The Academy of Macroeconomic Research (AMR) is a research institution under the direct supervision of China’s National Development and Reform Commission (NDRC), the ministry in charge of economic development and planning.
As a “national high-end thinktank”, the AMR’s Energy Research Institute is a well-respected body conducting energy transition research and providing vital suggestions on the energy transition to Beijing.
At this year’s COP29 in Baku, it launched the executive summary of 2024 China Energy Transformation Outlook (CETO), a key report describing China’s pathways to net-zero.
The launch was attended by a number of high-level officials, including climate envoy Liu Zhenmin and the head of the International Energy Agency, Dr Fatih Birol.
Carbon Brief’s Wanyuan Song was granted a rare – and lengthy – joint interview with its director general, Prof Lyu Wenbin, and director, Prof Bai Quan, who is also the lead author of the report, to hear their views about China’s energy transition.
- On China’s commitment to climate action: “Climate change doesn’t just affect China, it affects every country in the world…Climate change is not fake. It is happening and we are all on the same boat.”
- On international collaboration: “The joint work [on energy transition pathways] was meant to allow for a deeper grasp of the problems, making the research findings more scientific and [suggestions] more reasonable.”
- On an early emissions peak: “[W]e would love to try our best…but we can’t rule out all possibilities to peak even earlier than planned.”
- On updates in this year’s outlook: [This year w]e have also placed more emphasis on international cooperation.”
- On the need for global cooperation: “To achieve the best scenario, China shouldn’t be the only country that puts efforts into energy transition.”
- On stimulus and carbon reduction: “China’s ‘two new’ (“两新”) policy – large-scale equipment renewals and trade-ins of consumer goods – is one of [the policies]. The first three aspects [of ‘two new’] directly promote carbon reduction.”
- On managing electricity grids and markets: “China has never faced this kind of challenge before. The demand for electricity is huge, and soaring.”
- On China’s coal use: “With renewable energy becoming more powerful and energy storage becoming cheaper and more flexible, coal plants can play the role of ‘firefighters’ in the system – used in an electricity crisis whenever it is needed.”
- On the role of “green hydrogen”: “[I]t is very expensive at the moment…Commercial and technology innovation are needed to reduce costs.”
- On calls for greater ambition from China: “It can’t be the case that developing countries need to cut more emissions than developed countries – that would break the UN’s principle of ‘common but differentiated responsibilities’.”
CB: Why is China so determined to achieve its energy transition and combat climate change?
Bai Quan: Climate change doesn’t just affect China, it affects every country in the world. No one is excluded from it. China is one of the victims of extreme weather. The horrifying typhoon in Shanghai in recent months has blown windows off of skyscrapers – Shanghai didn’t have that many typhoons in the past. Autumn in Qinghai province [in west China] used to be cool and dry, but now it has become rainy. The weather forecast [once] said there was light rain in Beijing, but the heavy rain in the neighbouring province Hebei drowned people. Summer is getting hotter and winter is getting colder – this is climate change, and no one can survive alone. If Shanghai was drowned, would London be spared, would New York be OK? Climate change is not fake. It is happening and we are all on the same boat.
Combating climate change is a must, it is one of our core needs, and the primary thing we need to do to secure life and production. Low-carbon issues have been part of China’s policy for a long time but it wasn’t as big of a focus until President Xi vouched for climate action with the “dual-carbon” goal. The [“dual-carbon” goal] promise to the world is serious and, after President Xi announced it in 2020, it has become a hot topic [in media and among ordinary people]. The energy transition, as a sustainable solution, helps the “dual-carbon” goal to be realised.
CB: Your institute is working with national and international partners to produce an annual “China energy transformation outlook”. Can you tell me how that collaboration came about and what the aims of the project are?
Lyu Wenbin: The Chinese government has proposed the “dual-carbon” goal, and the energy transition is an important part of this process. Now that a goal has been clearly set, what we should do to deliver it is to choose the best pathway. Our research was conducted along with the Danish Energy Agency and Columbia University. The joint work was meant to allow for a deeper grasp of the problems, making the research findings more scientific and [suggestions] more reasonable.
CB: We covered your CETO 2023 report, in which you listed three stages of transformation. The first of these phases is the peaking phase, which lasts until 2030. With China rapidly expanding renewable energy this year and hitting its wind and solar capacity targets six years early, do you think China could peak even earlier than planned – “before 2030”?
BQ: There are many uncertainties and changes in the world economy, geopolitics and even military actions at the moment. Uncertainty also exists in climate change. China’s electricity consumption grew faster than expected and we would love to try our best to overcome all the difficulties to meet China’s carbon peaking goal before 2030, but we can’t rule out all possibilities to peak even earlier than planned.
CB: What differences are there in your outlook for China’s energy transition this year, compared to 2023?
BQ: The scenarios are different, although they are basically aligned. We have also placed more emphasis on international cooperation. The report itself has absorbed experiences from different places, such as Denmark’s experience in heating, for modelling, pathway design and other suggestions in the report. We would be very interested in discussing more new ideas and sharing our experience with everyone else.
CB: What would be needed for China to realise the most ambitious energy transition scenario featured in your report?
BQ: To achieve the best scenario, China shouldn’t be the only country that puts efforts into energy transition. China, as a developing country, at the government level and at the individual level, has already done a lot. The energy transition needs global cooperation. More people will realise the urgent need to combat climate change if we all join hands together. Solving some problems, such as commercialising hydrogen, also needs more joint research.
CB: You have previously said China’s energy transition relies on comprehensive policy support for green industry, “effective” investment in the green and low-carbon sector as well as promoting green consumption. Do you see signs of this in government plans for economic stimulus?
BQ: Yes, many! China’s “two new” (“两新”) policy – large-scale equipment renewals and trade-ins of consumer goods – is one of them. In the document issued by the State Council [China’s central government], there are four aspects: “implementing equipment updates, trade-in of consumer goods, recycling, and improving standards”.
The first three aspects directly promote carbon reduction. The first one is to service industrial sectors, the second one is to serve the general public, and the third one is for China’s “circular economy”. The last aspect indirectly serves energy saving and carbon reduction goals, by setting standards [for energy usage, emissions and recycling] to prevent people from re-purchasing outdated equipment with low energy efficiency.
In the past, it was difficult to recycle old production equipment, such as large motors. One obstacle is the challenge of acquiring a “first receipt” to be eligible for tax deductions. [Scrapped product sellers often cannot provide the purchase receipt – the “first receipt” – to the resource recycling companies for value-added tax deductions.] The new policy allows an ordinary invoice to be used for pre-tax deduction, solving the problem. This is a very important incentive to meet the 2027 goals [of the “two new” policy].
For the ordinary people, the “two new” policy also benefits their daily life. For example, they can receive subsidies for about 10-20% of a new purchase, with up to 2,000 yuan ($276) to trade-in a new fridge. [Trade-in subsidies for home appliances cover fridges, washing machines, televisions, air conditioners and computers.] They can get new energy saving electronics appliances at a very low price.
The “two new” policy documents clearly state the delineation of responsibilities of both the central and local governments, including funding they should provide. [The central government accounts for about 90% of funding and has issued a 300bn yuan ($41bn) bond to support this effort.] China holds regular press conferences stating progress on the “two new” policy, including on the renewal of outdated solar and wind equipment.
Another vital policy is the “guidelines to ramp up green transition of economic, social development” issued by the Central Committee of the Communist Party of China and the State Council. [See Carbon Brief’s China Briefing for more.] That is to say, it’s not just the [state-affiliated] State Council that promotes the “green transformation”, the Central Committee [the leading body of the Communist party] also really values it. There was a green transition policy before, but this new policy is a top-level design of “full green transition” [across every aspect of society]. It is a blueprint of China’s transition in industry, building [construction], transportation, energy and many other areas. Together with the “two new”, which is an implementation document for this top-level design, we now have both a direction and a manual for the energy transition.
CB: China is attempting to upgrade its electricity grids and markets to manage the variability of wind and solar power. What are the biggest challenges it faces in this area?
BQ: China has never faced this kind of challenge before. The demand for electricity is huge, and soaring. Reforms in the electricity pricing system and grid management are underway, and so are many other reforms. These reforms need to be economical, fair and feasible. Reforms, in general, have less impact on the rich than the poor. In the end, we can’t just ignore energy safety and cut electricity supply, nor ignore the poor being unable to afford it. This is a big challenge for the government to achieve in such a short time, especially if we are to peak carbon before 2030. Current price reform, in terms of whole reform effort, is happening very quickly, with the medium-to-long term contract reforms, as well as the spot market and the ancillary market reforms. However, it is a complicated matter, with each province facing different situations. Industrial usage and civilian usage are also different – we need to protect ordinary people’s needs.
CB: There has been significant international criticism of China’s decision to use coal-fired power plants as “flexibility providers” in its energy transition. Will coal continue to be necessary for China’s energy mix as it approaches carbon neutrality in 2060 and beyond, and how effective are China’s current efforts to develop low-carbon coal-fired power?
BQ: China’s principle is “construction new before destruct old” (先立后破), which is also translated as “build before breaking”. [See Carbon Brief’s articles from 2021 and 2022 for background.] The challenge China faces is different [from other countries], our electricity consumption is growing too fast. Energy security for us is most important, and cutting coal out completely does not match the basic principle of energy supply. What we can do is to increase the share of green electricity when improving the overall quantity and quality of electricity supply. Power grids also need to improve capacity for electricity generated from renewable sources, to counter their variable nature. Energy storage is an ideal solution for us, but it is too expensive at the moment.
The only pragmatic solution at the moment is asking coal plants to “tiao feng” (调峰, part-load operation, which means run below full-capacity). The old design of a coal-fired power plant was to operate for 5,500 hours annually, but they are at about 4,000 hours now. With renewable energy becoming more powerful and energy storage becoming cheaper and more flexible, coal plants can play the role of “firefighters” in the system – used in an electricity crisis whenever it is needed.
Overall, electricity is the core of future development. Reforms in electricity generation, power grids, electricity usage and electricity demand are all needed. Developing countries in particular face harder challenges. It is not only China – Vietnam and India also are exploring solutions to their power problems. Therefore, we emphasise global cooperation, which is vital for finding a solution for us all.
CB: Will “green hydrogen” play a significant role in China’s future energy mix and, if so, when do you think it will be deployed at scale?
BQ: Yes. Green hydrogen is a great alternative for fossil fuels in the chemical industry and the transportation sector. We were excited about it when it was first discovered, but it is very expensive at the moment. To deploy green hydrogen, commercial and technology innovation are needed, to reduce costs.
China’s carbon pricing has not reached the chemical industry yet, but it might change with changes in the market. The commercialisation of hydrogen is very important, a hydrogen fuel-cell vehicle needs to be affordable. We face the same problem that the EU faces and we would love to learn from them.
CB: Recent research has suggested that China should reduce emissions to at least 30% below 2023 levels by 2035, to align with the Paris Agreement goal of limiting warming to 1.5C. Some Chinese scientists have called this 30% figure “too ambitious”. Do you think a 30% reduction would be achievable?
BQ: I haven’t read the paper so can’t comment on it. I am not sure if there are suggestions for other countries in this research paper. [International expectations for China’s climate goals] need to be fair for China, as a developing country. [They] need to consider the shared responsibilities of the developed countries, including the US and EU. It can’t be the case that developing countries need to cut more emissions than developed countries – that would break the UN’s principle of “common but differentiated responsibilities”. China has not yet reached carbon peak, it still has some ways to go.
The post The Carbon Brief Interview: Prof Lyu Wenbin and Prof Bai Quan appeared first on Carbon Brief.
The Carbon Brief Interview: Prof Lyu Wenbin and Prof Bai Quan
Back in 1978, my year two teacher at Kelmscott Primary School in the foothills of Perth was a woman named Lesley Choules, who was especially fond of homely aphorisms as part of her teaching approach. Mrs Choules would deliver these cheerily, or icily, depending on how we had been behaving, but not much time would pass on any given day without her reminding us that “a smile costs nothing, but gives much”, or more ominously, “idle hands make the devil’s work”. All very old school, no doubt, but delivered with care and sincerity.
I think Mrs Choules was the first person I ever heard say that a “stranger is just a friend you haven’t met yet”. A simple but profoundly lovely sentiment, which is so at odds with the contemporary encouragement by demagogues and algorithms, to treat strangers with suspicion, or as subjects for exploitation.
And I’m exceedingly fortunate to experience the phenomenon of ‘stranger as friend’ quite a bit today as an adult. It occurs on every occasion when I meet someone new and end up finding out that they support Greenpeace.
These moments are wildly unpredictable in their timing-–being told “yes, I support Greenpeace”, mid-needle, by the person giving me the vaccination particularly stands out in my memory. But what I have learned, not just from reading organisational demographic reports but from my own daily life, is that we Greenpeacers are a varied bunch of human beings united by especially wonderful common threads: a sense of personal commitment to seeing an earth capable of nurturing life in all of its magnificent diversity, and a shared conviction that together we have the power to secure this future, whatever the odds. That’s Greenpeace.
So, to pick one recent example, I was on the road with a colleague, and we stopped in at a pub to grab a counter meal at the end of a long day. It was a fairly typical country hotel…some football playing on a big screen somewhere at the back, people tucking into their parmies and chips.
We found a table, and I went up to place our orders, accompanied by a bit of a chat with the person pulling the drinks. In the course of a polite conversation about the World Cup I mentioned in passing that I had South American work colleagues. The bartender then asked where I worked, to which I responded “Greenpeace”.
And then there was the moment.
‘Greenpeace! I get the emails and sign everything! I love the oceans. It started for me when I was travelling around the world and I realised how much damage was being done. I had to do something.’
These occasions carry an enormous significance to me, and to all of us at Greenpeace. On a personal level, they activate something profound and primal: a rush of belonging and sense of kinship and gratitude. I know, as a matter of intellect, that there are millions of people who support Greenpeace all over the world. But there is nothing like the experience of being told by a stranger, “I am part of Greenpeace too”, to viscerally reinforce that powerful, wonderful reality.
It is only this community of ‘strangers who are friends’ that enables Greenpeace to exist at all. Just to think on this for a moment, Greenpeace has run massive campaigns, taking on the most powerful vested interests in the world, for more than fifty years. Yet in that whole time, we haven’t taken funding from any government or business. We exist only because of people who believe in our mission and our method and give of themselves—their time, money, name, skill, energy, trust, talent, passion and perseverance. It is a miracle of collaborative action that we make possible every day, together.
So, with this in mind, I smile at the bartender and say a version of what I always do in these circumstances:
‘Thank you, thank you. Greenpeace only exists because of you, and me, and all of us. So, deeply and sincerely, thank you.’
And it is such a privilege to have the opportunity to say those words, on behalf of an organisation that I have loved since I was a kid, and for a mission that is my vocation, for all life on earth.
I don’t know what Mrs Choules would have made of Greenpeace—a bit naughty maybe—but I remember her as someone who loved nature, and she encouraged that love in her pupils. I like to think she would have recognised our common bonds, and been delighted at their regular discovery in these idiosyncratic encounters.
To meet someone who is part of Greenpeace is to know a friend. Another spirit who has found belonging, purpose, meaning and impact in our shared ideal. The truth is, you never know who, you never know where, but if you sail with Greenpeace, you have mates. You will never face the world alone.
Whatever is here now, whatever is to come, we will see it through together. We have agency on this earth. Across our many languages and lives, we will continue to dream a universal dream of a flourishing planet, and make good on our common conviction that together we have the power to make it so.
With Love,
David
Q & A
A question I was asked this week—and quite often get asked—is, what is the relationship between Greenpeace and other well known environmental organisations like the Wilderness Society, Australian Conservation Foundation, the World Wildlife Fund, Bird Life, Australian Marine Conservation Society and others?
Greenpeace is independent, but we are also deeply collaborative, and so often work closely with our good mates at these organisations and others. For example, a number of those organisations I have mentioned above are involved in opposing Woodside’s threat to Scott Reef, and we are all conscious that we have the greatest impact when we work together.
That said, organisations have varying strengths, histories, organisational and institutional realities, so we can often play different and complimentary roles, depending on our capabilities. On a personal level, I’ve always been very grateful for collegiate, trusting and frank relationships with colleagues and friends within the environmental movement (here’s my note of appreciation for Kelly O’Shanassy, on the occasion of her leaving ACF last year, for example). In that sense too, we are stronger together, and strongest when we each play our own part well
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?
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