World Bank Group, an international financial institution, has decided to stop financing upstream oil and gas projects in a bid to help tackle climate change.
The World Bank said on Tuesday at the One Planet Summit, convened by French President Emmanuel Macron, it would stop financing upstream oil and gas after 2019 in order to align its support to countries to meet their Paris goals. The bank’s commitment comes two years after the Paris Agreement was signed, pledging to try and keep a global temperature rise this century well below two degrees.
According to its official website, the One Planet Summit is an alliance of hundreds of global leaders from all sectors, determined to demonstrate the power of collective action in addressing such a global issue as the fight against climate change. The aim is to find new means of speeding up the reduction of greenhouse gas emissions, and of ensuring climate issues are central to the finance sector.
Explaining its decision to exit oil and gas, the World Bank said the move is part of its efforts to transform its own operations in recognition of a rapidly changing world.
In exceptional circumstances, the bank said it would consider financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within the countries’ Paris Agreement commitments.
Speaking of bank’s oil and gas investments, about a year ago, the bank allocated over half a billion of dollars in debt and guarantees to support Vitol and Eni’s Sankofa offshore oil and natural gas project in Ghana. Ghana’s government identified the Sankofa project as one of two transformational projects that would help the country achieve its COP21 commitments for climate mitigation. The project is expected to reduce carbon emissions in Ghana by an estimated 1.6 million metric tons annually as gas displaces heavy fuel oil—equivalent to taking 1.2 million cars off the road each year or planting 152 million trees.
Another reason the World Bank is supporting the Sankofa project is that the project is expected to generate $2.3 billion in revenues for Ghana’s government (per year) and provide a stable, long-term source of domestic gas that will solve Ghana’s chronic gas supply constraints.
The WBG added on Tuesday it was on track to meet its target of 28% of its lending going to climate action by 2020 and to meeting the goals of its Climate Change Action Plan – developed following the Paris Agreement.
Offshore Energy Today Staff