US refusing extra money for the World Bank to help poorer countries tackle climate change

The UK is not the only wealthy country accused of rowing back on its climate commitments, as Joel Hills reports

The continent of Africa is home to 17% of the world's population. Africa produces just 3% of the emissions that are changing our climate, but it is on the front line of global warming.

In M'Hamid El Ghizlane, in the south of Morocco, ITV News visited the dried out remains of what was an orchard.

Trees that used to bear dates no longer do - the land is too dry.

Haj Ahmed Ben Chaaiba told us the region he lives in "used to be famous for its agriculture" and that "farming provided everyone with a livelihood". He now drives a taxi.

As developing nations grow their economies they need access to energy. And it's vital that energy is renewable.

Morocco has the potential to be a clean-energy superpower, but its ability to realise this potential depends on whether it can borrow money.

An aerial view of the Noor solar power station, in Ouarzazate, southern Morocco. Credit: AP

The Noor solar power station in Quarzazate was built with help from the World Bank. It covers an area of 11.6 square miles and is capable of generating up to 500 megawatts of electricity - enough to power one million homes in Morocco.

That's big, but the Sahara desert is vast and the sunshine here is all year round. It's a fraction of the energy that Morocco could produce.

As it stands, analysis by the Climate Policy Initiative shows that African countries can pay effective interest rates of up to 38% to borrow to fund solar power projects.

Wealthier nations pay far less.

Analysis by the Climate Policy Initiative shows that African countries can pay effective interest rates of up to 38%. Credit: Climate Policy Initiative

The World Bank exists to provide low interest loans and grants to developing nations.

A year ago, a report by the G20 Expert Group on Climate Finance, commissioned by the British and Egyptian governments, recommended tripling the lending capacity of all Multi-lateral Development Banks to help poorer nations tackle climate change.

The report urged the World Bank to use its balance sheet in bolder and more creative ways and to embrace loan guarantees.

It also said the World Bank's shareholders need to increase the annual contributions they make. 

ITV News understands that an updated report by the same group has been prepared ahead of COP28 next month, and it calls for shareholder countries to make capital increases of up to £20 billion a year, every year for the next 10 years.

Under the proposals, the UK would need to contribute an extra £1.4 billion a year to the World Bank. The United States would need to contribute an extra £3.4 billion.

For every extra £1 the UK contributes, the World Bank can generate up to £600 of low interest loans.

US Treasury Secretary Janet Yellen refused to comment when approached by ITV News in Marrakesh

The Bank can leverage additional shareholder donations by borrowing against that money and using the funds to attract private investment.

But all countries need to support the proposal for it to work.

Rishi Sunak has publicly committed to extra funding for the World Bank, on the condition of reform. 

But, for the moment, the World Bank's largest shareholder, the United States, is refusing to agree to capital increases.

Here in Marrakesh, we approached Janet Yellen, the US Treasury Secretary, and asked her why the Biden administration is taking the position it is. But she refused to comment.

Lord Nick Stern, Professor of Economics at the London School of Economics, says increased contributions from shareholders are essential if emissions in developing countries are going to be driven down.

Lord Stern told ITV News that a failure to increase lending from the World Bank will mean that the world will fail to deliver on the Paris Agreement

"If we don't triple the World Bank and other Multilateral Development Bank lending, we will not [reach] the finance that will get the investment going that we need to deliver on Paris," the cross bench peer told ITV News at the IMF and World Bank Annual Meeting.

"The consequence of that is deeply dangerous," Lord Stern added. "It's the next 10 or 15 years that decides whether we've got any chance to holding the Paris goals of well below 2C or best efforts on 1.5C.

"Those goals were set for a reason. If we go beyond that, the world becomes a very dangerous place."

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