THE Asian Development Bank (ADB) has declared that it will no longer finance any coal-related projects and will move to retire and decommission coal-fired power plants in the region.
In its draft energy policy, ADB said it “will not finance any coal mining, oil and natural gas field exploration, drilling or extraction activities.” This includes cross-border transmission lines linked to coal power plants.
ADB said it no longer invests in projects that modernize, upgrade, or renovate coal facilities to extend their life. The bank will only finance projects that will re-engineer plants for use of cleaner fuels, such as natural gas or renewable energy sources.
“ADB will support DMCs in planning for early retirement of coal power plants and will support decommissioning of coal power plants and site redevelopment for new economic activity, including cleaning of hazardous materials, restoring soil and water, redevelopment of the buildings, and upgrading existing infrastructure. In providing support for coal phase out, ADB will support new job creation in cooperation with the local communities and stakeholders,” the draft energy policy document stated.
The draft said that in cases of coal-fired power plants re-engineered to natural gas, these projects will only be financed if these would help attain net neutrality by mid-century.
These projects, ADB’s draft said, may also be considered for financing if they will help in the retirement or adoption of carbon capture, utilization and storage by mid-century.
Per the revised policy, ADB may finance natural gas projects including gas transmission and distribution pipelines, LNG terminals, storage facilities, gas-fired power plants, natural gas for heating and cooking.
This will be based on five conditions, including: energy services will go to those without access to this service; no other technology can provide the same service at an economic cost that considers the social cost of carbon; and the project uses high efficiency and best technologies that are available.
The natural gas power project must result in a net reduction in grid emission factor and is aligned with the targets to achieve carbon neutrality by mid-century.
ICSC: Bridge must have an end
Reacting to the policy change, Institute for Climate and Sustainable Cities (ICSC) Senior Policy Advisor Atty. Pedro H. Maniego Jr. said, however: “It is concerning that as the door is closed on coal, the door seems to have opened indefinitely for fossil gas. There is no bridge in the world without an end, and if the Bank will consider fossil gas as a bridge and transition fuel, it needs to stipulate an end.”
ADB, he added, “did cite green hydrogen from renewable energy sources, which could eventually replace natural gas. Policies toward this end need to be established with urgency.”
Nonetheless, Maniego commended the ADB for issuing the energy policy draft that ends coal even if the current policy draft is 10 years late.
He believes the Manila-based multilateral should have gone down this path as early as 2009 when its energy policy was last revised. Adopting this policy of ending coal could have given ADB the ability to provide urgent advice to DMCs.
“Sustainable development is the goal of the Bank’s DMCs, and flexible generation is at the center of this just energy transition. Decarbonization will be an outcome of policy signals that elevate the importance of stable, modern grids that are designed to absorb a far greater amount of renewables and utilize emerging technologies,” Maniego said.
New risks in gas
NGO Forum on ADB Executive Director Rayyan Hassan agreed and said ADB is faced with new risks in the gas industry. Hassan said, “ADB is still gridlocked in LNG and gas finance, as well as harmful WTE incinerator projects, and large hydropower plants which all contribute to increasing concentrations of GHG.”
Meanwhile, Civil Society Organizations (CSOs) in the region celebrated the release of the draft energy policy of the Manila-based multilateral development bank.
Gerry Arances of the Center for Energy, Ecology, and Development (CEED) Philippines said they supported ADB’s stance to abandon coal. He said this will rectify the bank’s mistake of financing coal-fired power plants that led to the “suffering of many communities in the Philippines and across Asia.”
NGO Forum on ADB Energy Campaigner Glenn Ymata also welcomed the draft of the new energy policy, and commended the bank’s effort to consider issues affecting communities and civil society organizations.
Hemantha Withanage from the Centre for Environmental Justice in Sri Lanka, a former head of the NGO Forum on ADB, said the NGO Forum on ADB has long advocated making ADB a fossil-free bank. He said, however, that ADB should stop financing “other high carbon-emitting technologies such as gas and waste to energy.”
Hassan, nonetheless, said the new draft policy is a “much-delayed justice” for ADB coal-affected communities in Phulbari Coal mine in Bangladesh, Tata Mundra Coal project in India, Visayas Baseload and Masinloc Coal Project in the Philippines, and Jamshoro Coal project in Pakistan.
“We commend this very immediate move away from coal by the ADB in its Energy Policy review this 2021, as we are at the brink of a climate apocalypse as there is hardly any time left to avert global temperature rise beyond 1.5 degrees,” Hassan said.
No projects for lending
In an e-mail to the BusinessMirror last week, ADB’s Energy Sector Group Chief Yongping Zhai said the last time the bank financed a coal power project was in 2013 and it no longer had any similar projects in the lending pipeline. These are some of the changes that will be forthcoming in the bank’s new energy policy.
He said ADB invested $25 billion in the energy sector between 2015 and 2020. Around 45 percent of the amount was invested in renewable energy and energy efficiency.
Another 35 percent was for projects in transmission and distribution lines to integrate more renewable energy into the region’s energy systems.
Zhai said ADB committed to help developing members access clean and reliable energy for all. Between 2009 and 2019, ADB’s clean energy financing reached $23 billion and its target is to reach $80 billion in cumulative climate financing for 2019-2030.
Image credits: AC Dimatatac, iCSC