Multilateral Development Banks (MDBs) are somewhat new to the spotlight at COP, but they hit the big time last year getting a call to reform and scale up their ambition on climate finance in the COP27 cover decision.
Not ones to shy away from big gestures – the MDBs can certainly splash the cash: USD$17bn direct finance to fossil fuels since the Paris Agreement (and this is before indirect finance via financial intermediaries, technical assistance, trade finance and budget support has been calculated) — 68% of this was spent on fossil gas.
Some MDBs are leading and some are lagging. The European Investment Bank has signed the Clean Energy Transition Partnership to shift public finance to a renewable just transition. Meanwhile, the World Bank leads the MDBs in financing fossil fuels. Why yes, that’s the same World Bank that is the new host for the Loss and Damage Fund. And yes, that does mean they’ll be funding gas projects with one hand while dishing out cash for the damage caused by fossil fuels with the other.
As MDB heads meet with the COP president today, will they only chat about how private finance can save the planet? Or will they discuss meaningful agreements that recognize the need for public finance to shift out of fossil fuels and support a just transition that is transparent and upholds the rights of all? Will they remain silent about the structural debt crisis, or will they address that the MDBs’ main response to all challenges is to grant even more loans? What about progressive taxation? Maybe, before we make the MDBs bigger, we should demand they become better.
We must expect the MDBs to recognize that the commitment to align with the Paris Agreement means supporting a 1.5°C pathway that has no room for fossil fuel expansion. We also expect the World Bank president and others to recognise that calling gas a ‘transition’ fuel ignores demands from Global South countries for a people-centered just, rapid, and equitable transition to sustainable, renewable energy. All in all, it is unclear how creating more emissions, locking in a fossil fuel development model and creating stranded assets is transitioning to anywhere except increased poverty and even more disastrous climate impacts.
Never fear, ECO’s here to help. Here’s a short to-do list to ensure that this year there isn’t just talk about reform but meaningful climate action from the MDBs at COP28 and beyond:
- End direct and indirect finance for all fossil fuels including fossil gas.
- Shift finance to a just transition that benefits people and the planet. Invest in sustainable renewables and energy efficiency that are cheaper, cleaner and bring real benefits to local communities, not profits to big foreign corporations.
- Increase ambition and quality of investments to keep 1.5 alive.
- Take urgent action on the debt crisis and provide more long-term concessional climate finance, with faster and direct access.
- Increase transparency and accountability, require deep improvements in reporting on investments, use only grant-based finance and shift away from neocolonial power structures to democratic governance. Give the users of the banks a larger say, from developing countries to local communities that benefit or suffer from the banks’ lending.
- Stay away from dangerous distractions, risky and inefficient ‘solutions’ including nuclear power and geoengineering.