Powering the Transition
World Bank and other IFI energy lending in Asia
This year, the World Bank is holding its Annual Meetings in Asia. This is a region that will be key to the success of the global energy transition, and at the same time has much to lose if it does not happen fast enough, because its people are so vulnerable to climate change.
The most climate-vulnerable Asian countries are spearheading a new form of climate leadership and have set visionary goals. How can the World Bank, together with other international financial institutions (IFIs), support them to turn these bold commitments into reality?
The World Bank meets in Indonesia, days after the wake-up call of the Intergovernmental Panel on Climate Change (IPCC) 1.5°C report, and ahead of the UN climate talks where countries must prepare to revisit their nationally determined contributions (NDCs) to keep the goals of the Paris Agreement in sight.
In parallel, the Climate Vulnerable Forum (CVF) of countries will be organizing at the very highest level,2 under the leadership of the first female president of Pacific Island nations, to inject a new kind of political momentum to raise ambition. Their own commitment to reach 100% renewable energy by 2050 raises the bar for other countries, and challenges the World Bank – and other international financial institutions (IFIs) – to match their bold leadership with finance.
This paper holds up a mirror to current and planned IFI energy sector support in Asian climate-vulnerable countries. It shows how this is not yet fit for purpose, and recommends how IFIs can intervene at this critical juncture to give governments the confidence to step up.
If done right, IFI financial and technical support can unlock and operationalize higher renewable energy ambition. This paper also warns of what to avoid by showing that the costs of indirectly-supported coal would end up harming the region that IFIs are trying to help.