A record-breaking amount of new offshore wind capacity has been secured at the UK’s latest auction for renewable energy projects.
Five fixed-foundation projects, amounting to 8.25 gigawatts (GW), secured fixed-price “contracts for difference” (CfDs) to supply electricity for an average of £91 per megawatt hour (MWh).
Additionally, two floating offshore wind projects with a combined capacity of 192.5 megawatts (MW) won contracts, securing a “strike price” of £216/MWh.
This new capacity, totalling 8.4GW, marks a significant increase from last year’s sixth auction, when 5.3GW had been secured as part of a bounce back from the “failed” fifth round.
While the latest auction saw offshore wind prices rising by around 10% since the previous round, analysis suggests that the outcome will, nevertheless, be roughly “cost neutral” for consumers.
Contrary to simplistic and misleading comparisons made by some opposition politicians and media commentators, this is because CfD payments would be balanced by lower wholesale costs.
The government welcomed the “stonking” results, saying that it put the country “on track” to reach its 2030 targets for clean power, create jobs and bring new investment.
Below, Carbon Brief looks at the auction results, what they mean for bills and the implications for the UK’s target of “clean power by 2030”.
- What happened in the seventh CfD auction round?
- What does the record offshore-wind auction mean for bills?
- What does AR7 mean for reaching clean power by 2030?
What happened in the seventh CfD auction round (AR7)?
The UK government announced the results of the seventh auction round (AR7) for new CfDs on 14 January 2026, hailing the outcome as a “historic win”.
The CfD scheme was introduced in 2014 and offers fixed-price contracts to generators via a “reverse auction” process. The first auction was held in 2015.
Projects bid to secure contracts to sell electricity at a fixed “strike price” in the future.
If wholesale prices are lower than this set amount, the project receives a payment that makes up the difference.
However, if the market prices are higher than this level, then the project pays back the difference to consumers. For example, according to a report from thinktank Onward, between November 2021 and January 2022, CfD projects paid back £114.4m to consumers.
For the seventh auction round, the results have been split into two, as part of reforms to help expedite the process for offshore wind. As such, the publication of results on 14 January covers fixed-foundation offshore wind and floating offshore wind.
A second set of results will be released between 6-9 February 2026, covering technologies including large-scale solar and onshore wind.
A total of 17 fixed-foundation offshore wind projects totalling 24.8GW of capacity were competing for contracts at this auction, meaning many have missed out.
Still, a record 8.4GW of offshore wind secured contracts, making it the biggest ever offshore wind auction in Europe, according to industry group WindEurope.
This includes 8,245 megawatts (MW) of fixed-foundation offshore wind and 192.5MW of floating offshore wind, which, collectively, will generate enough to power more than 12m homes.
As such, there was an increase of more than 3GW in offshore wind capacity compared to the sixth allocation round, as shown in the chart below.
(The 2.4GW Hornsea 4 scheme, which had been awarded a CfD at the previous auction round, went on to be cancelled in May 2025, with developer Ørsted citing cost inflation.)
This follows on from the “fiasco” of the fifth allocation round in 2023, where no offshore-wind projects secured contracts due to the limit on prices set by the government.
Carbon Brief analysis suggests that the capacity secured in the latest auction will generate around 37 terawatt hours (TWh) of electricity each year, around 12% of the nation’s total demand.
With onshore wind and solar results still to come, this means that projects with CfDs will generate some 135TWh of power by the time they are all completed, or nearly half of current demand.
When the current Labour government took office in 2024, a number of changes were made to encourage offshore wind capacity bids. This included separating the technology from solar and onshore wind into a separate “pot”, an allowance for “permitted reduction” projects in AR6 and a significant increase to the “budget” for the auction overall.
Since then, there have been continued reforms to help meet the government’s target of decarbonising power supplies by 2030. (See: What does AR7 mean for clean power by 2030.)
This includes extending the contracts from 15 years to 20 years, relaxing eligibility requirements related to planning consent and legislating to allow the secretary of state for energy – currently, Ed Miliband – to see anonymised bid information ahead of setting a final budget for that technology.
Initially, the government set a total budget of £900m for fixed-foundation offshore wind projects and £180m for floating offshore wind.
The budget for fixed-foundation offshore wind projects was then raised to £1,790m.
(Note that the “budget” is a notional limit on the amount of CfD levies that can be added to consumer electricity bills. This does not come from government coffers and – as explained below – it does not translate into an equivalent increase in consumer costs, because CfD projects also reduce wholesale electricity prices, which make up the bulk of bills.)
Ahead of the auction, the maximum “administrative” strike price was set at £113/MWh for offshore wind and £271/MWh for floating offshore wind.
The four winning fixed-foundation offshore wind projects in England and Wales secured a strike price of £91.20/MWh in 2024 prices and the one in Scotland £89.49/MWh, as shown in the table below. This comes out at a blended average of £90.91/MWh.
| Projects (fixed-foundation) | Capacity (MW) | Owners | Strike price (2024 prices) | Delivery year (phase one) |
|---|---|---|---|---|
| Awel y Mor | 775 | RWE, SWM, Siemens Financial Services | £91.20/MWh | 2030/31 |
| Dogger Bank South | 3,000 | RWE, Masdar | £91.20/MWh | 2030/2031 |
| Norfolk Vanguard East | 1,545 | RWE | £91.20/MWh | 2029/2030 |
| Norfolk Vanguard West | 1,545 | RWE | £91.20/MWh | 2028/2029 |
| Berwick Bank | 1,380 | SSE Renewables | £89.49/MWh | 2030/2031 |
The two floating offshore-wind projects will see a strike price of £216.46/MWh, shown below.
| Projects (floating) | Capacity | Owners | Strike price (2024 prices) | Delivery year (phase one) |
|---|---|---|---|---|
| Pentland | 92.5 | CIP, Eurus Energy, Hexicon | £216.46/MWh | 2029/2030 |
| Erebus | 100 | TotalEnergies, Simply Blue Energy | £216.46/MWh | 2029/2030 |
These prices are around 19% below the maximum level set ahead of the auction – a figure that had been cited by opposition politicians as “proof” that the round would be a “bad deal” for consumers.
Successful projects include RWE’s Awel Y Mor (775MW), the first Welsh project to win a CfD contract in more than a decade.
Dogger Bank South in Yorkshire and Norfolk Vanguard in East Anglia – which will be two of the largest offshore windfarms in the world – at 3GW and 3.1GW, respectively – both secured contracts.
Additionally, Berwick Bank in the North Sea became the first new Scottish project to win a CfD since 2022. At 4.1GW, the project being developed by SSE Renewables is the largest planned offshore-wind project in the world.
The projects are located around the UK, which is expected to ease grid connections. Nick Civetta, project leader at Aurora Energy Research, noted in a statement:
“83% of the capacity connects in areas of high power demand and greater network capacity, lowering the cost of managing the system.”
In terms of companies, German developer RWE has dominated the auction outcome, with 6.9GW of the capacity being developed overall.
What does the record offshore-wind auction mean for bills?
The auction results arrive at a moment of intense interest in energy bills, which remain significantly higher than before the global energy crisis in 2022.
The government, along with much of the energy industry, said the new offshore wind projects would lower bills, relative to the alternative of relying on more gas.
Meanwhile opposition politicians and right-leaning media used misleading figures to argue that gas power is cheap or that the new offshore wind projects would add large costs to bills.
Broadly speaking, there is some evidence to suggest that electricity bills will rise over the years to 2030 – largely as a result of investment in the grid – before starting to decline.
However, this is the case whether the UK pushes forward with its efforts to expand clean power or not – and is mainly dependent on the timing of electricity network investments and the price of gas.
At the same time, electricity demand is starting to rise as the economy electrifies – as shown in the figure below – and many of the UK’s existing power plants are nearing the end of their lives.
This means that new electricity generation will be needed, whether from offshore wind, gas-fired power stations or from other sources.
Adam Berman, director of policy and advocacy at industry group Energy UK, said ahead of the auction that renewables were the “cheapest” source of new supplies.
Similarly, Pranav Menon, senior associate at consultancy Aurora Energy Research, tells Carbon Brief that the key question is how to meet rising demand most cost-effectively. He says:
“Here, it is quite clear that the answer is renewables (up to a certain price and volume), given that new-build gas is much more expensive…(even after accounting for costs and intermittency for renewables).”
The government said that the price for offshore wind secured through AR7 was “40% lower than the cost of building and operating a new gas power plant”. It added:
“Britain has taken a monumental step towards ending the country’s reliance on volatile fossil fuels and lowering bills for good, by delivering a record-breaking offshore wind result in its latest renewables auction.”
In a similar vein, Dhara Vyas, head of Energy UK said in a statement that the results would “deliver lower bills”. She added:
“Today’s auction results will deliver critical national infrastructure that will strengthen our energy security and deliver lower bills, as well as provide jobs, investment and economic growth right across Great Britain.”
These statements rely on updated government estimates of the cost of different electricity-generating technologies, published alongside the auction results.
They also rely on two studies published by Aurora and another consultancy, Baringa, both commissioned by renewable energy firms involved in the auction.
The government’s new cost estimates reflect the inflationary pressures that have hit turbines for gas-fired generation, as well as offshore wind supply chains.
Carbon Brief analysis of the latest and previous figures suggests that the government thinks the cost of building a gas-fired power station has more than doubled. (Reports from the US point to even steeper three-fold increases in gas turbine costs.)
As such, building and operating new gas-fired power stations would be relatively expensive, at £147/MWh, according to the government. (This assumes the gas plant would only be operating during 30% of hours in each year, in line with the current UK fleet.)
While the offshore wind prices secured in AR7 are around 10% higher than in AR6, at £91/MWh, they would still be considerably lower than the cost of a new gas plant.
However, these figures for new gas and for offshore wind in AR7 do not reflect the wider system costs of keeping the electricity grid running at all times.
In late 2025, Baringa concluded that a strike price of up to £94.50/MWh for up to 8GW of offshore wind would be “cost neutral”. This does not include system balancing costs, which the study argues are relatively modest for each additional gigawatt of capacity.
Carbon Brief understands that, when taking this into account, the “cost neutral” price for further offshore capacity would be reduced by a few pounds. This implies that the AR7 result at £91/MWh is likely to be in or around the “cost-neutral” range, based on Baringa’s assumptions.
Also, in late 2025, Aurora concluded that new offshore wind could be secured at “no net cost to consumers”, provided that contracts were agreed at no more than £94/MWh.
In contrast to Baringa’s work, this study is based on what an Aurora press release describes as a “total system cost analysis”. This means it takes into account the cost of dealing with the variable output of offshore wind, such as system balancing and backup.
In an updated note following the results of the auction, Aurora said that it would “generate net consumer savings of just over £1bn up to 2035”. This is relative to a scenario where no offshore wind had been procured at the latest auction.
(In its pre-auction analysis, Aurora pointed to a reduction in consumer electricity bills of around £20 per household per year by 2035, relative to relying on more gas power instead.)
Writing on LinkedIn, Aurora data analyst Ivan Bogachev said that this was the case, even though it might appear to be “counterintuitive”. He added:
“Moreover, AR7 projects are primarily clustered in areas which see few network constraints, limiting any contribution to higher balancing costs.”
In contrast, Conservative shadow energy secretary Claire Coutinho and right-leaning media commentators cited misleading figures to claim that the auction was “locking us in” to high prices.
Coutinho has repeatedly cited a figure for the cost of fuel needed to run a gas-fired power station in summer 2025 – some £55/MWh – as if this is a fair reflection of the cost of electricity from gas.
However, this excludes the cost of carbon, which gas plants must pay under the UK emissions trading system and the “carbon price support”. It also ignores the cost of building new gas-fired capacity, which as noted above has soared in recent years.
Dr Callum McIver, a researcher at the UK Energy Research Centre (UKERC) and research fellow at the University of Strathclyde, tells Carbon Brief that “you can’t credibly strip out the cost of carbon” and that the £55/MWh figure is not an “apples-to-apples” comparison with the AR7 result.
McIver says that a fairer comparison would be with a new-build gas plant, which, according to the latest DESNZ cost of generation report, would come in at £147/MWh – and would remain at £104/MWh, even if the cost of carbon is ignored.
UKERC director Prof Robert Gross, at Imperial College London, tells Carbon Brief that Coutinho’s £55/MWh figure for gas is “unrealistically low” because it is below current wholesale prices, which averaged around £80/MWh in 2025.
Gross adds that, as well as ignoring carbon pricing, the figure is also for “existing and not new gas stations, which we will need and which will need to recover much increased CAPEX [capital cost]”.
Another factor often not taken into account by those criticising the price of renewable energy contracts is that these projects reduce wholesale prices, as noted in Aurora’s modelling.
Separate analysis published by the Energy and Climate Intelligence Unit (ECIU) thinktank finds that wholesale power prices would have been 46% higher in 2025 – at £121/MWh rather than £83/MWh – if there had been no windfarms generating electricity.
This is because windfarms push the most expensive gas plants off the system, reducing average wholesale prices. This is a well-known phenomenon known as the “merit order effect”.
What does AR7 mean for reaching clean power by 2030?
Offshore wind is expected to be the backbone of the UK’s electricity mix in 2030, making the stakes for this CfD auction particularly high.
Under the National Energy System Operator’s (NESO) independent advice to the government, half of electricity demand will be met by offshore wind by 2030. It says this requires between 43GW and 51GW of generating capacity from the technology.
This advice informed the government’s action plan for meeting 100% of electricity demand with clean power by the end of the decade, which also sets a target of 43-50GW of offshore wind.
Currently, the UK has around 17GW of installed offshore wind capacity, leaving a gap of 27-34GW to the government’s target range.
A further 10GW of capacity already had a CfD prior to the latest auction, excluding the cancelled Hornsea 4 project. The additional 8.4GW contracted in AR7 means the remaining gap to the minimum 43GW end of the government’s range is just 7GW, as shown below.
Speaking to journalists after the auction results were announced, Chris Stark, who is head of “Mission Control” for clean power 2030, told journalists that securing 8.4GW in AR7 put the UK on track for its targets. He added:
“The result today actually takes us now to within touching distance of the goals that we set for 2030 – more to come on that, as I mentioned, with the onshore technologies and the storage projects up and down this country.
“But this is, I think, a real endorsement for the steps that Ed Miliband has taken to bring about that goal of clean power by 2030, it will bring huge benefits to people here in the UK.”
There remain a number of challenges with the delivery of these offshore-wind projects – including securing a grid connection – that could threaten delivery before 2030.
Writing on LinkedIn, Bertalan Gyenes, consultant at LCP Delta, says that with a third of the new capacity set to deliver before 2030, a “swiftly delivered and ambitious [allocation round eight] would put DESNZ within touching distance of its targets”. However, he adds:
“The job is not over yet, the windfarms need to be connected, the network upgraded, consenting pipelines de-clogged – there can be no more delays and certainly no cancellations like what we had seen with Hornsea 4 after last year’s auction.”
McIver wrote on LinkedIn that the auction result “takes us into the goldilocks zone that just about keeps CP30 targets alive, if AR8 can similarly deliver”. He added:
“OK, looking at delivery years [for the contracted projects], maybe we’re aiming for roughly CP33 [clean power by 2033] now? Maybe that would be no bad thing.”
Within the briefing for journalists, Stark highlighted a number of steps undertaken by the government over the past 18 months to ease the challenges around the expansion of the renewable energy sector.
This includes removing “zombie projects” from the queue for connecting projects to the electricity network and announcing £28bn in investment for gas and electricity grids.
As such, the auction results fit within a “host of policies” designed to make the ambitious clean power by 2030 target possible, said Stark.
The second half of the CfD results, covering technologies such as onshore wind and solar, are expected out next month. DESNZ’s action plan set a range of 27-29GW and 45-47GW of capacity for the two technologies, respectively, if the country is to meet its 2030 clean-power target.
The post Q&A: What UK’s record auction for offshore wind means for bills and clean power by 2030 appeared first on Carbon Brief.
Q&A: What UK’s record auction for offshore wind means for bills and clean power by 2030
Climate Change
DeBriefed 3 July 2026: US faces scorching Independence Day | Record ocean temperatures | Vietnam’s EV surge
Welcome to Carbon Brief’s DeBriefed.
An essential guide to the week’s key developments relating to climate change.
This week
Heating up
NOT FREE FROM HEAT: “Dangerous, record-breaking” heat altered plans for 4 July celebrations across the US this weekend, reported the Associated Press. New York and Boston hit 100F (37.8C) on Thursday, said the newswire. CNBC reported that temperatures of up to 105F (40.5C) are forecast in central and eastern parts of the country, with “daily, monthly and all-time records possible”.
TEMPERATURES SOAR: Heat that hit western Europe last week spread east to “scorch” Germany, Hungary, Romania, Poland and others, said Bloomberg. Red warnings for extreme heat were issued in a number of nations, noted the outlet, adding that the heat “underscores how climate change is transforming summers in the world’s fastest-warming continent”. The Independent said last month was confirmed to be England’s hottest June on record.
HEAT DEATHS: June’s extreme temperatures caused more than 2,000 excess deaths in Spain and France, reported the Guardian. The countries are bracing for further heat that “could bring temperatures of 44C (111F) over the coming days”, said the newspaper. Deaths in France rose almost 30% at the heatwave “peak” on the week of 22 June, according to Le Monde. Last week’s conditions also led to around 480 excess deaths in the Netherlands, reported Reuters.
BOILING: Global ocean temperatures reached record levels for this time of year, reported NBC News, “fuelling fears of more dangerous heatwaves this summer and fanning concerns over the escalating global climate crisis”. Scientists told the Financial Times that this could lead the world towards “uncharted territory”. The newspaper said global average sea surface temperatures reached 20.96C on 21 June, exceeding June records for 2023 and 2024.
Around the world
- GOAL DROPPED: The World Bank will “abandon” its goal to devote 45% of annual lending resources to climate-related projects, reported Reuters. Carbon Brief explored what it could mean for global climate action.
- FIVE-YEAR PLAN: China plans to invest more than 20tn yuan ($2.9tn) in “key energy projects and new business models” over the next five years, according to International Energy Net.
- DRILLING: The Guardian said UK Labour politicians “urged” the likely next prime minister Andy Burnham to ignore “deluded” calls to develop the Rosebank oil field located in the Atlantic north of Scotland.
- PLASTIC TALKS: Countries and activists feared key issues could be sidelined at “critical” talks on a global treaty to curb plastic pollution in Kenya, said Climate Home News. A treaty could have “important implications” for climate change, reported Carbon Brief in 2024.
- CANADA PIPELINE: Canadian prime minister Mark Carney announced plans to build an oil pipeline to supply Asia with up to 1m barrels per day, reported the Financial Times. Earlier this week, Carney called the previous government’s climate plans “expensive” and “divisive”, said CBC News.
63
The number of UK newspaper editorials calling for more oil and gas extraction in the North Sea so far in 2026, according to Carbon Brief analysis.
Latest climate research
- Including emissions from permafrost thaw raises the likelihood of the Arctic becoming a net-carbon source by more than 50% at 2C of warming | Earth System Dynamics
- Net-zero scenarios relying less on carbon dioxide removals lead to fewer residual emissions, which offers greater health improvements for “non-white and low-income groups” in particular | Nature Climate Change
- Agricultural plots of land in sub-Saharan Africa owned by women face heat impacts 2-2.5 times higher than those owned by men | Nature Sustainability
(For more, see Carbon Brief’s in-depth daily summaries of the top climate news stories on Monday, Tuesday, Wednesday, Thursday and Friday.)
Captured
Wind and solar were the world’s largest source of new energy in 2025, according to Carbon Brief analysis of the latest Energy Institute statistical review of world energy. Wind and solar also saw the fastest growth, up by 18% in 2025. Nevertheless, every source of energy – including coal, oil, gas, nuclear and hydro – also reached global all-time highs last year.
Spotlight
Vietnam’s EV surge
Carbon Brief explores the reasons behind soaring electric-vehicle sales in Vietnam.
Motorbikes are a constant fixture on streets across Vietnam. They pollute the air in cities and make crossing the road a feat of endurance.
But, increasingly, people are moving away from petrol-powered vehicles to save money and reduce air pollution.
Sales of electric motorbikes, scooters and mopeds more than doubled in Vietnam last year, according to a recent report from the International Energy Agency (IEA).
This identified that Vietnam has the largest electric vehicle (EV) market in south-east Asia.
Nearly one-in-five of the two-wheeled vehicles sold last year were electric, it noted, in a nation with 102 million people and 77m motorbikes.
This is “particularly impactful” given they are the main mode of transport in Vietnam, said Lam Pham, Asia energy analyst at thinktank Ember. He told Carbon Brief:
“Electrifying road transport is essential for Vietnam to achieve its net-zero target by 2050. Road transport accounted for around 86% of transport-sector emissions in 2022.”
The nation has just 6.8m cars, but this number is also climbing, partly due to EVs, with nearly 40% of new car sales being electric.
This is “above levels seen in most European countries”, noted the IEA. (The UK’s figure is around 30%.)
EV incentives
Fuel costs surged in south-east Asian countries earlier this year after the energy crisis caused by the US-Israel war on Iran.
This “accelerated” discussions from “why use EVs” to “why keep paying more for fuel”, said Dr Tham Nguyen, a lecturer at the Ho Chi Minh City campus of Australia’s Royal Melbourne Institute of Technology (RMIT) University, who has researched Vietnamese public attitudes to EVs.
But the surge is “not driven by fuel prices alone”, noted Pham.
Increased EV sales can also be attributed to a “convergence of affordability, convenience and sustainability”, Nguyen said:
“Vietnamese consumers buy EVs because they see real value with immediate personal benefits, such as cost savings and energy security, alongside long-term environmental gains.”
Government policies have also incentivised sales through registration fee exemptions and tax cuts for EVs.
Another factor is affordable EVs sold by Chinese companies and Vinfast, a Vietnamese manufacturer. The IEA report noted that Vietnam is the only country in south-east Asia with “sizeable” domestic production of accessible EVs.
Vinfast reported a 219% year-on-year increase in orders for electric motorbikes and e-bikes in the first quarter of 2026, but the company has yet to turn a profit.
Pham noted that “growing public awareness of air pollution” has also “dramatically strengthened” public support for EVs.
Future plans
Vietnam’s major cities also have plans to get drivers to go electric or turn to public transport.
The capital city Hanoi announced that it would ban fossil-fuel-powered motorbikes from a central zone this month, but this has been postponed until 2028.
Ho Chi Minh City, the nation’s largest city with more than 9.5 million people, intends to introduce low-emission zones and swap 400,000 petrol-powered motorbikes to electric by 2028.
The city’s green transport plans focus on metro lines, electric buses and e-bikes, explained RMIT associate professor Catherine Earl. She noted that walking and cycling are currently “not popular, accessible or safe for many residents in Ho Chi Minh City’s hot and humid climate”.
Looking ahead, Pham said Vietnam could focus on “purchase subsidies, financing schemes and adequate charging or battery-swapping infrastructure, to ensure lower-income riders, including delivery and ride-hailing drivers, are not negatively affected”.
Watch, read, listen
‘JUST 1%’ OF EMISSIONS: The Guardian debunked arguments that climate actions from smaller countries are “insignificant”.
DRILLING RISKS: Mongabay reported on the possible impacts oil drilling in the Amazon could have on a “little-known reef”.
HEATING UP: The BBC Climate Question podcast discussed the weather pattern El Niño and its links to climate change.
Coming up
- 7-10 July: AI for good global summit, Geneva, Switzerland
- 7-15 July: UN high-level political forum on sustainable development, New York
- 8-10 July: Ninth meeting of the board of the fund for responding to loss and damage, Manila, Philippines
Pick of the jobs
- Green Alliance, senior partnerships officer | Salary: £42,748-£47,346. Location: London
- World Vision, environment and climate action senior adviser | Salary: Unknown. Location: Kenya
- Nature Energy, interim associate or senior editor | Salary: Unknown. Location: London or Milan
- Climate Analytics, senior communications manager – climate policy (maternity cover) | Salary €60,605-€66,880. Location: Berlin
- Carbon Exchange, researcher | Salary: Unknown. Location: Hong Kong
DeBriefed is edited by Daisy Dunne. Please send any tips or feedback to debriefed@carbonbrief.org.
This is an online version of Carbon Brief’s weekly DeBriefed email newsletter. Subscribe for free here.
The post DeBriefed 3 July 2026: US faces scorching Independence Day | Record ocean temperatures | Vietnam’s EV surge appeared first on Carbon Brief.
The World Bank has abandoned a target for 45% of the funding it gives developing countries to be “climate finance”, following months of pressure from the Trump administration in the US.
However, a concerted effort by developed- and developing-country shareholders has seen the bank hold onto its “action plan” for tackling climate change.
The multilateral development bank (MDB) – which is headquartered in Washington DC – is the single largest provider of climate finance globally, distributing $39.2bn in 2025 alone, primarily as loans.
Amid widespread aid cuts by developed countries, the World Bank and other MDBs have previously pledged to significantly scale up their climate finance over the next decade.
Despite scrapping its central target, the bank says it will continue to support the demands of its “clients”, many of which have explicitly stated their need for climate-related investment.
Here, Carbon Brief looks at the likely impact of the World Bank’s policy shift and whether it is – as one expert puts it – “mostly a symbolic victory” for the US.
- How does the World Bank support climate action?
- Why has the World Bank abandoned its climate-finance target?
- Why is the World Bank important for international climate finance?
- How will these changes affect global climate action?
How does the World Bank support climate action?
The World Bank is the oldest and largest MDB. It is tasked by its 189 member governments – the bank’s shareholders – with supporting development projects around the world.
The US is the bank’s largest shareholder, followed, in order, by Japan, China, Germany, France and the UK.
Every year, the bank provides billions of dollars – predominantly as loans – to developing countries.
(One part of the World Bank, the International Development Association – IDA – specifically distributes grants to lower-income nations, as well as lower-interest loans.)
Through its financing, the World Bank also has an important role in “mobilising” private investments in developing countries.
In recent years, the bank has increasingly focused on helping developing countries to cut emissions and adapt their economies for climate change.
The World Bank provided $164bn in what it calls financing with climate “co-benefits” between 2020 and 2025.
The largest share of this funding – roughly one-fifth – went to clean energy and electricity access projects. Smaller shares went to areas such as public transport, water supply and sustainable farming.
As the map below shows, the largest recipients of the bank’s climate funds since 2020 have been emerging economies, such as Turkey ($10.3bn), India ($9bn) and Nigeria ($6.3bn).
Among the largest World Bank projects in recent years are two extensive programmes in India, totalling nearly $3bn, supporting renewables and green hydrogen.
Others include $1.7bn for a Pakistan hydropower project, $926m for Iraq’s railways and $803m to boost “green development” in Colombia.
Despite the bank’s major role in providing climate finance to developing countries, it has faced heavy scrutiny from climate advocates.
In particular, they have noted the dominance of loans that push developing countries further into debt. The World Bank has also been criticised for a lack of transparency around how it classifies projects as “climate-related”, as well as “over-reporting” of climate finance.
Why has the World Bank abandoned its climate-finance target?
When World Bank president Ajay Banga – nominated by former US president Joe Biden – took over the institution in 2023, there were widespread calls for MDB reform.
Many of the bank’s shareholders wanted to see billions more dollars being channelled to support climate action. Later that year, Banga announced that the bank would ensure that 45% of the bank’s funding was climate finance by 2025.
This replaced an existing target of 35% for climate finance between 2021 and 2025, which had been set out in the bank’s second climate change action plan (CCAP).
The CCAP is intended to “mainstream” climate action in the bank’s work. With it in place, the World Bank’s climate finance more than doubled from $17.2bn in 2020 to $39.2bn in 2025.
As the chart below shows, this meant the World Bank exceeded its 2025 goal, with climate-related projects making up a 48% share of total funding that year.
When Biden was replaced by Donald Trump as president in 2025, the US administration turned against international cooperation, including climate finance.
However, the US did not walk away from the World Bank, where it exerts considerable power as the largest shareholder.
With the CCAP due to expire in July 2026, the US has spent months pressuring the bank and its shareholders to weaken or abandon the plan altogether.
US Treasury secretary Scott Bessent issued a statement during the 2026 World Bank and International Monetary Fund (IMF) spring meetings in April 2026, in which he called for “jettisoning” the 45% climate-finance target. More broadly, he said:
“We welcome the coming expiration of the CCAP and…expect the bank to immediately shift its myopic focus on climate and financing volumes to one that emphasises high-quality, durable projects.”
This vision involves a push for the World Bank to finance more fossil-fuel projects, including drilling for new gas. (The bank has committed since 2019 to stop funding upstream oil and gas projects.)
The decision on whether to continue with the CCAP was negotiated behind closed doors by the board of directors – representing national shareholders. There were reports of “deep divides”.
A joint statement from 19 of the 25 directors last year affirmed the need for both a plan and a target. The US, Russia, Kuwait and Saudi Arabia all declined to sign up, while Japan and India abstained, according to Reuters.
There were reports of European nations championing a climate plan, bolstered by support from the developing countries that would stand to receive climate finance. The US call to drop the 45% target entirely was reportedly backed by Saudi Arabia and Russia.
Ultimately, the day before the CCAP was due to lapse, the World Bank announced what appeared to be a middle ground. It would drop both the 45% target and the 35% goal it had replaced, while also “extend[ing]” the CCAP.
UK development minister Jenny Chapman told a committee hearing in the House of Commons the next day that this marked a “compromise”. She said:
“It wasn’t clear we were going to get a CCAP at all and a bank without an action plan on climate is a problem for us – so that’s a good outcome.”
Supportive shareholders had been pushing for a one-year extension of the plan. While the World Bank did not initially define the length, Chapman confirmed on LinkedIn that the plan had, in fact, been extended “indefinitely”.
The bank said it would also engage an “independent evaluation group” to assess the CCAP, in line with a board request.
Gaia Larsen, director of climate finance at the World Resources Institute (WRI), tells Carbon Brief that this evaluation will likely be “relatively free from political ideology” and could be “focused on how to make the CCAP more effective”.
Why is the World Bank important for international climate finance?
Under the Paris Agreement, developed countries – including major World Bank shareholders in Europe and elsewhere – are obliged to provide climate finance for developing countries.
This includes a target of $300bn a year by 2035, which is expected to largely come from developed countries. One significant way these nations can contribute to this goal is via their support for MDBs, particularly the World Bank.
The World Bank has described itself as “by far the largest provider of climate finance to developing countries”. Each year, it oversees half of all climate finance from MDBs and far more than any single donor country.
Many developed countries have, therefore, enthusiastically backed the World Bank’s climate efforts, as well as a “bigger” role for MDBs in development more broadly. The bank can lend sums that far exceed the amount of new public finance that individual nations are willing to commit.
This is particularly significant, given many of these nations, including the UK, Germany and France, have announced large cuts to their aid budgets in recent years.
Carbon Brief analysis suggests that roughly a fifth of the international climate finance provided and “mobilised” by developed countries in recent years can be attributed to their World Bank contributions, as the chart below shows.
(This only accounts for the World Bank financing that can be linked to developed-country shares in the bank. Developing countries, such as China, also have significant shares, which are not included in the chart below.)
MDBs – including the World Bank – have committed to providing $120bn in climate finance to developing countries by 2030.
This was set to come from greater shareholder contributions, combined with a programme of reforms to free up capital.
If the World Bank continued to provide half of the MDB total, it would need to increase its climate finance by around 50%, from $39.2bn today to $60bn in 2030.
Therefore, experts see a “key” role for the World Bank in achieving not only the $300bn target, but also the more aspirational $1.3n target that countries agreed as part of the “new collective quantified goal” (NCQG) on climate finance at COP29 in 2024. This includes the private capital it could “unlock” through its lending.
Joe Thwaites, international climate finance director at Natural Resources Defense Council (NRDC), tells Carbon Brief that these “NCQG politics” are “quite important”. He says:
“The maths of the $300bn does not work if the MDBs pull back and so I think that’s why you’re seeing developed countries taking a stand.”
How will these changes affect global climate action?
To date, the World Bank has only released minimal details about its new climate plans. As such, experts say the impact on future climate finance remains uncertain.
Jon Sward, environment project manager at the Bretton Woods Project, tells Carbon Brief:
“They have said they are going to retain all the same processes about climate-finance reporting. So, of course, there is a world in which, actually, climate finance continues to increase like it has been.”
Some of the World Bank’s internal organisations will, in fact, keep their climate-finance goals for the time being. For example, the IDA’s largely grant-based funding retains a 45% target for its current round, which will last until 2028 – the year of the next US presidential election.
However, WRI’s Larsen tells Carbon Brief that the changes, from a bank that was previously a “champion for climate action”, remain significant:
“This reality, reinforced by the elimination of the 45% goal, means that it would not be surprising to see a reduction in climate investments.”
In a statement, the World Bank said its “work on climate is and will remain firmly client driven”, noting that it supports nations undertaking their Paris Agreement climate plans.
Therefore, its climate focus may come down to whether there is demand for climate action from “client” countries receiving finance.
At an April event in discussion with the climate sceptic Bjørn Lomborg, Bessent said that global financial institutions should focus on growth, characterising climate action as an “elite belief”.
The implication from the US Treasury secretary was that recipient countries are not interested in climate action. However, as reported by Devex, a group of World Bank shareholders representing nearly 100 developing countries, wrote a letter that appeared to push back against this framing.
This “G11+” group, led by Brazil and China, said the bank “must remain firmly client-driven”, noting that countries are “following nationally determined pathways toward climate action”. NRDC’s Thwaites tells Carbon Brief:
“It’s one thing for the Europeans to talk about climate…This was the client countries [100 developing countries] saying: ‘No, we want this.’”
Recent research by the ODI thinktank found that 79% of developing-country officials polled wanted to see MDB investment in solar projects, 54% wanted hydropower and 47% wanted wind power. Only 13% wanted investment in gas-power plants.
Rishikesh Ram Bhandary, a senior development researcher at Boston University, has stressed the need for an “enhanced CCAP”, which could be supported by the bank’s new independent evaluation. Among other things, he tells Carbon Brief:
“The bank needs to make a more convincing case about how climate change is being integrated into development priorities rather than competing with them.”
Thwaites says he is hopeful that the outcome is “mostly a symbolic victory for the US”.
However, he says major shareholders from Europe and elsewhere should make it clear to the bank that it is not “the only game in town” when it comes to climate finance. He says:
“If [the World Bank] are going to cave into one shareholder, when the vast majority of the other shareholders are supportive of continuing climate action, they can take their money elsewhere.”
The post Q&A: How will the World Bank’s abandoned finance goal affect climate action? appeared first on Carbon Brief.
Q&A: How will the World Bank’s abandoned finance goal affect climate action?
Rich Wilson is CEO of the Iswe Foundation and co-founder of the Global Citizens’ Assembly.
The numbers are stark. According to the 2026 Global Report on Food Crises, 266 million people across 47 countries experienced high levels of acute food insecurity last year, nearly double the figure recorded a decade ago.
Meanwhile, disruptions to oil, gas and fertiliser flows through the Strait of Hormuz drove a 46% month-on-month spike in urea prices early this year, sending agricultural price indices up 8% and raising the spectre of a global affordability crisis.
This is not a blip. It is a new baseline. The EAT-Lancet Commission concluded that food systems now account for roughly 30% of total greenhouse gas emissions and are the largest single contributor to the climate crisis. The science has been clear for years.
Now some of the solutions to the problem are becoming socially acceptable too.
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Earlier this year, people from more than 60 countries and territories, selected not by vested interest, but by lottery, spent seven weeks examining the evidence on food and climate for the latest Global Citizens’ Assembly. They heard from scientists, farmers and industry. They worked through 42 hours of structured deliberation, engaging with some difficult trade-offs.
They were not asked to endorse a predetermined conclusion. They were asked an open question: what changes, if any, should we make to how we grow, share and eat food, so that everyone has enough to nourish themselves while tackling the causes and impacts of climate change?
Phase down industrial animal farming
Their answer was unambiguous. They voted to protect forests. They voted to phase down industrial animal food production. They voted for supply chain reform and corporate accountability, explicitly rejecting the idea that the burden of change should fall on individual consumers. All 22 of their Calls to Action passed with over 85% support, a super-majority of randomly selected people from every region of the world, in agreement.
Consider what the assembly was actually being asked to decide. Industrial animal food production is the primary driver of tropical deforestation. Protecting more land as forest and ecosystem means less land available for the expansion of industrial production. That is a real trade-off, with real consequences for real livelihoods. Politicians have spent years avoiding it.
These randomly selected people looked at the evidence, deliberated across time zones and cultures, and chose the forests, with 64% in strong support and a further 20% in favour. People from livestock farming communities voted for change. Not because they were told to. Because deliberation led them there.
We estimate there have now been more than 7,000 citizen participation initiatives worldwide in the last decade. They have been organised because, as our 2025 report: People in the Lead demonstrated, people are now consistently and significantly ahead of politicians on issues ranging from climate to AI governance.
The people know best
What the research consistently shows is that ordinary people, given proper evidence and time, produce recommendations that are more effective and more aligned with public values than what emerges from elected legislatures. The gap in global governance is no longer primarily between science and the public. It is between citizens and their political leaders.
That gap matters for more than procedural reasons. When policy treats people as passive recipients rather than active participants, it leaves out the very actors whose behaviour, trust and consent the transition depends on. Institutions that speak only to other institutions, and negotiate only with state actors and industry lobbies, are missing out on the trust and energy of the people they are supposed to serve.
Governments, left to their own devices, are not moving fast enough to prove that argument wrong. At COP30 in Belém last November, countries failed to agree on a fossil fuel phaseout roadmap, and even full implementation of every submitted national climate plan still leaves the world on course for 2.3 to 2.8C of warming.
Citizens’ track at COP
But the Brazilian presidency grasped something important. Among the conference’s more significant outcomes was the formal launch of a Citizens’ Track within the UNFCCC process, a mechanism for connecting the global participation field to intergovernmental climate negotiations. Türkiye and Australia, who together hold the COP31 presidency in Antalya this November, now have the opportunity to strengthen and institutionalise what Brazil began.
In Guatemala, Indigenous women build climate resilience with old and new farming methods
The question before us is no longer whether citizens can contribute to solving these problems. Across the world, in local food networks, in community assemblies and in participatory planning processes, they already are, quietly generating more ambitious and more legitimate solutions than those emerging from formal diplomatic channels.
What is required now is the political courage to connect people to power. Not to consult citizens and file the results. Not to invite them to observe while the real decisions are made elsewhere. But to recognise the public as partners in perhaps the most consequential governance challenge of our time.
The post As food shocks spread, citizens are showing more leadership than governments appeared first on Climate Home News.
As food shocks spread, citizens are showing more leadership than governments
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Q&A: How will the World Bank’s abandoned finance goal affect climate action?
As food shocks spread, citizens are showing more leadership than governments
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