Energy Economy

02 Sep 2020

ADB Urged to Withdraw Financing New Coal-Fired Energy Projects

02 Sep 2020  by   

The Asian Development Bank has been urged to withdraw from financing new coal-fired energy projects by its Independent Evaluation.

Independent Evaluation reports to ADB’s Board of Directors through the Development Effectiveness Committee on how the bank can enhance its policies, strategies, operations, and special concerns in Asia and the Pacific.

The arm has urged the bank to revisit its energy policy and align its policy to its commitment to withdraw from financing new coal-fired energy projects made in 2013.

Independent Evaluation is calling for the ADB to formally align its policies to climate change commitments.

The report recommends that ADB emphasise climate change mitigation and adaptation as a core priority, place a higher emphasis on promoting a more active high-level engagement with developing member countries in their energy sectors, increase support to address gaps in ADB’s energy operations, and expand energy operations in a cross-sectoral fashion beyond the power sector to meet new energy needs in developing member countries.

Independent Evaluation’s ADB Energy Policy and Programme, 2009–2019, assessed ADB’s assistance to the energy sector across all its developing member countries from 2009 to 2019 and the relevance of its Energy Policy 2009.

The bank approved $42.5 billion for the energy sector during the evaluation period, most of which went towards electricity transmission and distribution.

The Asia and Pacific region is still heavily reliant on thermal coal for power and heat generation, which is a major contributor to climate change and air pollution, according to the assessment.

The region has the world’s most coal projects in the pipeline, with 78% of new plants in the pipeline located in ADB’s developing member countries.

The review found that ADB’s energy programme made significant contributions to increasing the availability and reliability of electricity supply, through investment in power grid infrastructure, as well as increasing the share of renewable energy in the region through public and private sector financing.

However, ADB’s Energy Policy fell short of addressing other priorities such as demand-side efficiency, last-mile electrification, and sector reforms.

Taylor-Dormond, ADB’s director general for Independent Evaluation, said: “Asia has the highest demand for natural resources and the largest emissions of greenhouse gases contributing to climate change. Therefore, efforts of ADB’s developing member countries to curb these emissions will have worldwide impact.

“As a leading development partner in the region, ADB can play a key role in helping address these serious environmental challenges through its energy policy.”

Nathan Subramaniam, IED Director, adds: “The energy sector is undergoing a dramatic, rapid, and global transformation due to new technological advances and climate change concerns. ADB’s current energy policy is no longer adequately aligned with the ongoing transformation and with its new corporate strategy.

“ADB needs to ensure the new policy is aligned with the global consensus on climate change, its corporate strategy, and recent changes in the energy sectors of the developing member countries.”

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