Hot money: Illuminating the financing of high-carbon infrastructure in the developing world

Elsevier, iScience, Volume 24, 19 November 2021
Ball J., Pastor A.O., Liou D., Dickey E.
Major infrastructure financiers will have to significantly decarbonize their investments to meet mounting promises to cut carbon emissions to “net-zero” by mid-century. We provide new details about those needed shifts. Using two World Bank databases of infrastructure projects throughout the developing world, and applying a methodology for imputing the projects' likely future carbon output, we assess the emissions profile of power-plant projects executed from 2018 through 2020 — the three years immediately preceding the spate of net-zero pledges. We find that approximately half the generation executed in those years is too carbon-intensive to align with keeping Earth's average temperature from exceeding 1.5°C above pre-industrial levels, largely because of the prevalence of new natural-gas–fired power plants. We also find new evidence of host countries' agency in shaping carbon trajectories: Much of the climate-misaligned financing is not foreign but domestic. And we find different institutions are financing infrastructure portfolios with significantly differing carbon intensities.