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Exposing the “Clean Energy” Myths of ADB and AIIB

Updated: Aug 5, 2019

“There should be a platform for people, governments and multilateral development banks (MDBs) to realize that the target of 1.50 is feasible. However we need various approaches much sooner than we thought of before,” according to Hemantha Withanage of Centre for Environmental Justice based in Sri Lanka. The latest 2018 Intergovernmental Panel on Climate Change report have sparked stronger renewed calls calling for a rapid decarbonization to limit the warming temperature of the planet.

Accordingly climate – related risks to health, livelihoods, food security, water supply, human security are projected to increase with the global warming. The economic loss from global disasters will cost more than the usual in 2017. Consequently the loss and damage caused by severe droughts, floods, landslide and the coastal sea level rise will have irreparable impacts.

It is part of this context that multilateral development banks particularly the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) have made several pronouncements on their commitments to Paris Agreement. AIIB being “born” after the landmark Paris Agreement have proudly publicly stated that, “there are no coal projects in our pipeline.” Whereas ADB’s Chief Energy Sector Group have recently released an opinion piece stating that while the 51 – year old bank will meet its own climate finance targets, “ADB’s lending portfolio has no place for dirty energy.” However despite these declarations are ADB and AIIB remiss in translating these commitments into the fiber of their respective institutional policies and actual lending portfolio?

Debunking these banks’ narratives

In the strategy meeting convened by NGO Forum on ADB, an independent coalition of CSOs holding the ADB and AIIB accountable, the myths purported by these banks were demystified. ADB’s outdated 2009 Energy Policy provides that the bank “will selectively support coal – based power plants if cleaner technologies are adopted.” The ADB have a history of financing coal – fired power plants using clean coal technology (CCT) and complaints have been filed to ADB’s Accountability Mechanism in this regard.

These include the ADB – backed 4, 000 MW Mundra Ultra Mega Power Project in Gujarat, India, which claims to use supercritical technology under its Private Sector Operations Department. World Bank’s private sector arm, International Finance Corporation (IFC) also co – financed the same project and a US Supreme Court case has been filed challenging the absolute immunity of IFC. The ADB also financed the 200 MW Visayas Base – load Power Development Project in Cebu, Philippines that also used circulating fluidized bed (CFB) boiler technology, which is also a type of CCT. Despite being the dominant buzzword for MDBs, using CCT will not be able to prevent significantly greenhouse gas emissions that have detrimental impacts both to the environment and on affected communities’ health.

In the case of the supposed green bank, AIIB has approved 6 natural gas projects or roughly 19% of its portfolio in its first 3 years of operation. This is also consistent with the trend across MDBs of shifting their respective energy lending portfolios from financing the construction or rehabilitation of coal – fired power plants to natural gas, which is perceived as “more environment – friendly” as compared to coal. “There have been claims that consultations have taken place but voices from the people have not been adequately heard,” according to Hasan Mehedi of Coastal Livelihoods and Environmental Action Network (CLEAN) based in Bangladesh that is monitoring the AIIB – backed Bhola Integrated Power Plant Project.

The MDBs are also using the same language as CSOs, peoples’ movements and communities fighting against harmful projects. The strategy meeting called for stronger energy policy language reflected in MDBs actual lending portfolio without any room for exceptions. Clear and unambiguous phase out plan of fossil fuel to just transition to renewables by 2030 and beyond has been the rallying cry of NGO Forum on ADB and its partner members. MDBs are also using this narrative particularly on the supposedly advances made on renewables. These broadly include solar farms, wind parks, waste – to – energy, geothermal, carbon capture and storage to attain the vision for Asia’s low – carbon growth.

Strengthening the case for renewables

There is no question that the viability of renewables in the long – term to meet the Paris Agreement. However civil society has also strongly denounced renewables with damning impacts both to the environment, cause land grabbing or any human rights violations. According to the Nationally Determined Contributions of Indonesia, the projected energy mix by 2027 shows an increase on renewables particularly for geothermal which is approximately estimated to be at USD 25 billion investment. Nonetheless as pointed out by veteran activist Titi Soentoro of Aksi, “The country already has a fragile ecosystem and the number of geothermal power plants in the pipeline in a highly sensitive environment might be a disaster in the making.”

The other myth espoused by MDBs and the fossil fuel industry is the intermittency issues of renewables. However, “Krabi Province in Thailand is an example wherein it is projected that by 2026, the province is 100% self – dependent on renewables. There are alternatives such as solar rooftops but definitely not solar farms as well as maintain the strong opposition to coal is feasible to attain the just transition,” according to Suphakit Nuntavorokan of Healthy Public Policy Foundation based in Thailand.

The potential for renewables according to Philippine government data shows 250 GW of capacity. Recent developments have shown that renewables are not only getting to be cross – competitive but it is also cheaper. “Coal is no longer the king in the Philippines. Community – based renewable energy systems used to be difficult to argue because it is expensive but now the narrative is different,” according to Gerry Arances of Center for Energy, Ecology and Development (CEED) based in the Philippines.

Lead up to 2030

The multilateral development banks, the private sector, fossil fuel industry and governments are intensifying their own version of narratives with respect to achieve the Sustainable Development Goals and the Paris Agreement. Nevertheless for CSOs, peoples’ movements and communities at the forefront of this battle, it is about stopping coal – fired power plants and other fossil fuel including natural gas as well as fight for the space for acceptable renewable investments to thrive in. The conversation on energy is all about social justice, protecting our rights and the story of mankind’s survival.

Download the pdf here.


Annabel Perreras is the Policy Coordinator on AIIB of NGO Forum on ADB, you may reach her via her email


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