The MDBs and a Just, Paris-aligned Recovery - If you missed the Big Shift webinar catch up here!
A Paris-aligned and just recovery to Covid-19 by the Multilateral Development Banks (MDBs) is a vital part of the global response. On 28th May, members of the Big Shift Global Coalition organised a webinar to discuss this further with 4 panellists: Bronwen Tucker, OCI; Dileimy Orozco, E3G; Augustine Njamnshi, ACSEA and Andrew Scott, ODI. The discussion was moderated by Vibeka Mair of Responsible Investor.
Panellists presented views on: MDBs’ track records in energy financing; recovery packages so far; what a Paris-aligned, just recovery should look like; why this should not include investment in oil and gas and specifically what this should look like in the case of Africa.
The MDBs and COVID-19 response so far
MDBs and other public finance institutions (National Development Banks, Export Credit Agencies) have a crucial role in the recovery from COVID-19 given its global impact. In a blog the World Bank called for green stimulus and support for energy efficiency and renewable energy and the ADB in a blog stated that ‘Recovery financing must go into green infrastructure.’ However, apart from the EIB no one has gone beyond talking about this and made it policy and President Malpass of the World Bank has even talked of structural adjustment as part of the response.
MDB financing is still currently in the initial response phase to COVID-19 but even within this current, important stage in spending there are opportunities to ensure resilience. For example, if energy efficiency is integrated then finance to build health facilities could lead to more resilience in the health system.
Dileimy Orozco summarised the role of the MDBs in the COVID-19 response and beyond: ‘The MDBs’ role is – as it has always been - to support countries in not losing sight of their long-term vision, and to build resilience in every aspect of their development’
Why should MDBs implement a just and Paris-aligned recovery?
The Big Shift Campaign holds the main MDBs to account in their commitment to the Paris Agreement and SDG7 on energy access for all. As a result of COVID-19, we already know millions of people have lost their job or suffered a reduction in income. And we know that lower-income, vulnerable and socially marginalised groups have been impacted most – the same people who are most at risk to the impacts of climate change.
We also know that measures implemented now may have long-term consequences for the climate and sustainable development. We need to avoid measures that would lock-in future greenhouse gas emissions or result in stranded assets.
In her presentation, Bronwen Tucker showed how the main MDBs continue to invest in fossil fuels directly and indirectly through facilities that support fossil fuel projects, financial intermediaries and technical assistance. We saw how a number of banks including the World Bank, the EBRD, the ADB and the IsDB actually increased their investment in oil and gas between the periods of 2013-2015 and 2016-2018.
Yet, as well as the climate risk this poses, Andrew Scott pointed out, investment in oil and gas production also does not necessarily lead to faster economic growth than investment in other sectors, and arguably it leads to fewer jobs than investment in renewable energy. Price volatility remains a threat for higher-cost producers, and global demand is expected to level off and decline within a few years. And the imperative of rapid and steep reductions in greenhouse gas emissions to avert catastrophic climate change suggests we should seek to use recovery measures as way to accelerate reduced oil and gas production.
The case of Africa
Augustine Njamnshi presented the specific experience of Africa where he described how the experience of COVID-19 in Africa has ‘made the case for decentralized, participatory renewable energy plus the role of civil society more compelling’ He described how COVID-19 patients are dying due to a lack of energy in most health centres especially in rural communities and also how the drop in oil prices will negatively impact oil dependent economies of Africa hence exposing the volatile nature of the fossil fuel- based economies
Furthermore, COVID-19 has only compounded the effects of climate change which are ever increasing. This includes the reduction in food productions due to climatic conditions which have been aggravated by COVID-19. It is projected that locust invasions in east Africa will be three-fold in mid-2020 hence the situation is not getting any better
So what should a Just, Paris-Aligned Recovery by the MDBs look like?
The webinar touched on a broad range of proposals for a Paris-aligned, just recovery including:
MDBs can play a role as investors of first resort helping to build a pipeline of green projects.
MDBs will be key for shaping national economic policy and regulation and supporting pro-climate action reform efforts through technical assistance and policy-related lending. To do so they should help countries reframe their economic analysis and planning to drive the required systemic change both globally and domestically.
Green stimulus needs to be supported by structural change and MDBs can provide important support through technical assistance and also as thought leaders
A just recovery should include debt relief as advocated for by the G20 countries
There should be scope to fast track projects which can contribute to Paris Alignment.
We could also go further and ask recovery measures to be assessed whether they accelerate climate action.
MDBs should seek to use recovery measures as way to accelerate reduced oil and gas production.
By financing decentralised, participatory energy systems MDBs would guarantee not only security, but also could create jobs in the rural economies
Nearly all African countries have renewable energy as part of their NDCs, it is important to prioritize this.
MDBs must include effective participation in recovery decision-making. Sustainability of a project is guaranteed when the stakeholders understand their stakes in it
Transparency is key and MDBs should be transparent about their assessments of the climate implications of recovery measures.
As Augustine concluded ‘COVID-19 has taught us a lesson. We can’t continue business as usual. It’s not profit that will help us, it is humanity.’ Members of the Big Shift Coalition will be continuing this conversation and continuing to advocate for Paris-alignment by the MDBs and their financing of a just sustainable recovery