U.S. Threatens to Halve World Bank Funding to Force Financing of Global Fossil Fuel Projects

This legislation, titled the Combating Global Poverty Through Energy Development Act, is a direct, hard push by the U.S. to redefine how major international banks fund energy projects around the globe. In short, the bill mandates that the U.S. Treasury Secretary use all available leverage at institutions like the World Bank and the IMF to stop them from restricting financing for coal, oil, natural gas, and civil nuclear power projects. It’s essentially the U.S. government telling global lenders: if you want our money, you must fund fossil fuels.

The Checkbook as a Weapon: Conditioning World Bank Funds

Here is where the bill gets real specific and applies maximum pressure. Starting in Fiscal Year 2026, the U.S. is authorized to cut its funding contribution to the International Bank for Reconstruction and Development (IBRD)—a core part of the World Bank—by up to 50% (Sec. 2). This massive withholding only gets reversed if the Treasury Secretary can certify two things to Congress: first, that the IBRD has canceled all rules blocking financing for coal, oil, gas, or nuclear projects; and second, that the IBRD has adopted a policy that actively promotes financing these energy types. This isn't just asking nicely; it's using the U.S. checkbook to force a policy change that aligns with the goal of promoting affordable energy in developing nations, even if it means pushing high-carbon options.

Dismantling Existing Environmental Guardrails

If you're tracking global climate policy or just prefer not to breathe heavily polluted air, this section is key. The bill requires the Treasury Secretary to immediately instruct U.S. representatives at every covered international financial institution to fight against any policy that restricts or bans financing for these energy sources (Sec. 2). Furthermore, the Secretary must work to cancel existing rules that currently block this financing. This means that environmental or social safeguards put in place by these banks over the last decade—often restricting new coal plant funding, for example—would be targeted for immediate removal. For communities in developing nations, this could lead to a rapid increase in local pollution from newly financed projects that might have previously been blocked by the bank's own internal standards.

What This Means on the Ground

The stated goal is promoting “reliable and affordable electricity” in developing nations, which is a huge and necessary goal. For a country struggling with power outages, this bill could mean quicker access to financing for a natural gas plant that stabilizes their grid. The trade-off, however, is significant. This move fundamentally overrides the policy direction of global institutions that have been trying to shift their lending toward lower-carbon, renewable energy sources. It forces the World Bank to become a funder of projects that actively contribute to climate change, potentially undermining global efforts to transition away from fossil fuels. It also puts the U.S. Treasury Secretary in a powerful, central role, effectively using U.S. financial muscle to dictate the lending policies of multilateral institutions, which could definitely strain diplomatic relationships with other nations that contribute to these banks.