Restoring World Bank upstream oil and gas financing would produce greater benefits than global emissions costs

What's this about?

People disagree about whether the World Bank should again fund new oil and gas wells.

The key question: would this help poor nations more than the harm from added heat-trap gases?

What supporters say

• New oil and gas work could bring more help to poor nations with very weak power systems.
• Gas could give steadier power and help shops, plants, and other firms grow.

What critics say

• Money from oil and gas does not always spread to families, jobs, schools, or health care.
• New oil and gas wells could clash with plans to cut heat-trap gases.
• Methane (a strong heat-trap gas) and gas burned at wells could make the harm worse.
• Solar, wind, and small power nets may give power faster and at a lower cost.

How to read this

The number of points on each side does not show who is right; strong proof matters more than a long list.

The bottom line

Some places might gain from steadier power and new firms, but the gains would not happen everywhere.

The proof leans against bringing back broad World Bank funding, though we are not sure yet because exact results remain unclear.

The claim is that restoring World Bank financing for upstream oil and gas would deliver more development and energy-access benefits than the climate damage caused by the additional emissions. The evidence does not support that conclusion clearly: it points against a broad restoration, but with low confidence because the policy’s exact effects have not been measured.

The case for

Natural gas could help provide more reliable electricity and support industry in countries where power systems are weak, domestic resources are available and markets can support new infrastructure. The International Energy Agency identifies gas as one possible contributor to reliable power in Africa, alongside grids, renewable energy, efficiency and clean cooking. But it also stresses that energy access depends on affordability, infrastructure and investment choices—not simply on producing more gas. 1

The potential gains could be especially important in low-income countries with severe electricity shortages. World Bank evaluations say such countries need broader, more strategic support and have received disproportionately small shares of generation, connections and transmission infrastructure. A World Bank-backed gas-market project in Benin, Côte d’Ivoire and Togo projects lower energy costs, industrial growth and more private investment. However, those projections concern downstream gas markets, and do not prove that upstream World Bank financing would produce the same results. 2

Research also finds that electricity-access projects can improve some household, business and community outcomes. Yet the effects on income, jobs, education and health are uneven and often limited. The strongest case for restoring financing is therefore conditional: reliable energy could be highly valuable in particular places, but the evidence does not show that upstream oil and gas investment is necessary or that its benefits would exceed its global climate costs.

The case against

Restoring upstream financing would support additional fossil-fuel capacity at a time when major net-zero pathways do not require new oil and gas fields beyond those already approved. The IEA’s net-zero scenario says efficiency, electrification and low-emissions fuels can meet energy needs without new fields of that kind. The IPCC and other research also describe a limited carbon budget, with only a fraction of known reserves compatible with stringent warming goals. 3 These findings establish a serious climate concern, although they do not calculate how much extra production would result from a change in World Bank policy.

Oil and gas operations can also create substantial methane and flaring emissions. The World Bank’s flaring tracker estimated about 357 million tonnes of carbon-dioxide-equivalent emissions in the reported year, including roughly 42 million tonnes of methane (see Figure 2). The total shows the scale of the risk, but it is not an estimate of emissions from future World Bank-financed projects. Strong monitoring and controls could make a significant difference. 4

More fundamentally, oil and gas revenues do not automatically produce broad or lasting development. Research points to volatility, corruption, weak institutions, conflict and the crowding-out of other industries as reasons resource-rich countries can experience weaker growth and welfare. Upstream production alone does not guarantee jobs, household benefits or economic diversification. 5

Renewables may also offer a faster or cheaper route to access, especially for remote communities that would not benefit from centralized fossil-fuel infrastructure. The World Bank and ESMAP estimate that solar mini-grids could provide electricity to as many as 380 million people in Africa by 2030 and may be the least-cost option for many underserved communities (see Figure 3). This is a modelled potential, not a direct test of competing World Bank policies, but it challenges the idea that new upstream investment is required. 6

The bottom line

The evidence leans against restoring broad World Bank upstream oil and gas financing, but only weakly. The arguments against are better supported: climate pathways impose clear limits, resource revenues do not reliably create inclusive development, and renewable alternatives may serve many communities more cheaply or quickly.

Still, the verdict is low-confidence, because no source provides a project-by-project comparison of restored financing with alternative investments. The missing evidence includes how much new production the policy would cause, whether it would improve access and household welfare, how much emissions would be additional, and whether carefully selected gas projects could deliver benefits unavailable through grids or renewables.

The balance could differ for tightly regulated projects in the poorest countries with clear local benefits and strong alignment with national climate plans. It would be less favourable where projects are export-oriented, poorly governed, vulnerable to methane leaks or likely to displace renewable and grid investment.