The ADB’s self-imposed ‘Strategy 2030’ calls for climate finance from the bank’s own resources to reach $80 billion between now and 2030. It also committed to focus at least 75% of its operations to support climate change mitigation.
Over the past three years, however, the bank has heavily invested in fossil gas and related infrastructure across Asia and is now facing the reality of stalled construction in several places and rising environmental costs.
Critics call for policy shift
A network of over 250 civil society organizations across Asia have used the occasion of the Asia Clean Energy Forum (ACEF) 2020, organised this week as a virtual conference from Manila, to call on the bank to “make an immediate shift towards renewable energy pathways for a Paris Aligned COVID-19 recovery.”
The future of ADB Energy investments should be in renewable energy and community microgrids, they say with “no space for fossil fuels especially coal.”
Independent data suggests renewable energy will create more jobs and is cheaper to produce. “The age of fossil fuel baseload power generation has come to an end,” critics underlined urging the ADB to “take action to align its investment policies with the 1.5 degree target of the Paris Agreement.”
Established in 1966, the Asian Development Bank is owned by 68 members, with 49 originating from the region. ADB President Takehiko Nakao underlined that in addition to clean energy targets, “a sustainable and secure energy supply remains essential as more than 350 million people still lack access to electricity in our developing member countries.”
Raising funds through USAID and KfW
To raise more investment for energy projects in Asia and the Pacific, the ADB has entered partnerships with both the United States Agency for International Development (USAID) and the German Kreditanstalt für Wiederaufbau (KfW).
Under the USAID partnership, the bank seeks to mobilize $7 billion worth of investment designated to boost clean power gen capacity by 6 Gigawatts (GW) and increase regional energy trade by 10% over the next five years.
KfW and ADB some month ago agreed to expand their co-financing partnership in Asia-Pacific with an additional $2 billion over the next 4 years. The funds are meant to be used to promote sustainable economic development, a cleaner environment, and renewable energy.
The additional funds from Germany will build on a $2 billion co-financing partnership, launched in 2014, and renewed in 2017 for an additional $2 billion. This partnership yielded 14 projects focused on education, energy, health, industry and trade, and public sector management. The $4 billion provided by KfW for these projects was complemented with $5.8 billion from ADB.