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Welcome home. The World Bank and IMF Spring Conference, launched today in Washington, offers economic development finance experts a worthy opportunity to cram in a very tumultuous few months. Trump’s confusion threatens the Bretton Woods agency itself in a very direct way, as highlighted below.
Also today, Patrick has the latest information on how the US tariff shock will ripple the clean energy sector. Thank you for reading. – Simon Mandy
Join the global leader in business, finance and policy from May 21-22 for the Climate & Impact Summit, held in London and online. As a newsletter subscriber, you can sign up for a free digital pass here or secure a face-to-face pass discount here.
Multilateral Development Bank
Banga will put on a practical tone for the climate as Trump threats loom
Damocles’ sword has never hanged so heavily at the World Bank’s annual spring meeting.
Since the foundations of the body in 1944, the United States has been its driving force and largest shareholder. However, in February, President Donald Trump ordered Secretary of State Marco Rubio to conduct a review on whether the US should withdraw from intergovernmental organizations. This is fearing fear of potential exits from the World Bank and the IMF. It has been in circulation since the 2025 Manifesto, the controversial project of the Heritage Foundation, the blueprint for Trump’s second term.
So it’s not surprising that World Bank President Ajay Banga has used public engagement in recent weeks to highlight a practical approach to its work and openness to debate with the Trump administration. This has led to the World Bank’s climate policy in the spotlight.
Banga took over the World Bank in June 2023 following the exit of Trump appointee David Malpas, who was facing increasing public pressure over a lack of enthusiasm for climate finance.
Banga quickly adopted another tack, highlighting the need for the World Bank to address the threat posed by climate change to low-income countries. Analysts, particularly a group of independent, high-level experts on climate finance, say that expanded actions from the World Bank and other multilateral development banks are important for the world to achieve the goals of the Paris Agreement on climate change restrictions.
During the first months of his responsibilities, Banga has pledged that climate funds from renewable energy to disaster resilience will account for 45% of bank loans by 2025. Recent comments show that this commitment exists, but perhaps a broader view of what climate-friendly lending looks like.
Last week he told reporters that the World Bank board in June would discuss “all the above” energy strategy, with a “transition plan for everyone, not just renewables.”
Banga said the board wanted the board to waive decades-old ban on loans to nuclear projects. This pleases the Trump administration, which has expressed strong support for the industry.
He previously approved and spoke about the fossil gas project, telling the New York Times in February that it was “a cleaner fuel that will help with the transition.” Again, the rise in gas financing will work well with Trump, who has long been let go of the unfair treatment of the fossil fuel industry and is assumed to be treated.
None of this necessarily informs the World Bank’s U-turn on its climate stance. The World Bank never ceased funding for gas projects, even if it ceased support for coal and various types of oil projects. Nuclear power, though controversial, could have a long-term place in a net-zero future. Meanwhile, the agency is subject to rigorous scrutiny from nonprofits about how it assesses progress towards climate targets.
The big question now is whether these emphasis changes are sufficient to satisfy Trump, or whether the administration will push for a more serious setback to the climate as the price of continued support. (Simon Mandy)
Renewable Energy
Sunlight, wind power, battery hammered by customs
The Trump administration’s trade policy has hit retail investors since the president’s announcement of the “liberation day” tariffs on April 2. For environmentally conscious investors, tariffs layer new risks in addition to the administration’s already hostile approach to renewable energy.
For solar products, the US imports very little directly from China. However, if the President’s “mutual” tariffs are applied as planned in July, imports from the rest of Southeast Asia will suffer sudden taxes in addition to the already-in-effective baseline 10% tariffs. These tariffs could increase the cost of utility solar projects by 2.5-3.5%.
The renewable energy tax credit is in effect despite Trump halting payments to grants, loans and other financial incentives included in the Inflation Reduction Act. If they are eliminated, the project costs will be shot higher, the bank said. But so far, there’s little appetite in Congress to abolish credits. In a letter on April 9, the Republican senator urged the Trump administration to refrain from abolishing tax incentives that promote US manufacturing.
Shares in the US solar company sunk 31 and 33 percent, respectively this year.
There was one safe port in the solar turbulent ocean. Nextracker has enjoyed a modest 2% increase in solar panel shifting tracker with The Sun Arcs of the Sky so far this year.
To take advantage of the tax credits from the IRA, Nextracker is procuring steel in the US. In its April 16 investigation report, Bank of America said “there are no direct tariff exposure,” and that 100% of its products are being done in the United States.
“The entire (solar) tracker industry is well positioned to withstand tariffs,” the bank said.
Batteries, an important part of the solar ecosystem for energy storage, rely heavily on China, which accounts for nearly 70% of the supply of lithium ions, Morgan Stanley said.
A 145% tariff on China would “significantly” increase the price of US battery storage devices, Morgan Stanley said. South Korea, the US’s second largest battery supplier, faces mutual tariffs of 26% when Trump’s 90-day suspension, announced on April 9, ends.
“We hope that the uncertainty about the IRA policy and the potential negative impact of tariffs will continue to increase CleanTech’s reputation,” Morgan Stanley said.
Wind turbine parts are also suffering from tariffs, but the impact should be significantly limited, Morgan Stanley said. Up to 60% of the wind blades and other parts come from Mexico and seem to be exempt from customs duties for now. However, Germany supplied two-thirds of the wind tower. Germany, Vietnam and Spain supply 80% of the generator parts to wind turbines, the bank said.
If the Trump administration’s goal on tariffs was to encourage domestic manufacturing, renewable energy companies could have been expected to profit. But they will be hurt by these tariffs on imported raw materials, and the sector will suffer even more if Trump is targeting subsidies adopted by the Biden administration. (Patrick Temple – West)
Smart Lead
Can the rich really work?
A quarter of protest voting investors voted against reelection of chairs at oil major BP.
By pushing back the leaders of the European Parliament’s biggest political group, it called on the EU to abolish the 2035 deadline.
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