By taking an axe to climate finance, the US scores another own goal

The growing pressure on the World Bank and IMF to scale back climate lending opens up opportunities for others to take the lead.

- Vikram Khanna

The Trump administration has pulled the US out of the Paris Agreement on climate change for the second time. It has also withdrawn from the climate loss and damage fund, which is aimed at helping developing countries with their green transition. At home, it has terminated some US$20 billion (S$26 billion) in climate grants and frozen funding of the Inflation Reduction Act which supports climate-friendly tech and products. It is rewriting regulations to favour the fossil fuels industry.

Even after all this, the Trump administration isn't done with its assault on the green economy. Its climate change denialism and anti-woke crusades have intruded into climate finance and the work of US-based international institutions. This will have ripple effects worldwide.

"MISSION CREEP" JUSTIFIED In a broadside against the International Monetary Fund (IMF) and World Bank at their spring meetings in April, US Treasury Secretary Scott Bessent — viewed as "the adult" in the Trump administration — accused the two institutions of "mission creep" and "expansive policy overreach" because of their work on climate change, gender and social issues. Their "sprawling and unfocused agendas" have "stifled their ability to deliver on their core mandates", he claimed.

It is easy to see what is wrong with these allegations. If there has been "mission creep" on the part of the IMF and World Bank, it is justified because a climate crisis has been creeping up on the world.

From 2000 to 2019, there were more than 7,300 major recorded climate-related disaster events, compared with about 4,200 in the previous 20 years. The United Nations Office for Disaster Risk Reduction projects that by 2030, the world will experience around 560 climate-driven disasters annually, up from 350-500 medium- to large-scale disasters per year over the past two decades.