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World Bank drives billions into fossil fuels, including Asia’s largest coal field

Over 70 organizations call on World Bank President to step down

Heike Mainhardt, Urgewald

October 14, 2021

Ahead of the COP26 climate summit, the World Bank is boasting to “already [be] the largest multilateral funder of climate investments in developing countries.” However, the World Bank neglects to disclose that it is at the same time also the largest multilateral funder of fossil fuels in developing countries – providing $12 billion in project finance since the Paris Climate Agreement.

The World Bank is even still assisting coal. This week, during the World Bank’s Annual Meetings, Urgewald released a new report that shows: Despite the World Bank’s pledge in 2013 to no longer finance coal power plants, the Bank still provides public assistance to coal in many crucial ways.

The new study explains how the World Bank’s technical assistance in Pakistan provided a road map for attracting investment into the undeveloped Thar lignite coal field – the largest coal field in Asia. One element of the Bank’s coal road map included advising the government to establish a power tariff that would be able to attract investment into Thar coal-to-power projects through a “sufficient” return on investment, i.e., big enough profit.

World’s most profitable coal investments

After 2013, the World Bank continued to assist Pakistan to follow the coal road map without calling it coal. During 2014 to 2016, the Bank had two Power Sector Reform development policy operations providing $1.1 billion in government budget support. The World Bank’s Power Sector Reform included tariff reforms with fixed-capacity payments that incorporated a high rate of return on investment making new coal power investments in Pakistan the most profitable in the world.

In addition, the World Bank’s private sector arm, the International Finance Corporation (IFC), provided US$75 million equity and US$150 million loan to Habib Bank; and US$66 million equity to Bank Alfalah. Subsequently, these two Pakistan banks helped finance five Thar coal-to-power projects. Furthermore, from 2017 to 2024, the World Bank is providing US$425 million “to accommodate the connection and transmission of new power generation,” which includes new coal-generated power.

Following the World Bank’s coal road map, Pakistan went from having only one small 150 MW coal-fired power plant in 2016 to five coal plants equal to 4,770 MW in 2020 with another 3,330 MW of coal power due to come on-line between 2022 and 2023. After years of electricity shortages, now Pakistan has too much power. The surplus power means power plants have low utilization rates coupled with high fixed-capacity payments, which stem from the World Bank’s tariff reforms. As a result, Pakistan’s power sector debt has swelled and threatens the country’s financial wellbeing and expansion of renewable energy.

Pakistan is not an isolated case

According to Urgewald data collection, since the Paris Climate Agreement, the World Bank has provided over $12 billion in fossil fuel project finance in over 35 countries; policy reforms in dozens of countries making fossil fuel investments, including coal, more profitable; $10-$20 billion annually in government budget support without any restrictions on fossil fuel expenditures (to 81 countries since Paris Agreement), and technical assistance in at least 11 countries aimed at expanding fossil fuel investments, including coal.

Over 70 organizations call for World Bank President Malpas to be replaced

Given the billions of dollars in investments the World Bank is driving into fossil fuels, over 70 civil society organizations sent a letter to the World Bank’s Executive Directors calling for the replacement of the Bank’s president, David Malpas.

These organizations are demanding the World Bank end all forms of public assistance for all fossil fuels and to support countries on a just transition to renewable and inclusive development. The letter also asks to establish stronger climate and social justice qualifications for management personnel responsible for the Bank’s climate and energy work.