World Bank calls for accelerated renewable energy investment as oil supply risks mount

By Editor

The World Bank has urged governments across the world to accelerate investments in renewable energy, clean technologies and resilient infrastructure as rising oil supply pressures continue to threaten economic stability, inflation control and long-term development.

According to the Bank, the ongoing global oil supply squeeze has reinforced the urgent need for countries — particularly developing economies — to diversify their energy mix and reduce dependence on volatile fossil fuel markets.

The Bank said investments in renewable energy, solar infrastructure, decentralized energy systems and clean technologies are becoming increasingly critical for protecting economies from future energy shocks while supporting growth, employment and climate resilience.

“Countries become more resilient when they diversify energy sources, including renewables and nuclear energy, because it reduces exposure to energy price shocks,” the World Bank stated.

The institution noted that governments must continue investing in the infrastructure needed to support energy diversification, including solar mini-grids, decentralized electricity systems and reliable power supply networks, especially in remote and climate-vulnerable communities.

Beyond energy infrastructure, the World Bank stressed that sustained investment in human capital remains essential for economic resilience and future job creation.

According to the Bank, countries must modernise education systems and workforce development programmes to equip workers with skills relevant to emerging industries, including clean technology, digital services and artificial intelligence.

“Practical AI tools are already improving productivity in sectors such as agriculture by helping smallholder farmers detect crop and livestock diseases and improve access to services,” the Bank said. “But investment in people goes beyond technical skills. It also includes quality education, healthcare and strong social programmes that strengthen human capital.”

The Bank further warned that the global economy is entering another period of heightened uncertainty driven by geopolitical tensions, climate risks, policy instability and rapid technological disruption.

It noted that surging oil prices and tightening global supplies are placing additional pressure on public finances, particularly in developing countries, where inflation, widening fiscal deficits and supply chain disruptions are already constraining growth.

As governments grapple with competing priorities between economic stabilisation and long-term development, the World Bank cautioned against reducing public investments that support growth and employment.

“When faced with fiscal pressure, governments often resort to cutting long-term capital investments. This is not the right response,” the Bank said. “Evidence shows that reducing investment spending during crises weakens recovery, lowers productivity and wages, and reduces countries’ ability to withstand future shocks.”

Instead, the Bank advised countries to prioritise high-impact projects capable of generating jobs, stimulating productivity and strengthening climate and energy security.

It said poorly designed or low-impact projects should be discontinued, while strategic investments with long-term economic value should be protected.

The World Bank also highlighted the importance of improving public sector efficiency to create fiscal space without relying solely on increased taxation or borrowing.

According to the institution, nearly one-third of public investment spending is lost globally due to inefficiencies, with losses significantly higher in low-income countries.

It explained that better project appraisal, transparent procurement systems, effective implementation and regular maintenance of infrastructure assets could substantially reduce waste and improve value for money.

“Neglecting maintenance quietly drains public finances because infrastructure deteriorates faster and replacement costs become higher over time,” the Bank noted.

The institution added that digital technologies can help governments improve project monitoring, accountability and spending efficiency.

It cited countries such as Viet Nam and Cambodia, where governments are increasingly deploying digital systems to track project outcomes and ensure public spending delivers measurable results.

The World Bank said strengthening upfront planning and project selection capacity has become essential for countries seeking to maximise the impact of limited public resources.

The Bank noted that it is already supporting governments in countries including the Philippines, Viet Nam and Mongolia to improve project appraisal and investment planning processes.

“The goal is to ensure that projects selected for implementation generate sustainable economic growth, create jobs and strengthen resilience over the long term,” it said.

The World Bank concluded that while global economic shocks may persist, countries that prioritise clean energy investment, efficient public spending and human capital development will be better positioned to achieve sustainable growth and energy security.