What Didn’t Get Said: Missed Opportunities at the Spring Meetings

Martha Molfetas

Heela Rasool-Ayub

The World Bank and International Monetary Fund (IMF) Spring 2024 meetings held the promise of a watershed moment, after the excitement for robust climate action when Ajay Banga became president of the World Bank. But the lack of commitment to tackle entrenched obstacles has kept meaningful reform just out of reach. This year's Spring Meetings doled out change in small increments, when what the world needs is sweeping action.

The path to a just energy transition must create meaningful change by addressing both today's debt and development realities and the future's climate and energy challenges. The pain of doing nothing will far exceed the costs of a just transition to clean energy: an estimated $1.2 quadrillion by 2100 in climate-fueled damages if business continues as usual-to say nothing of the loss of human life and retreat of habitable zones-while a transition to net-zero energy systems can save us $12 trillion by 2050. In the wake of all that is known about our climate reality, global forums continue to under-deliver.

During the Spring Meetings, the World Bank and IMF took steps that were necessary but not sufficient. Eleven nations pledged a combined$11 billion to a hybrid capital mechanism and the creation of the Liveable Planet Fund. The World Bank unveiled an initiative to better coordinate co-financing efforts with ten other multilateral development banks and, with the African Development Bank, committed to bring energy access to 300 million people across Africa by 2030. These are largely performative gestures in the face of the $366 billion annual deficit poorer countries need to adapt to climate change.

If development banks are serious about reforming the international financial infrastructure to take on climate change, they must address the elephants in the room-otherwise, their silence only gives credence to skepticism about their ability to meet this historic moment.

Climate Debt Trap

Conspicuously lacking were discussions of the debt burden of emerging market and developing economies (EMDEs). EMDEs face staggering development bank debt that exceeds investments needed for climate resiliency and mitigation efforts. Emerging economies alone will pay about $400 billion to service these debts this year. Many EDMEs will likely face debt insolvency in five years, impacting 1.1 billion people. Almost all (93%) of countries most vulnerable to climate impacts are in debt distress or at significant risk of it. For the Vulnerable 20 (V20)-a group of nations especially susceptible to climate impacts-climate change escalated the cost of debt by $62 billion over the past decade. Debt burdens plus increasing climate shocks are leaving poorer nations unable to invest in their socioeconomic development, let alone adaptation and mitigation. Proposals like the Bridgetown Initiative and the V20's Accra to Marrakech Agenda offer options to address the inequities built into the Bretton Woods order. If the World Bank and IMF are serious about climate adaptation and mitigation, they must restructure debt burdens and forgive debt for vulnerable nations while increasing investments in climate-resilient infrastructure and adaptation measures.

Financing Fossils

Development banks are still financing fossils, despite pledges to the contrary. The World Bank Group says it stopped investing in oil and gas in 2019, but both the Multilateral Investment Guarantee Agency (MIGA) and the International Finance Corporation (IFC) continue to finance such projects. The International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) support fossil fuels through budgetary financing, policy reforms, associated infrastructure, and technical assistance. In 2021 alone, MIGA and IFC direct support, alongside IBRD and IDA's indirect support, totaled $1.6 billion in fossil fuel finance-not including funding for fossil-friendly infrastructure, advocacy for policy reforms, and technical assistance. In 2022, the World Bank financed $2 billion in fossil energy projects. At the Spring Meetings, energy transition investments were largely linked to natural gas-a fossil fuel responsible for 22% of global emissions. Pledges to stop financing or subsidizing fossil fuel projects are hollow unless institutions thoroughly reassess where they are sending their money.

Green Technology Transfers

Emerging economies have long advocated for technology transfers to help transition to a greener economy. The lack of robust technology transfers from more advanced economies is a barrier, exacerbated by increasing fragmentation and dwindling trade flows. As the primary stewards of the international financial system, the World Bank and IMF should initiate discussions on technology transfers and promote associated incentives. Leveraging its economic surveillance mandate, the IMF could advise members on the benefits of liberalizing goods and services to align with their Paris-goals. The recently launched IMF Resilience and Sustainability Trust can incentivize IMF members and help them identify strategies to leverage or de-risk investments in renewable energy-attracting private investors. At a minimum, these institutions could enhance financing options through concessional rates significantly more favorable than market terms.

Critical Green Resources

EMDEs hold much of the world's reserves of lithium, cobalt, nickel, and other resources for our clean energy transition, while their extraction often causes local environmental and health harms. The Spring Meetings gave little discussion to harnessing these critical resources with social justice or incentivizing debt forgiveness around their access. The World Bank and IMF are missing the opportunity to help EDMEs electrify with renewable energy developed through locally-available green resources-empowered by finance incentives-rather than locking them into fossil energy that harms the environment and exacerbates climate vulnerabilities.

The World Bank and IMF are picking off low-hanging fruit, but the urgency of our twin energy and climate crises requires more. While the World Bank and IMF are transitioning away from financing coal, fossils remain on the table-despite our climate reality and against the logic of considering fossil fuel reserves as stranded assets. Right now, 60% of these known assets must remain untapped to achieve a 1.5°C world. The World Bank and IMF support of natural gas will perpetuate a business-as-usual approach. Institutions-from academia to development banks-need to evaluate where they stand. They must decide if they're going to keep the world tethered to fossils or be a part of climate solutions and, in turn, a climate secure future.

The authors attended the World Bank Spring Meetings as CSO Observers.

Martha Molfetasis a Senior Fellow, Planetary Politics, at New America, working on just energy transition, and a Visiting Assistant Professor at Pratt Institute's Graduate Center for Planning and the Environment, where she teaches environmental economics. Martha is a senior climate and energy policy consultant, writer, and strategist with over 15 years of experience helping NGOs, think tanks, and businesses unpack climate, environmental justice, resource conflict, sustainable development, and global policy issues.

Heela Rasool-Ayub is the Director of Planetary Politics at New America. She previously served as a foreign service officer with the U.S. Agency for International Development and was on the National Security Council staff in 2016.