Trump calls on World Bank to reopen fossil fuel funding

[Ben Graham]

The Trump Administration is pressing the World Bank to resume financing oil and gas projects, reversing the institution’s 2019 policy to halt new fossil fuel investments.

Officials told the Financial Times the push extends to other development banks, signalling a broader retreat from climate-focused lending since Donald Trump’s return to the White House. North American banks and asset managers have also begun pulling out of net-zero alliances, further underscoring the shift.

The move prioritizes energy security, with an emphasis on upstream gas development, and targets financing for projects in developing countries. Critics warn this could undermine global efforts to curb rising emissions. While industrialized nations remain the largest historical polluters, emissions are climbing fastest in developing economies. Last year was the warmest on record.

A 2020 report by German NGO Urgewald found the World Bank had channelled more than $12 billion into fossil fuel ventures since the Paris Agreement in 2015, including $10.5 billion in new loans, guarantees and equity. The bank formally ended financing for new upstream oil and gas projects in 2019, allowing only narrow exemptions for gas. In 2023, it pledged to allocate 45 per cent of annual financing to climate-related projects by 2025.

Climate finance needs remain staggering. Economists estimate developing economies will require $1.3 trillion annually by 2035. Development banks are expected to play a pivotal role in mobilizing that capital. 

Earlier this month, the European Investment Bank reported climate finance from development banks had more than doubled in five years, reaching $85 billion in 2024.