[ADB]

Energy Campaign

Groups hit ADB for ‘coal legacy’ and continued fossil fuel investments

Energy and climate advocates hit the Asian Development Bank (ADB) for its doublespeak on clean energy, as the Bank hosts the Asian Clean Energy Forum (ACEF) with USAID and the Korean Energy Agency (KEA) in its Manila Headquarters.

“Despite its professed commitment to ‘clean energy’, ADB’s energy legacy remains to be its funding of fossil fuels, especially coal,” said Gerry Arances, Executive Director of the Center for Energy, Ecology, and Development (CEED). “To this day, coal-fired power plants in Masinloc, Zambales, in Naga, Cebu, and Calaca, Batangas remain in operation, with its negative effects on the health and livelihood of communities, its increasing cost, and decreasing reliability.”

Arances also criticized ADB’s co-organizers, USAID and KEA, as both the US and South Korea remain adamant supporters of coal despite its apparent endorsement of renewable energy sources. “The US remains a stumbling block for decarbonization, even backing out the Paris Agreement. Meanwhile, South Korea, which owns 51% of Korea Electric Power Corporation, is responsible for two coal power projects in Cebu alone and South Korea Engineering & Construction is proposing to set up and expand coal operations in the Quezon province.”

Fossil fuels incompatible with climate crisis, groups say "Governments and investors need to realize that coal is a sunset industry. Continuing to invest in coal-based power, given the current context of falling renewable energy costs and shifting policy landscape in response to the climate crisis, runs the risk of producing stranded assets,” said Zeena Manglinong, FDC Executive Director. “If this happens, and there is a great likelihood it will, ordinary citizens might end up paying for the losses associated with them. We must not forget that in the Philippines we are still paying for stranded debt and stranded contract costs under EPIRA," she continued.

“ADB has to decide whether its part of the problem or part of the solution,” said Rayyan Hassan of the NGO Forum on the ADB. "ADB, which has been the largest coal financier in the region, has been claiming that it has not done any coal since 2013. But the truth is that ADB continues to also finance in fossil fuel related transmission infrastructure such as gas pipelines and railways leading to coal mines. It has also continued to proliferate gas power plants in the region especially in Myanmar and Bangladesh.”

“With expanding energy markets and investments unparalled in any region of the world, Asia holds now in balance the world’s future on climate change,” said Philippine Movement for Climate Justice Ian Rivera. “Asia is a region which is home to many climate vulnerable countries but also hosts governments welcoming dirty energy projects which further worsen the climate crisis,” said Rivera.

Governments should lead energy transition, not companies Rivera also hit the Duterte administration, particularly DOE Sec. Alfonso Cusi, for its continued support for coal projects and its continued belief in clean coal. “Despite yet another study has labeled the Philippines as the country most threatened by the climate crisis, not only has the administration rolled back in its participation in climate negotiations, it is also doubling down on its dirty energy policy.”

“ADB has no track record to speak with regards to shifting investments to expedite the end of fossil fuel. But time is not too late for this institution to become relevant. But our government cannot simply remain passive recipients or even active defenders of dirty energy investments. It is still the obligation of the Asian governments to push the swift energy transition,” he said.

The groups remain dissatisfied with the promised $7 Billion worth of “clean energy investments” from companies to be mobilized by the ADB and USAID, as per the agreement they signed last Tuesday.

“Public finance is being used to power dirty energy projects like coal plants and renewables are being left in the hands of the private sector,” said Sanlakas Secretary-General Atty. Aaron Pedrosa. “Without ensuring that renewable energy projects remain public in character, specifically by setting up community-based and community-owned renewable energy projects, ‘clean energy’ will still mean problems in accessibility and cost as it will still primarily serve profit,” Pedrosa continued.

“Not only do we demand from finance institutions and the ADB an immediate phase out of coal projects, we also call on the dedication of financing to renewables owned and managed by consumers themselves,” said CEED’s Gerry Arances. “Renewable energy’s transformative potential will be undermined if it is subject to the same conditions as fossil fuels, which failed to address the peoples’ energy and development needs.”

Asia Clean Energy Forum (ACEF) 2019 Statement

The Asian Development Bank’s (ADB) is holding its 14th Asia Clean Energy Forum (ACEF) this week from 17 - 21 June 2019. The NGO Forum on ADB along with its member partners demands the ADB to meaningfully act on the urgency of climate crisis in the Asia - Pacific. In 2018, multilateral development banks (MDBs) including the ADB created a joint framework for aligning their activities with respect to the goals of the Paris Agreement [1].

In ADB’s Strategy 2030 it has increased its committed operations supporting climate change mitigation and adaptation to 75% in 11 years time and set to prioritize investments for a low - carbon economy. “However despite this rhetoric, ADB’s deafening silence on retiring coal-fired power plants it had earlier funded in the region and banning financing for fossil fuels speaks in stark contrast with this commitment,” Annabel Perreras, Advocacy Coordinator, NGO Forum on ADB.

 

CSOs demand that ADB, as a standard bearer for other MDBs, should adopt stringent measures in accordance with the 1.5 degree pathway. According to Rayyan Hassan, Executive Director of NGO Forum on ADB, “In order for the Bank to demonstrate its commitment in unambiguous terms, it should have a time-bound phase-out plan for natural gas and intensify investments on renewable energy projects that are neither harmful to the environment nor to the affected communities.”

The Philippine Movement for Climate Justice (PMCJ) has been calling out the ADB in exposing the “clean energy” myth of the Bank. The 600 MW coal-fired power plant in Masinloc, Zambales in the Philippines was tagged as a clean investment and was rehabilitated by the ADB. According to Ian Rivera, PMCJ National Coordinator, “The plant annually releases 3,766,177 mt of CO2 emission and while ADB claims that it is no longer funding coal, it should be held responsible for the harmful impacts that it had caused in hastening climate change and putting the lives of people at risk.”

“It is imperative for ADB to be true to their legacy, getting out of the business of dirty energy,” added Bernadette Zeena Manglinong, Women & Gender Coordinator of Freedom from Debt Coalition (FDC).

Sreedhar Ramamurthi, NGO Forum on ADB International Convener and Executive Director of Environics Trust, India strongly stated that “ACEF has an important role in transforming the Asian energy portfolio. Asia is one of the most potential regions for further growth in energy consumption. The choice of a right path in the context of global climate and developmental impacts will be imminent”.

In a study made by E3G, the independent climate change think tank has pointed out that Southeast Asia is at the frontline of the global decarbonization challenge – and is lagging behind many other regions of the world [2]. The region is experiencing rapid economic growth and increasing energy demand. “ADB should use its country-level work and its Country Partnership Strategies to be more proactive in supporting countries achieve the Paris Agreement compliant pathway,” according to Sonia Dunlop, E3G Senior Policy Advisor.

According to Gerry Arances, Executive Director of Center for Energy, Ecology, and Development (CEED), “It is high time for ADB to make use of decentralized renewable energy microgrids like in the case of the Philippines. These have been proven to be an effective alternative in providing clean, affordable and accessible electricity particularly among unelectrified and remote households, small island grids and impoverished communities and even in metropolis like Metro Manila where electricty prices is rising”[3]

Lastly, CSOs demand that the ADB should start pursuing distributed renewable energy systems because it maximizes energy access and advances energy democracy. It is designed on the principle of doing no harm to the environment, supports local economies and contributes to the health and well-being of all people. By investing in distributed renewable energy systems, essentially this also contributes to fulfilling ADB’s commitment to improving governance and meet the Bank’s stated objective of ensuring energy access for all.

“ACEF should find and foster more finances, technologies, and skills for decentralized and people owned energy systems. That’s the need of the hour!” Ramamurthi ended.

[1] The MDBs’ alignment approach to the objectives of the Paris Agreement: working together to catalyze low-emissions and climate-resilient development http://bit.ly/2FgmqIZ

[2] The Asian Development Bank: Asia’s future climate bank? How the Asian Development Bank can become “Paris aligned” in Indonesia, Vietnam and the Philippines.

[3] Center for Energy, Ecology, and Development. Decarbonizing the ADB.

Asia Clean Energy Forum (ACEF) 2018 Statement

Three years ago, in 2015, governments, including ADB Member Countries, signed on the commitments of the Paris Agreement, requiring them to take rapid steps towards limiting greenhouse gas emissions by 1.5 degrees Celsius. Member Countries are as a result aiming to follow ambitious goals laid out in their Nationally Determined Contributions (NDCs) and have entered into an arena of new discussions to tackle energy investments in global development financing from this perspective. If humanity hopes to limit the trajectory of climate change, meeting – and even exceeding—the promises made in 2015, it must essentially stop emitting greenhouse gases into the atmosphere by 2060, (from the recent study, Nature Climate Change). Yet, the ADB agenda for shifting to a “low carbon scenario” in energy investments only commits to energy projects, which foresee a 2 degree Celsius rise by 2060, and in its recent infrastructure financing report (2017) fails to explicitly support DMCs in meeting their NDC commitments.

 

Prior to the COP21 in Paris in 2015, the G20 meeting in Brisbane in November 2014 had pronounced its goals for achieving 2% GDP growth of its economies by 2020. This leads to the question whether development financing will address the climate crisis or continue its business as usual of economic growth outcomes and raises fundamental questions about what kind of energy sources will be used to achieve these aims? The seismic shifts in global development financing, specifically in relation to Asia’s developing economies and private entities have raised the ante on the governance mechanisms of multilateral banks, particularly given that in the global context, private banking institutions are committing to end or phase out investments in fossil fuels and non-renewable. Likewise, there is a real struggle in holding private investors accountable especially in the realm of development financing. The establishment of fresh lending institutions, such as the Asian Infrastructure Investment Bank (AIIB), BRICS’s New Development Bank (NDB) and the ascension of China as an economic and political superpower seems to signal a new order in the continent’s aid architecture with an increasing role and share of private finances.

 

The Billions to Trillions in Mega Infrastructure as promoted by the World Bank and other IFIs such as AIIB is emphasizing the expansion of ports, industrial parks and trade routes. In recent media reports, Chinese investments in the Kuantan Port in Malaysia have led to the doubling of its cargo volume and revenue since 2013. Similarly, port city investments are being financed by commercial banks and IFIs some of the target industries within these industrial parks/port cities are –

  • Energy Technologies

  • High-end equipment manufacturing

  • Manufacturing of Advanced Materials

  • High Carbon Steel production plants etc.

 

The nature of these industries would suggest an increased demand for high baseload energy.

 

“The Forum is gravely concerned with these seismic shifts in global development financing, specifically in relation to Asia’s developing economies. The intrusion of private capital in development finance, has raised the ante on the governance mechanisms, or lack thereof, of multilateral banks especially the ADB. There is a real struggle in holding private capital accountable especially in the realm of development financing. The Forum believes this lack of accountability of private capital is a telling sign for all future investments in Trans-boundary Infrastructure and Energy-intensive projects being championed by the AIIB and the One Belt One Road Initiative.”

 

The ADB at present is reviewing its Strategy 2030 and has had made considerable shifts in its lending in the energy sector. ADB has set up a controversial clean technology fund or CTF through which in 2013 it has financed - without meaningful consultation or attention to environmental or social safeguards - over 150 Million USD in geothermal energy projects in Indonesia alone. The CTF committed this finance despite the fact that, according to the CTF:

 

"a similar previous project between ADB, WB and GoI were carried out in 2010 (via PIP of MoF) which was not successful".

 

In 2016, the ADB through its ADB CTF Private Sector Geothermal Program: Indonesia & Philippines was attempting to seek further funding, again without the mandatory meaningful public consultation required by the ADB. In addition, ADB has provided direct support in the name of "clean energy" for the notorious mega-infrastructure Financial Intermediary, PT Sarana Multi Infrastruktur, (PT SMI) with a well-documented track record of violations of environmental and social safeguards. Given that the majority of geothermal projects in Indonesia are targeted at forest areas inhabited by Indigenous and other forest-dependent peoples, lack of attention to the environmental and social impacts is a tremendous problem.

 

We also note with extraordinary concern that the ADB is currently attempting to place Indonesia's entire National Energy Company (PLN) under "borrower system" rules instead of requiring the mandatory implementation of all ADB Safeguards. Given the dismal environmental and social track record of PLN and the borrower system, this calls into question any claims of a focus on clean technology with meaningful environmental and social safeguards[1].

 

The ADB has also a track record of financings dirty fossil fuel projects such as the Tata Mundra Coal Power Plant in India, Visayas Coal Project in the Philippines, and many other investments in gas projects in the region. At present, ADB is looking to invest in the CHP5 Coal Power Plant in Mongolia. The bank has also sent a team to see the feasibility of the Upper Karnali Hydropower Dam in Nepal as a possible investment venture. In fact, the majority of its 41 energy pipeline projects published online, are based on the extraction of fossil fuels or other forms of retrogressive energy investments, including large hydro and waste to energy (incineration) projects.

 

We reiterate our call from 2017 ACEF on the ADB to provide a clear plan of action on transitioning from Fossil Fuel energy to fully renewable energy investments and to ensure and publicly commit that these investments - including existing investments as described above -- are carried out under fully implemented ADB safeguards with mandatory meaningful consultation with affected communities, strict avoidance of forced resettlement, and with careful and documented adherence to environmental safeguard requirements, including the protection of forest and forest peoples, and mandatory social safeguards for the protection of the lives and livelihoods of affected communities, with a specific focus on women, Indigenous peoples and the vulnerable as required by ADB safeguards. The transition from Fossil Fuel to RE must have clear indicators and targets with mandatory indicators including gender-disaggregated documentation of environmental and social impacts and the prevention of those impacts, including information disclosure, consultation, avoidance of land evictions. In addition, we call for clean energy transition indicators in line with countries and their respective NDCs (Nationally Determined Contributions) as per the Paris Agreement.

[1] http://www.safeguardcomments.org/borrower-systems.html

 

ENDORSED BY:

  1. CLEAN (Coastal Livelihood and Environmental Action Network), Bangladesh

  2. Bangladesh Working Group on External Debt (BWGED)

  3. SDG Watch, Bangladesh

  4. Jal Sarokar Manch – Nepal

  5. Indigenous Perspectives - India

  6. Manipur Cycle Club - India

  7. Environics Trust – India

  8. Environmental Public Society – Armenia

  9. Nash Vek Public Foundation – Kyrgyztan

  10. Both Ends – Netherlands

  11. Pakistan Fisher Folks

  12. Legal Rights and Natural Resources Center – Kasama sa Kalikasan (LRC-KsK/Friends of the Earth-Philippines)

  13. Umeedenoo Pakistan

  14. NGO Forum Cambodia

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