Treasury Secretary Scott Bessent told the World Bank on Oct. 15 to stop obsessing about climate and get back to its core business of ending poverty. He called on the bank to remove its 45 percent financing for climate projects, arguing this “skews projects away from country priorities and distorts projects away from the goal of increasing access to the affordable and reliable energy needed to increase growth and productivity.”
For the sake of the world’s poor, the bank — and all international aid — needs to pay heed to this commonsense call.
Like the United Nations and many international organizations, the World Bank set on 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 $42.6 billion into climate projects. That is money that couldn’t be used for the world’s most desperate needs.
The 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. As the climate change narrative took hold, poverty was implausibly recast as vulnerable to hundred-year temperature changes.
World Bank President Ajay Banga, nominated by President Biden in 2023, has staunchly defended the climate targets. However, research repeatedly shows that dollar for dollar, core development investments — like 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 like flood defenses are somewhat better, but still pale against proven development strategies.
A popular claim is that poverty and climate should be tackled jointly. This glib claim just doesn’t pass a logic test. Tackling poverty through nutrition, health and education can quickly help hundreds of millions of people live better lives at low cost. Tackling poverty through climate action will achieve little by 2030 and provide minimal help even by the end of the century. Yet, climate policy costs easily run into the trillions while harming the world’s poor by driving up the prices of fertilizer and energy.
As Bessent highlighted, developing nations today need cheap, reliable energy to industrialize, 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 limited access to energy beyond wood and hydroelectric power. The typical poor African only gets to use as much fossil fuel in a year as an American uses in nine days.
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 a fantasy. While solar and wind can be cheaper than fossil fuels when the sun is shining and the wind is blowing, it is infinitely costly when there is no sun and no wind. Reliable power requires extensive backup, which drives up costs and leads to much higher electricity costs in societies worldwide that heavily rely on solar and wind energy. 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 kWhs of electricity for each person from solar and wind. However, it added almost five times more from fossil fuels because they’re 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.
Bessent made it clear that the United States continues to support the poverty-ending mission of the World Bank — but that the United States isn’t writing a blank check. He instructed the bank to spend less on bureaucracy and on fat paychecks for its president and board. And he made it clear that its focus needs to be “on investments that increase access to affordable and reliable energy, reduce poverty and boost growth.”.All that is to be applauded.
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.
The United States is just one shareholder among 189, albeit it is the largest, having put in the most money. Other countries need to get on board with the mission to return the World Bank to basics. European countries are also digging in, staunchly defending the hugely expensive virtue signaling. Raiding development funds for climate initiatives isn’t just misguided. It is an affront to human suffering.