Commentary: Fossil fuels are winning the battle for easy money

Fossil fuels are gaining ground in the realm of easy financing, according to a recent commentary. Cash-strapped nations are increasingly turning to the International Islamic Trade Finance Corp (ITFC) to help fund their petroleum imports, as reported by David Fickling for Bloomberg Opinion. Despite Brent crude exceeding $100 a barrel for most of the past month, and diesel prices soaring more than double their previous levels, these impoverished oil importers aren't facing a crisis.

The reason lies in the growing trend of helping oil and gas users pay for fuel they can't afford. A recent example is Bangladesh's $3.3 billion emergency energy package, which allocates over $3.1 billion for oil and gas imports, with $200 million going towards repairing the country's crumbling electricity grid. The ITFC, unlike conventional multilaterals like the World Bank and Asian Development Bank, primarily focuses on providing semi-commercial loans to help these countries pay for their petroleum imports.

Between 2020 and 2024, the ITFC disbursed $29 billion, putting it on par with other major multilateral institutions. While the ITFC's support is crucial for meeting immediate needs, it raises concerns about the long-term implications. The commentary argues that repeatedly borrowing money to finance fuel imports only delays the underlying problem of lack of capital.

It also points out that spending funds on fossil fuels is less beneficial than investing in clean energy alternatives, which provide lasting benefits. The commentary concludes by advocating for conventional development banks to accelerate their support for clean power to avoid being outpaced by the fossil fuel economy.