World Bank’s Development Policy Finance 2015 to 2021: Stuck in a carbon intensive rut

This report argues that World Bank Development Policy Finance (DPF) in Indonesia and Pakistan has locked these countries into carbon-intensive energy paths. In Indonesia, DPF conditionalities promoted natural gas as a 'bridging fuel' and supported state energy company PLN, which continues to plan coal expansion. In Pakistan, the report claims World Bank pressure to meet 'prior actions' for the PACE loan led to the adoption of a flawed energy plan (IGCEP) that significantly reduced renewable energy targets in favor of coal, gas, and large-scale hydropower.

• The World Bank's Development Policy Finance (DPF) in Indonesia and Pakistan has actively promoted the use of natural gas and supported energy sectors heavily invested in coal, effectively financing fossil fuels through sector stabilisation and reforms.
• In Indonesia, a $500 million Sustainable and Inclusive Energy Development Policy Loan (DPL) approved in 2015 facilitated the expansion of natural gas through conditionalities, which the report claims has locked the country into high-carbon infrastructure for 40 years and hindered renewable energy expansion.
• The World Bank's International Finance Corporation (IFC) is linked to coal expansion in Indonesia through its relationship with Hana Financial Group. Specifically, IFC provided a $15.36 equity investment in Hana Indonesia in 2019, while Hana Indonesia subsequently backed the Java 9 and 10 coal-fired power projects.
• The World Bank's 2021 Climate Action Plan continues to categorize natural gas as a "bridging fuel," leading the bank to promote gas through lending instruments like DPF, Project for Results (P4Rs), and Technical Assistance (ASAs).
• In Pakistan, the $400 million Program for Affordable and Clean Energy (PACE) required a prior action to adopt a least-cost generation plan (IGCEP). The report asserts that pressure to meet this World Bank requirement led to a rushed approval of a plan that slashed renewable energy targets from 30-33% to 17% by 2030.
• The 2021 IGCEP in Pakistan prioritizes fossil fuels and large-scale hydropower over wind and solar, despite acknowledging that renewables are the cheapest form of new generation. The plan includes additions of approximately 8.5 GW of coal and 10 GW of gas/LNG over the next decade.
• Historically, World Bank DPF in Pakistan between 2014 and 2016 committed $1.1 billion to energy sector reforms focused on tariff increases. This created an attractive environment for coal investors, specifically facilitating the expansion of coal in the Thar region.

APA

Witt, F., Prasetiyo, A., & Moulvi, Z. (2021). World Bank’s Development Policy Finance 2015 to 2021: Stuck in a carbon intensive rut. Trend Asia. https://trendasia.org/wp-content/uploads/2021/12/World-Banks-Development-Policy-Finance-2015-to-2021-Stuck-in-a-carbon-intensive-rut_final.pdf

Chicago

Witt, Fran, Andri Prasetiyo, and Zain Moulvi. World Bank’s Development Policy Finance 2015 to 2021: Stuck in a carbon intensive rut. Trend Asia, 2021. https://trendasia.org/wp-content/uploads/2021/12/World-Banks-Development-Policy-Finance-2015-to-2021-Stuck-in-a-carbon-intensive-rut_final.pdf.

Wikipedia

{{cite report |last1=Witt |first1=Fran |last2=Prasetiyo |first2=Andri |last3=Moulvi |first3=Zain |title=World Bank’s Development Policy Finance 2015 to 2021: Stuck in a carbon intensive rut |publisher=Trend Asia |date=December 2021 |url=https://trendasia.org/wp-content/uploads/2021/12/World-Banks-Development-Policy-Finance-2015-to-2021-Stuck-in-a-carbon-intensive-rut_final.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{witt2021world, author = {Witt, Fran and Prasetiyo, Andri and Moulvi, Zain}, title = {{World Bank’s Development Policy Finance 2015 to 2021: Stuck in a carbon intensive rut}}, institution = {Trend Asia}, year = {2021}, month = dec, url = {https://trendasia.org/wp-content/uploads/2021/12/World-Banks-Development-Policy-Finance-2015-to-2021-Stuck-in-a-carbon-intensive-rut_final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }