Scrap fossil fuel subsidies now and bring in carbon tax, says World Bank chief

Jim Yong Kim calls for five-point plan to deliver low-carbon growth, including removal of incentives to exploit oil, gas and coal

The Guardian, By Larry Elliott, April 13

Poor countries are feeling “the boot of climate change on their neck”, the president of the World Bank has said, as he called for a carbon tax and the immediate scrapping of subsidies for fossil fuels to hold back global warming.

Jim Yong Kim said awareness of the impact of extreme weather events that have been linked to rising temperatures was more marked in developing nations than in rich western countries, and backed for the adoption of a five-point plan to deliver low-carbon growth.

Speaking to the Guardian ahead of this week’s half-yearly meeting of the World Bank in Washington DC, Kim said he had been impressed by the energy of the divestment campaigns on university campuses in the US, aimed at persuading investors to remove their funds from fossil fuel companies.

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  • World Bank fossil fuel financing leapt in 2014 despite its calls to end subsidies

    New analysis reveals funding of over $3bn for fossil fuel-related projects last year, despite repeated calls by bank’s president to scrap such ‘harmful’ global subsidies.

    The Guardian, By Karl Mathiesen, April 17

    The World Bank increased its financing for fossil fuel projects in the last financial year, according to a new analysis, despite repeated calls by its president to end the global subsidies for oil, coal and gas.

    In a report released on Friday, Oil Change International (OCI) identified $3.4bn (£2.3bn) of loans, grants, guarantees, risk management and equity for fossil fuel-related projects in the developing world in the 2013-14 financial year. This was the highest recorded in four years and up 23% on the year before although the bank said it disagreed with lumping in both direct and indirect funding.


    A World Bank spokeswoman said: “We have seen the [OCI] report and do not agree with the way it characterises our work. Critically, the report uses a completely different way of classifying energy projects to the World Bank Group.”

    The spokeswoman said the bank’s own assessment showed its support for fossil fuels almost halved during 2013/14, while its financing of renewable energy rose significantly.

    But the bank admitted that its fossil fuel calculation did not include another tranche of funding for governance, called ‘policy and institutional development’ – part of which supports the burning of fossil fuels.

    “In countries that produce hydrocarbons, these need to be considered as part of the overall energy strategy. In countries where natural gas is available, the development of this resource often provides a critical alternative to coal-fired power generation,” said the spokeswoman, who added that gas was a “clean flexible fuel”. The bank did not provide an estimate of how much it had put towards the fossil fuel industry through this type of funding.

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