US Pushes World Bank to Scrap 45% Climate Finance Threshold
Washington is pressing the multilateral lender to abandon a pledge it met in 2025, threatening to redirect lending flows at the worst moment for green finance in emerging markets.
The Trump administration is pressing the World Bank to abandon its commitment to direct 45 percent of annual lending toward climate-related projects, describing the target as "distortionary" and "nonsensical," E&E News reported on June 22 (2026-06-22).4 The bank had established the 45% threshold three years ago and confirmed by 2025 that it had met the goal — a milestone the administration now wants undone.
The move tracks Washington's broader effort to repurpose multilateral development banks away from climate mandates and toward what the administration frames as productive capital allocation. Its timing is sharp: ICE EUA Dec-rolling prices posted a 4.6% weekly loss in the week ending June 5 (2026-06-05) — the market's first weekly decline since early May — amid macro headwinds and diminishing confidence in the pace of transition-policy delivery.2
The 45% target was central to the repositioning of the World Bank under president Ajay Banga, who has sought to establish the institution as the flagship multilateral vehicle for clean energy and climate adaptation lending in lower-income countries. Dismantling the allocation would remove one of the few firm institutional commitments tying the volume of development lending to energy transition goals.
Private sector trends offer little comfort. The world's 65 largest banks committed $906 billion to fossil fuel companies in 2025, up 8% from 2024, according to the annual Banking on Climate Chaos report coordinated by Rainforest Action Network.3 Since the 2015 Paris Agreement, those institutions have collectively directed $8.7 trillion to oil, gas, and coal operations.
JPMorgan Chase remains the top fossil fuel financier globally, committing $58.2 billion in 2025, a 12.5% increase on 2024. Bank of America ranked second at $47 billion. Japan's Mitsubishi UFJ Financial Group came third at the same figure after a 21% single-year jump.3 US banks now represent 32% of all global bank fossil fuel financing, up from 28% in 2021, the largest national source of fossil capital in the world.
The picture within European banking is mixed. BNP Paribas cut fossil fuel deals by 28% and UBS by 36%, but Standard Chartered increased financing by 28%, Deutsche Bank by 20%, and HSBC by 16%.3 No coordinated European reallocation toward green finance has emerged to offset the US banks' growing share of fossil lending.
For the poorest economies, the prospective loss of the World Bank's climate allocation compounds an existing shortfall. The International Development Association — the bank's lending arm for the lowest-income countries — fell $20 billion short of its $120 billion replenishment target in late 2024.1 IDA-eligible countries contribute just 0.5% of current global emissions but bear a disproportionate share of climate-driven economic disruption. Available finance has skewed toward mitigation rather than adaptation.
The EU is operating under its own fiscal constraints. A June 2026 analysis from the Institute for Climate Economics found that existing EU investment in climate and energy projects covered barely three-fifths of what would be required to meet the bloc's 2030 targets.2
Whether Washington ultimately forces the removal of the World Bank's climate allocation threshold will determine how much concessional capital remains available for clean energy in lower-income markets through the end of this decade. A bank that reallocates lending away from climate projects widens a gap that private green finance has shown limited appetite to close — and grants fossil fuel infrastructure a window that no subsequent policy reversal would easily shut.