Inter-American Development Bank

Fossil fuel exclusion policies

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

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Paris AlignmentReasoning
Some ProgressExclusion of coal and upstream oil and gas only.
 Alignment and Reasoning
Coal policiesExcludes all thermal coal mining or coal-fired power generation and associated facilities.
Upstream oil and gas policiesExcludes upstream gas exploration and development projects with some exceptions.
Downstream oil and gas policies No evidence can be found for any downstream oil and gas exclusion policies, investment permitted.
Supply-side energy efficiency Will support fossil fuel efficiency projects.

Explanation

Coal  

IDB in its Environmental and Social Policy Framework excludes all “thermal coal mining or coal-fired power generation and associated facilities”. This marks a strong improvement from its previous guidelines on coal fired power plants. The exclusion is subject to a caveat stating that the policy “applies only to associated facilities for which the primary objective is related to the production, trade, or use of coal for power generation or to the transition of energy generated by a coal-fired power plant (e.g. a dedicated transmission line)”. 

Oil and gas 

The Environmental and Social Policy Framework excludes upstream oil exploration and development projects. With respect to natural gas, the Bank commits to exclude “upstream gas exploration and development projects. Under exceptional circumstances and on a case-by-case basis, consideration will be given to financing upstream gas infrastructure where there is a clear benefit in terms of energy access for the poor and where greenhouse gas (GHG) emissions are minimized, projects are consistent with national goals on climate change, and risks of stranded assets are properly analyzed”. However, IDB’s Framework does not have exclusions on oil. 

In practice, IDB provides little finance to fossil fuels. E3G’s analysis of non-fossil to fossil energy ratios (see ‘Non-fossil to fossil energy ratio’ page) among the MDBs has found that IDB is among the greenest. However, if exclusions on fossil fuel lending were in place, this would be a significant improvement.

Supply-side energy efficiency 

When possible, the IDB will support raising power generation efficiency, through upgrading power plants or installing combined cycle generation in open cycle power plants.  It will also promote the adoption of new technologies and concepts such as smart grids in the power subsector to strategically manage demand. 

Recommendation: Given IDB’s comparatively small investment in fossil fuels, the Bank should consider a full-scale exclusion of fossil fuel financing to complete Paris alignment in this metric. 

Last Update: November 2020

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