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Climate Financing Overhaul at the World Bank
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This week: Clean hydrogen takes off; Ditching deep sea miners.
Welcome back. Global financing for climate action could soon get a boost, if the incoming World Bank President Ajay Banga delivers as expected.
The bank’s board confirmed the appointment of the India-born American businessman on Wednesday. He is tasked with overhauling the institution to increase its lending capacity by taking on more risk while still maintaining its triple-A credit rating.
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Photo: Melissa Lyttle for The Wall Street Journal
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The World Bank lends to alleviate poverty and foster development but officials across the Group of 20 major economies have publicly called for it to fund more climate action.
While some national officials worry that increased lending for climate action might reduce development funding, Mr. Banga seems to disagree: “My logic is that the climate aspect is not separated from development,” he said in an interview with The Wall Street Journal earlier this year.
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The bank’s overhaul may seem irrelevant for many rich-world companies, but it touches global supply chains and there is hope it will also attract more private investment. “The World Bank can play a central role in this effort by using its resources and its policy know-how to more effectively catalyze private capital,” Mr. Banga said during an April speech.
Many poorer nations have been particularly hard hit by climate change, the pandemic, higher interest rates and rising prices for food and energy. Debt is ballooning and many face a lack of affordable lending. The Bridgetown Initiative estimated that a private-sector renewable energy project in a rich country could obtain financing at a rate of around 4%, but in a developing nation, the rate would be about 15%.
Mr. Banga brings relevant experience from his leadership roles in Mastercard and Citigroup as well as insight from his childhood and early career in India. He will need it, the pressure is on. The bank’s overhaul is expected to be a hot topic when leaders from the G-20 meet in September in New Delhi, India and again when the world gathers in December in Dubai for the COP-28 climate-change conference.
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“Estimates made by economists and scientists are in trillions in the case of climate change and trillions more for development. What multilateral development banks have is tens of billions, maybe hundreds. So you have to get the private sector in the things that they believe they can claim.”
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Ajay Banga, incoming World Bank President
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Content from our Sponsor: DELOITTE
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US Loan Programs Office: Building a Bridge to Climate Tech Bankability
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Loan Programs Office (LPO) director Jigar Shah discusses how he’s positioning LPO to break “chicken-and-egg” bank lending logjams to speed the commercialization of breakthrough climate technologies. Keep Reading ›
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Photo: Todd Anderson for The Wall Street Journal
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Efforts to boost production of hydrogen, a fuel seen as crucial for meeting global climate goals, are racing ahead at a rapid pace, particularly in the U.S., threatening Europe’s lead, according to a report, writes Will Horner.
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Planned hydrogen electrolyzer projects globally have jumped by 18% in the last six months, surpassing one terawatt of electricity capacity for the first time, according to a semi annual report by Aurora Energy Research.
North America has seen the largest increase in planned hydrogen projects in the past six months, according to the Oxford-based consulting firm. While Europe is still the most popular region for new hydrogen projects, its share has fallen from 63% six months ago to 56%, and the report predicts it will lose its majority share by 2025.
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Shipping company A.P. Moller-Maersk is selling its stake in deep-sea mining firm The Metals Company, even as the legal process to allow seabed mining approaches its final stages, writes Yusuf Khan.
TMC is one of the biggest proponents of deep-sea mining and is the most active company within the space, being the first to complete pilot testing.
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In June 2021, the company along with the Republic of Nauru set in motion talks for deep sea mining to be legalized when it applied to the UN-backed International Seabed Authority to mine in the Pacific Ocean. It triggered a rule that required the ISA to establish a code that would allow mining of deep-sea resources by July 2023, even if, as is expected, no code will have been agreed upon.
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Democrat Senators voting with Republicans to block President Biden's move to temporarily remove tariffs on Southeast Asian solar materials
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Supply Chains Have Changed Forever
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Nearshoring. Automation. Supplier diversification. Sustainability. WSJ Pro takes a closer look at how companies are reshaping their logistic.
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Thomas R. Lechleiter/ The Wall Street Journal
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Justen Williams/ The Wall Street Journal
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Helynn Ospina/ The Wall Street Journal
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Jasper Juinen/ Bloomberg News
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U.S. Climate envoy John Kerry has been invited to China for climate talks. (Reuters)
Americans electric-vehicle buyers insist on 300 miles of range. They are right. (Bloomberg)
EV adoption brings cleaner air to California, but mostly in wealthy communities. (The Hill)
Godfather of A.I. Geoffrey Hinton nurtured the technology at the heart of chatbots such as ChatGPT, but now he warns of danger ahead. (New York Times)
Norwegian hydrogen company NEL announces plans for a big factory in Michigan. (AP)
Germany's big dig. The country is reopening mines in a quest for reducing reliance on imported minerals. (Financial Times)
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The WSJ Risk & Compliance Forum on May 9 will include a discussion about the role of compliance in corporate sustainability, as new rules come into force. This session will feature Susan Salyer, SVP, general counsel and corporate secretary with Veritiv. Register here.
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Exxon Canadian Affiliate's Sustainability Under Scrutiny After Withholding Oil Spill Information
Exxon Mobil's Canadian affiliate Imperial Oil is facing severe criticism from indigenous groups and the Canadian government due to its failure to promptly report a wastewater leak that first occurred last May. Although the extent of the leak is still unknown, and the impact on local people, wildlife and the environment hasn't been determined, it will likely have negative social implications for both Imperial Oil and Exxon, particularly regarding human rights and community relations.
This is a sample of exclusive analysis of sustainability news from the Journal’s environment, social and governance (ESG) research analysts, whose work is primarily published by Dow Jones Newswires to help institutional investors and wealth managers integrate ESG factors into portfolio models, risk management programs and financial advice. The commentary by our research analysts is independent of the news coverage by reporters at the Journal. For more information about Dow Jones Newswires, click here.
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