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-renewables. 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 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 –
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 base load 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, have 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 mandatory implementation of all ADB Safeguards. Given the dismal environmental and social track record of PLN and the borrower system, this call into question any claims of a focus on clean technology with meaningful environmental and social safeguards.
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.
CLEAN (Coastal Livelihood and Environmental Action Network), Bangladesh
Bangladesh Working Group on External Debt (BWGED)
SDG Watch, Bangladesh
Jal Sarokar Manch – Nepal
Indigenous Perspectives - India
Manipur Cycle Club - India
Environics Trust – India
Environmental Public Society – Armenia
Nash Vek Public Foundation – Kyrgyztan
Both Ends – Netherlands
Pakistan Fisher Folks
Legal Rights and Natural Resources Center – Kasama sa Kalikasan (LRC-KsK/Friends of the Earth-Philippines)
NGO Forum Cambodia