39). Current prices for the greenhouse gas in Europe are up to five times lower.