The support of Multilateral Development Banks to renewable energy projects in developing countries

Abstract

Multilateral Development Banks (MDBs) are extensively involved in the Paris Climate Agreement and play a key role in climate finance. However, the amounts recently channeled to carbon-based projects may raise doubts about this involvement. This empirical approach seeks to explore whether MDB participation actually favors renewable energy projects in developing countries, aligning with their commitment to this Agreement. An empirical analysis is conducted to explore the determinants of MDBs’ participation in energy infrastructure projects developed in 64 countries using data from 2011 to 2018 obtained from the World Bank’s Private Participation in Infrastructure Database. The results reveal that MDBs’ participation is higher in renewable energy projects, confirming their commitment to clean energy; however, this is not confirmed by the amount of financial support provided.