Why World Bank needs to refocus on poverty

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OPINION

By Bjorn Lomborg

The United States just told the World Bank to stop obsessing about climate and get back to its core business of ending poverty.

The US Treasury Secretary Scott Bessent called on the Bank to remove its 45% financing for climate projects and instead invest to “increase access to affordable and reliable energy, reduce poverty, and boost growth”. For the sake of the world’s poor, more countries – including Indonesia – need to get on board with this common-sense call.

The World Bank was created at the end of World War Two to rebuild Europe, and then took on the mission of lifting poor people out of poverty.

But like the United Nations and many international organisations, the 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.

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 defences are somewhat better, but still pale against proven development strategies.

World Bank president Ajay Banga has staunchly defended the climate targets. He says that poverty and climate should be tackled jointly. Such a 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 do nothing by 2030 and help minimally 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 costs of fertiliser and energy

As Secretary Bessent highlighted, developing nations today need cheap, reliable energy to industrialise, 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 little access to energy beyond wood and hydro power. The average poor African only gets to use as much fossil fuel in a year as an American uses in less than 9 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 with no sun and wind.

Reliable power requires extensive backup that drives up cost, and across the world, makes high solar and wind societies experience much higher electricity costs. 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. But 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.

Climate change demands action, but not at poverty's expense. Rich governments should invest in long-overdue R&D 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.

More countries need to get on board with the mission to return the World Bank to focusing on poverty. Raiding development funds for climate initiatives isn't just misguided. It is an affront to human suffering. 

Bjorn Lomborg is President of the Copenhagen Consensus, Visiting Fellow at Stanford University's Hoover Institution, and author of "False Alarm" and "Best Things First".