The World Bank needs to refocus on poverty
Climate change demands action, but not at the poor’s expense
THE United States just told the World Bank to stop obsessing about climate and get back to its core business of ending poverty.
US Treasury Secretary Scott Bessent called on the organisation to remove its 45 per cent financing for climate projects and instead invest to “increase access to affordable and reliable energy, reduce poverty and boost growth”.
For the sake of the world’s poor, more countries – including Singapore – need to get on board with this commonsensical call.
The World Bank was created at the end of World War II to rebuild Europe – and then took on the mission of lifting poor people out of poverty.
But as with the United Nations and many international organisations, the Bank set its climate path after the Paris Climate Agreement in 2015, committing billions to climate and vowing to lead on green financing.
Last year, it poured US$42.6 billion into climate projects. That is money that couldn’t be used for the world’s most desperate needs.
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Research repeatedly shows that dollar for dollar, core development investments – such as improving maternal health, advancing e-learning, or enhancing agricultural yields – deliver much greater and faster benefits than climate spending.
In contrast, supporting poor countries to make aggressive emissions cuts would yield negligible results on development or climate metrics. Adaptation measures such as flood defences are somewhat better, but still pale against proven development strategies.
World Bank president Ajay Banga has staunchly defended the climate targets. He says that poverty and climate should be tackled jointly.
But this conflation is the core of the problem. It allows the Bank to justify diverting funds from proven, high-impact development (such as maternal health) to high-cost, low-impact climate mitigation projects that do little for the poor today.
Tackling poverty through nutrition, health, and education can quickly help hundreds of millions of people live better lives at low cost.
Tackling poverty via climate mitigation – funding expensive green energy projects to cut negligible emissions in poor countries – will have no meaningful impact for global temperatures by 2030, and little for poverty.
Yet climate policy costs easily run into the trillions while harming the world’s poor by driving up costs of fertilisers and energy.
As Secretary Bessent highlighted, developing nations today need cheap, reliable energy to industrialise, create jobs, and thrive – just as rich countries did a century ago, and China over the past decades.
Most of Africa remains quite poor with little access to energy beyond wood and hydro power. The average poor African only gets to use as much fossil fuel in a year as an American uses in less than nine days.
“Rich governments should invest in long-overdue R&D for breakthrough green technologies – affordable, reliable alternatives that everyone, rich and poor, will adopt. That is how we can solve climate without sacrificing the vulnerable.”
The World Bank aims to connect 300 million more Africans to electricity by 2030 through its Mission 300 initiative.
This is a worthy goal that is at risk of sabotage by an ever-present fixation on renewables.
The bank’s Mission 300 partner, the Rockefeller Foundation, touts renewables as the “most cost-effective and rapid route to prosperity”. This is fantasy.
While solar and wind can be cheaper than fossil fuels when the sun is shining and the wind is blowing, they are infinitely costly when there is no sun and wind. Reliable power requires extensive backup that drives up cost and makes high-solar and wind societies experience higher electricity costs across the world.
This is why rich countries, despite their green rhetoric, still get more than three-quarters of their energy from fossil fuels.
The World Bank’s own client surveys show people in poorer nations rank climate low on their list of concerns.
While African leaders will politely speak green to the Rockefeller Foundation and the World Bank, their actions speak more loudly. Last year, Africa added five kilowatt-hours of electricity for each person from solar and wind.
But it added almost five times more from fossil fuels, because they are cheaper and more reliable. Across all energy (not just electricity), Africa increased its solar and wind consumption a bit, but increased its fossil fuel consumption 22 times more.
Climate change demands action, but not at poverty’s expense. Rich governments should invest in long-overdue research and development for breakthrough green technologies – affordable, reliable alternatives that everyone, rich and poor, will adopt. That is how we can solve climate without sacrificing the vulnerable.
More countries need to get on board with the mission to return the World Bank to focusing on poverty. Raiding development funds for climate initiatives isn’t just misguided. It is an affront to human suffering.
The writer is president of the Copenhagen Consensus, visiting fellow at Stanford University’s Hoover Institution, and author of False Alarm and Best Things First
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