In order to achieve the Paris Climate agreement, civil society organizations (CSOs) in the Philippines and abroad recommended that the Asian Development Bank (ADB) should align its country partnerships with the global environmental accord.
The report titled “Decarbonizing the ADB” stated that the multilateral development bank’s efforts to set a clean energy agenda and climate agenda are not enough.
The CSOs supported the call last week by the ADB’s Independent Evaluation Department (IED) that the Manila-based financial institution should formally withdraw from financing new coal-fired energy projects and revisit its energy policy.
“While the IED recommends emphasizing climate change mitigation and adaptation as a core priority and alignment with the ‘Strategy 2030.’ which refers to the Paris Agreement, it’s important to specifically and clearly state the 1.5-degree-Celsius Paris temperature goal,” according to the report, which was written by the Center for Energy, Ecology and Development and commissioned by the NGO
Forum on the ADB.
“Developing Asia’s pivotal situation as the last bastion of coal and also among the most climate-vulnerable countries warrants that the ADB take a firm and stringent stand on pursuing a 1.5-degree-Celsius pathway, in order to avoid high-carbon lock-in and the risk of stranded assets in the future,” the report added.
The Paris Agreement aims for global carbon dioxide (CO2) emissions to decline by 45 percent by the year 2030 from 2010 levels and achieve a net-zero CO2 emission by mid-century. The CSOs said these goals should prompt multilateral institutions such as ADB to be more proactive.
The CSOs said updating the country partnership strategy (CPS) would mean increasing ADB’s technical assistance to its Developing Member Countries (DMCs) to formulate long-term low greenhouse-gas emission development and efforts to decarbonize their economies.
The updated CPS will also prompt ADB to finance projects that will place DMCs on the 1.5-degree-Celsius pathway. The CSOs said ADB-funded projects should also be screened according to their alignment with the Paris agreement.
Further, the CSOs said the ADB should impose a shadow carbon price of $80 per total carbon dioxide (tCO2) by 2020 and $100/tCO2 by 2030. Currently, ADB’s carbon price of $36.30/tCO2 is still considered as the bottom range or the lowest carbon prices imposed by financial institutions.
According to the 2017 Report of the High Level Commission on Carbon Prices, the explicit carbon-price level consistent with achieving the Paris temperature target is at least $40–80/tCO2 by 2020 and $50–100/tCO2 by 2030, provided a supportive policy environment is in place.
“To meet the Paris temperature goal, [the] ADB should impose carbon prices at least at the highest end of the range and also determine a faster and higher rate of increase of its carbon prices, much like how [the] EIB [European Investment Bank] has already determined its increasing carbon prices until 2050,” the report said.
Earlier, in an e-mail to BusinessMirror, the IED said the ADB approved $2.06 billion in financing for coal-fired power plants between 2009 and 2019.
The IED said the financing for coal-fired power plants located in Pakistan, Philippines, China and Vietnam, accounted for a total of 4.8 percent of the total financial support of ADB for the energy sector.
The IED report stated that ADB approved $42.5 billion for the energy sector between 2009 and 2019, the second-largest sector allocation after transport.
The Asia and Pacific region, IED said, is still heavily reliant on thermal coal for power and heat generation, which is a major contributor to climate change and air pollution.
The region has the world’s most coal projects in the pipeline, with 78 percent of new plants in the pipeline located in ADB’s developing member countries.
The IED review also found that ADB’s energy program 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.
ADB was a pioneering investor in renewable energy in many of its developing member countries. However, the IED said its energy program fell short of addressing other priorities such as demand-side efficiency, last-mile electrification, and sector reforms.