This update was co-written with María Marta Di Paola, Research Director at FARN and Guillermina French, Research Assistant at FARN.
BIC and Fundación Ambiente y Recursos Naturales (FARN) recently published a report analyzing the World Bank Group’s (WBG) investments in the energy sector in Argentina. After analyzing the WBG’s commitments in its Climate Change Action Plan (CCAP) in 2016, we reviewed active WBG projects in Argentina, finding that the value of direct investments destined for fossil fuels was 88 percent higher than for renewable energy, totaling $541 million in investments in fossils, with only $287 million going to renewable energy.
Our report shows that the International Bank for Reconstruction and Development (IBRD), the World Bank’s public sector lending arm active in Argentina, largely supports projects that reduce GHG emissions, aligned with the commitments made in the CCAP. However, the International Finance Corporation (IFC), the Bank’s private sector arm, continues to fund oil and gas projects related to the extraction and development of fossil fuels with significant impact on climate change and the environment, undermining the commitments of the CCAP.
This trend is not only evident in the WBG’s investments in the energy sector, but is also repeated in other sectors such as mining and forestry. The bottom line: The scale and impact of the WBG’s fossil fuel investments pose serious risks to undermining the gains made by the CCAP on the environment and climate change.
Based on our analysis, we recommend the IFC promote clean energy investments by including upstream oil and gas projects in the exclusion list to avoid indirect investment in fossil fuels. The IFC must also stop financing physical and financial infrastructure that supports energy generation using fossil fuels. The WBG should work to align its private sector investments made via the IFC with its stated goals to prevent negative impacts of IFC investments from outweighing the positive impacts made by public sector lending.
In light of the economic crisis caused by COVID-19, the WBG has the opportunity to build back better by supporting clean energy projects. The WBG should take advantage of this recovery to stop financing, subsidizing, or using fossil fuels; promote a clean, equitable, and distributed energy transition process; and only finance projects aimed at promoting an energy matrix that respects the environment and communities.
The need for leadership is urgent: WBG should use its influence to insist on climate change as a key element of sustainable development and integrate upstream analysis of policies and investments, as well as incorporate the CCAP commitments into the projects they finance.
For more information, see the full report here: