THE Russian invasion of Ukraine is causing a “backsliding” in the world’s efforts to cut emissions as the war is delaying the retirement of coal-fired power plants globally, according to the World Bank.
In a speech ahead of the International Monetary Fund (IMF)-World Bank Group (WBG) Annual Meetings, World Bank Group President David Malpass said the war has made oil more expensive, which is also forcing many advanced countries to reopen coal-fired power plants.
Malpass also noted an increase in coal mining in the past few months due to higher demand for coal as a source of energy.
“Due to Russia’s invasion of Ukraine and limited and high-price, natural gas supplies, coal-fired power plants are seeing their closures postponed across the world. And coal mining has accelerated,” Malpass said in his speech.
“The current environment is one where there’s backsliding so the reopening of coal-fired power plants is going on and including, and especially in the advanced economies,” he also said in an interview at the Stanford Institute for Economic Policy Research (SIEPR).
Malpass said this is one of the challenges being addressed by the World Bank especially since many countries have already issued new permits to allow coal-fired power plants to operate.
In a CNBC Debate at the Asian Development Bank (ADB) Annual Meetings, ADB President Masatsugu Asakawa said the efforts to address these challenges are being done through the Energy Transition Mechanism (ETM), a blended form of financing to fast-track the retirement of coal-fired power plants.
The ETM, ADB said, utilizes public and private investments to finance country-specific ETM funds to retire coal power assets on an earlier schedule than if they remained with their current owners.
These funds can come from governments, multilateral banks, private sector investors, philanthropies, and long-term investors. The ETM, Asakawa said, is being piloted in the Philippines, Indonesia and Vietnam.
“The Asia Pacific region is accountable for more than 50 percent of greenhouse gas emissions globally. It consumes 80 percent of global coal and at the same time, it is also true that this region is one of the most vulnerable areas against natural disaster. Almost 70 percent of major natural disasters take place in this region every year. So our fight against climate change is more robust,” Asakawa said.
It is crucial, Asakawa said, to retire coal-fired power plants because if this is not done earlier, these plants can be in operation for decades to come, making it difficult to meet decarbonization targets.
In the same forum, Energy Regulatory Commission (ERC) Chairperson and Chief Executive Officer (CEO) Monalisa C. Dimalanta said in the Philippines, a number of private banks have also created their own ETMs to contribute to these efforts.
Dimalanta said that at least one energy project has availed itself of an ETM to retire one of the younger coal-fired power plants in the country.
“I think all of these initiatives are welcome,” Dimalanta said. “It (ETM) is going to be a very welcome initiative to address high prices (of electricity) that we are experiencing similar to other parts of the world.”
Civil Society Organizations (CSOs), meanwhile, decried ADB’s efforts to finance fossil gas. While the bank has declared that it no longer intends to finance coal-fired power plants, the bank has increased financing for fossil gas.
The CSOs said ADB has spent over $4.7 billion on gas since the adoption of the Paris Agreement. Its gas finance accounts for over 96 percent of its fossil fuel financing from 2016-2020.
They added that ADB’s financing of fossil fuel projects has been in the form of loans, which could exacerbate the debt burden of ADB’s developing member countries.
“We are protesting the ADB’s continued financing of fossil gas, which seriously imperils climate action. It is not enough for the ADB to end financing for new coal. It needs to stop financing for all fossil fuels,” said Lidy Nacpil, coordinator of Asian Peoples Movement on Debt and Development (APMDD).
“[ADB] should [also] cancel outstanding loans from its past support for coal or convert these outstanding debts to grants for renewable energy. Staggering debt burdens continue to plague most developing countries and the impacts of these burdens are far worse during this time of the multiple crises of Covid, climate, and economic hardships,” she added.
According to Annabel Perreras, Project Data Analyst of NGO Forum on ADB, the current safeguards policy of ADB meant to protect the people from harm is up for review.
Image credits: Nonoy Lacza