The guidance issued this week rules out US support for coal and oil across the value chain and gas production – with rare exceptions for oil use in a humanitarian crisis or as backup for off-grid clean energy.
It calls on MDB staff to prioritise clean energy investments in low and middle-income countries and “only consider fossil fuels if [cleaner options] are unfeasible”.
The announcement was widely welcomed as a critical step forward in accelerating the end of public finance for fossil fuels. The US is the largest shareholder across the MDB system.
However, under certain conditions, support for gas infrastructure may continue in fragile and conflict-affected countries or in small island developing states.
Analysis will need to show there is no feasible clean energy alternative and the project would have a significant positive impact on energy access and development while being aligned with the Paris Agreement.
Maria Pastukhova, of think tank E3G, said the guidance effectively ends US support for fossil fuels in middle-income countries at the MDBs – a move she described as “a game-changer in making public fossil finance phaseout a new global norm”.