End ADB Greenwash
The ADB’s greenwashing in the climate policy space is apparent. The ADB's response to the climate crisis should not be determined by its statements on various global platforms, but is revealed through its energy sector investments. For the past three years, the ADB has invested heavily in fossil gas and related infrastructure across Asia. It is now facing the reality of stalled construction and rising environmental & social costs. With the COVID-19 pandemic, communities with pre-existing health conditions due to environmental pollution from fossil fuel energy plants and extractives projects are doubly vulnerable. There are also other issues, such as lack of meaningful consultations with local communities on project planning; lack of pre-project information disclosure, in particular concerning the shift towards financing via bonds and other indirect modalities of investing that remain highly opaque in their specific details; and the lack of human rights due diligence assessments from the onset. These critical issues have led to communities' opposition to ADB projects, leading to threats and reprisals against them, a glaring disconnect from real, sustainable development outcomes.
We need a clean, just, and fossil free ADB
Without strict criteria for clean energy or a firm exclusion of financing for oil, gas, and coal projects, the 2009 Energy Policy enabled the Bank to make dirty commitments, locking in a fossil fuel pathway for the next generation and undermining the Paris 1.5°C goals. While climate disasters are plaguing the world, the ADB is continually ramping up its financing of fossil gas, including for the controversial Turkmenistan - Afghanistan - Pakistan - India (TAPI) gas pipeline project. The Bank has also funded the Rupsha 800 MW Combined Cycle Power Plant in Bangladesh despite its proximity to the Sundarban Mangrove Forest, threatening the livelihoods of about 1,500 fisherfolk communities due to the effluent waste. The ADB is also financing controversial waste-to-energy projects in Thailand, the Maldives, and the Philippines, all of which are touted as renewable projects, but pose a risk in contaminating air, water, and soil, and undermining livelihoods.
As civil society organizations and people’s movements from Asia, Europe, North America, and Australia, we urgently call on the ADB to replace this draconian, anti-people, and anti-environment energy policy with one that is clean, just, and fossil free. As a public bank, the ADB must uphold a gold standard for climate action. This means leapfrogging fossil fuels and supporting a rapid and just transition to a renewable energy future.
We, the undersigned civil society groups from across the planet, demand the ADB to shift its Energy Policy towards the following broad objectives:
As a public bank, the ADB energy policy must be aligned with the Paris 1.5°C goal or an even more ambitious goals. The new ADB Energy Policy must align all lending and operations with a high-probability and equitable pathway that limits warming to well below 1.5°C. This means ensuring projects are compatible with reaching a global CO2 emissions decline of at least 45% from 2010 levels by 2030, and net-zero CO2 emissions before mid-century pursuant to the P1 Scenario in the Intergovernmental Panel on Climate Change’s 1.5°C Special Report, without relying on false or unproven solutions such as carbon capture storage and energy efficient fossil fuel technologies. Country partnership strategies (CPS) should also be updated to ensure alignment with the Paris Agreement, and projects should be screened to ensure they align with both CPS and national decarbonization pathways that go through robust public consultations.
The ADB portfolio must decarbonize its energy supply by ending fossil fuel finance. The new ADB Energy Policy must exclude support for gas, oil and coal projects across the supply chain—including but not limited to (i) coal for industrial use, such as coal mined and used for a captive power plant, (ii) projects adopting energy efficient, carbon capture and storage, or other mitigating technologies, and (iii) projects using co/tri-generation technology. This must likewise include indirect support through related infrastructure, advisory services, technical assistance, or financial intermediaries. The new ADB Energy Policy must systematically account for GHG emissions on a project-level by screening other carbon-intensive projects. Strict emission performance standards should be applied to all power projects, including renewable energy projects. The new policy must impose a shadow carbon price of at least USD 80/tCO2 by 2020 and USD 100/tCO2 by 2030, coupled with a faster and higher rate of increase.
ADB should provide concessional finance and technical assistance to help DMCs formulate and pursue just transition policies and strategies for workers and communities dependent on fossil fuels. ADB should assist DMCs in ensuring that workers’ rights and interests are upheld by providing technical assistance on formulating just transition policies and strategies and creating its own energy transition package, similar to the EIB. The energy transition package should prioritize funding for reconversion of abandoned coal sites, retraining and support for displaced workers, and other initiatives that will give rise to new employment opportunities. In the middle of a pandemic, billions of workers are already facing a high risk of falling into poverty.
ADB's new energy policy must promote community microgrids and public ownership of renewable energy systems to support Sustainable Development Goal 7 (universal energy access) and ensure a swift, equitable and just transition within the energy sector. As the costs of solar and wind technologies have decreased exponentially and have become competitive with fossil fuel technologies, community microgrids allow for faster and broader deployment of solar and wind power technologies. Therefore, ADB should be prioritizing community microgrids as attractive investments aligned with meeting DMCs' commitments to the Paris Agreement. The ADB must also make grants available for DMC governments and communities to directly own and operate renewable energy systems and associated infrastructure to ensure decent work and affordable energy.
ADB's new energy policy must meaningfully support innovative renewable energy technologies and infrastructure, and ensure all projects uphold free prior and informed consent of impacted communities. The new energy policy must prioritize upgrading existing grids into smart grids with increased capacity to maximize the integration of more variable renewable energy.
*** Further details on most of the recommendations above can be found in LEAVING BEHIND ADB’S DIRTY ENERGY LEGACY: Civil society critical reflections and recommendations, a publication by Center for Energy, Ecology, and Development (CEED).
Consequently, this statement brings together specific demands by local, national, and international civil society groups across key thematic areas of the ADB Energy Sector investment portfolio. The Bank must ensure the following demands are reflected into binding policy language in the new ADB energy policy:
ON COAL FINANCING
Asian Peoples' Movement on Debt and Development (APMDD)
Japan Center for a Sustainable Environment and Society (JACSES)
A complete withdrawal of coal involvement should cover both stopping the financing of new coal projects and phasing out participation from existing and already operational projects. Financing of fossil fuel projects has mostly been in the form of loans. In addition to the grave impacts and implications of its fossil fuel financing on people, communities, and on the climate - we are also profoundly concerned that ADB's fossil fuel financing also has, in the process, exacerbated the debt burdens of its member countries.
It is only fitting that the ADB Energy Policy Review also addresses the loans involved in its fossil fuel financing. We call on ADB to adopt a policy and take action that will address several issues - 1) accountability for impacts of ADB-financed coal projects 2) withdrawal of involvement from existing coal projects, 3) easing the debt burden created by ADB lending, especially lending to harmful projects. This can be done by converting the outstanding balance of ADB loans to coal projects into grants for renewable energy. This policy will also serve as an incentive and fiscal assistance for the developing renewable energy by its DMCs.
ON GAS FINANCING
When it comes to gas financing, it is important to understand that expansion of gas demand in the long term is not compatible with a 1.5°C degree pathway. For many reasons, the ADB should not treat gas as a transition fuel:
Scenarios aligned with the Paris Agreement (1.5°C, no overshoot) largely require today’s global gas demand to decrease, not increase, by 2030, implying a decrease in gas consumption in many developing country markets.
As of 2019, gas is the leading contributor to global fossil emissions – whilst coal emissions are declining.
Out of the 100-methane leakage hotspots worldwide, 50 are associated with oil and gas production. Carbon footprint and shadow carbon pricing methodologies used by multilateral development banks (MDB) and development finance institutions (DFIs) often neglects these upstream – Scope 3 – emissions and uses conservative assumptions around the global warming potential of fossil gas.
Replacement of coal generation with fossil gas will not achieve the necessary emissions reductions even if methane leakage is kept to a minimum. As the costs of renewables fall below the cost of gas, there is a risk of replacing one uncompetitive energy source with another.
Newly installed renewable power capacity increasingly costs less than the cheapest power generation options based on fossil fuels. The dramatic and ongoing cost declines for wind and solar disrupt the business model for gas in the power sector. While cost has been a constraint in the past, today, wind and solar are the cheapest forms of bulk energy supply in most major markets. As a consequence, renewables will become cheaper than existing coal and gas in most regions before 2030, including countries, but not limited to, China, India, Vietnam, Egypt, and Saudi Arabia.
Against this backdrop, and as a public bank with a mission of achieving a “prosperous, sustainable, inclusive and resilient” Asia and the Pacific, the ADB should cease to invest in gas altogether. ADB is best positioned to instead focus on enabling alternative, “best-of-a-kind” renewable energy and energy efficiency solutions. In particular, the ADB has an important role to play in bringing down cost of capital and risk mitigation around wind and solar in emerging markets and to support a just energy transition for fossil-fuel dependent regions.
Instead of considering investments in gas-based heating, ADB should prioritize innovative clean solutions that can be used in district heating (DH) or individual heating, that the Bank already has good experience with in its recent projects PRCs, (for example with solar collector plants and SDH, enhanced utilization of low-grade excess heat as a structural energy efficiency measures).
ON WASTE TO ENERGY
Global Alliance for Incinerator Alternatives (GAIA)
No Burn Pilipinas
Ecowaste Coalition
Zero Waste Europe
We urge ADB to divest from WTE projects and stop urging the DMCs to pursue thermal-based technologies of energy conversion from waste, including the provision of technical assistance in Asia due to its proven health, social, environmental, and climate risks. To help DMCs align with the Paris Agreement, ADB needs to refocus its investment on higher tiers of the waste hierarchy, which have significantly lower GHG emissions than technologies involving thermal conversion. Ongoing support to WTE also overrides national and international efforts and policies transitioning toward a circular economy and health and climate mitigation and adaptation measures.
Developing countries lack strong legislation on internationally recognized pollution prevention and control standards and monitoring and enforcement capacity to deal with residual, emissions and toxic wastes from WTE. Henceforth, we also strongly call for the removal of WTE as one of the projects deemed as climate mitigation and adaptation options in its green bonds, SDG bonds, and other programs and portfolios in the same way that the European Commission excluded WTE incineration from the draft EU Taxonomy Regulation and other countries and territories like Guam and the Philippines that have banned waste incineration.
Click this link to learn the full demands on Waste-to-Energy (a letter addressed to the Executive Directors of ADB; signed by 53 international, regional, and national organizations).
ON HYDROPOWER
CEE Bankwatch
Rivers Without Boundaries
ADB must stop supporting greenfield hydropower in its countries of operation, as it has continuously led to mass-scale destruction of communities and rivers across Asia. Water ecosystems, especially in Asia, are increasingly scarce and fragile, with ever-increasing human competition for exploiting their diverse resources. Therefore destructive uses, which have the same alternative options, should be phased out to give way to more compatible activities and no viable alternatives. This first of all relates to greenfield hydropower projects (including those which may be described as "multipurpose" storage dams that are not practical or sustainable in today's ecological, climate, and economic realities of Asia. Hydropower can be in most cases easily substituted by less destructive (and often less expensive) alternative technologies meeting the same human needs, such as wind, solar, smart grids, combined with energy storage projects, etc. Instead of wasting resources on usually unsustainable new hydropower projects, we strongly recommend that the ADB puts their development on hold or, better, inscribes them on the exclusion list. In 2020-21 more than 380 organizations from 80 countries supported the "Rivers for recovery" Call and Report, explaining why greenfield hydro has no place in post-COVID recovery efforts (see https://www.rivers4recovery.org). R4R Report demonstrates that 95% of hydropower put online in 2019 has serious negative environmental, social, economic, and geopolitical consequences.
Develop an environmental framework to guide hydropower modernization
The ADB needs to develop a responsible framework to assist clients in improving the social and environmental performance of upgraded projects, otherwise "modernized" facilities will continue to exert negative impacts, and the ADB will be responsible for that. For example, in regards to dams, mainly hydropower, such framework may address facilitation to fish migration; ecological requirements to temperature regime; basin-wide ecological optimization of water management schemes, public consultations on full-spectrum of dam impacts, restoring environmental flows, etc.
Develop stringent standards on environmental flows
When dealing with hydropower assets and other water infrastructure, the ADB strategy must incorporate an objective not to exceed the carrying capacity of aquatic ecosystems at basin-wide and local sc, limiting them to alteration of ecosystem processes and preventing loss of biodiversity. (e.g., 2018 Environmental flows Handbook for Hydropower published by the WB Group). Unfortunately, the ADB has not done an excellent job recently applying this standard in Uzbekistan.
Basin-wide planning
Any large-scale water infrastructure may be usefully modernized, designed, and assessed only in the context of a more comprehensive river basin management plan and\or strategic basin-wide assessment, which should focus on ecological integrity and ecosystem restoration. Therefore basin-wide evaluation of freshwater ecosystem carrying capacity and restoration needs should be the basis for any ADB intervention in the hydropower sector.
Exacerbating Unsustainable Development
The ADB should stop supporting bias towards hydropower in countries already over-reliant on hydro such as Tajikistan, Georgia, Nepal, etc. More than 50% of hydro in their energy systems makes these countries extremely vulnerable to climate fluctuations, developing single (and quite outdated) renewable technology. The higher cost of hydropower construction makes countries more vulnerable to debt crises can even increase poverty. Currently, ADB supports or considers for support extremely expensive and this uneconomic 15 MW Tina River Hydro in Solomon islands, highly questionable (in the context of overall hydropower bonanza) Balakot Hydro in Pakistan, three uselessly small but very ecologically disruptive hydropower dams in Uzbekistan, non-compliant with FPIC Tanahu hydropower project in Nepal, environmentally destructive and non-compliant with human rights Nenskra Project in Georgia, etc. ADB also supports the feasibility study of extremely destructive Kherlen river pumped storage hydro in Mongolia and the Obigarm-Nurobod road in Tajikistan, an associated facility to infamous Rogun Hydropower Dam, which is expected to ruin environmental and social stability in Aral Sea Basin. As civil society, we call on the ABD to stop investing in greenfield hydropower projects and adopt more comprehensive and environmentally responsible policies towards modernization of existing facilities and basin-wide energy system planning.
ON GEOTHERMAL ENERGY
Aksi! for gender, social and ecological justice
People's Coalition for The Rights to Water (KRuHA)
Solidaritas Perempuan
The recent death of a three-year-old girl and four other villagers after poisonous gas leaked from geothermal extraction in Sorik Merapi, North Sumatra, on Monday, January 25, 2021, reiterates the danger of extraction of geothermal as an energy source. In Indonesian experiences, geothermal as an energy source is not environmental, social, and economically sustainable but a financial, environmental, and socially risky energy source: deforestation, pollution, earthquake, loss of investment (note: environmental and social cost due to loss of communities' livelihood and income, usually not included in the investment for extraction). The geothermal industry also increases gender inequality, thus, compound further gender injustices. As a development bank financed by public money, ADB should be accountable to the public, prioritize the economic, social, and environmental sustainability of people in the recipient countries, and be responsible for the human rights violations committed during its profit-seeking business. Therefore, geothermal must not be acknowledged and not included as a clean and affordable energy source. Geothermal should be put in an exclusion list of ADB energy financing in ADB's new energy policy.
ON JUST TRANSITION
Freedom From Debt Coalition, Philippines
As fuels for powering electricity generation and economic development, renewables have become cheaper than GHG-emitting coal, oil, and gas. However, transforming the existing power sector (structure, systems, infrastructures, and uses) to go green and renewable has become a difficult development challenge. This is especially true in countries where the major power players are well entrenched politically and economically.
These power players will only embrace the transformation challenge if pressures from above (global such as the Paris Agreement targets) and from below (strong peoples’ movement for climate justice and clean energy) have become strong. As it is, many Asian governments and policymakers are tip-toeing their way to the 2030/2050 zero-emission goals haphazardly and uncertainly. As a result, workers' jobs and lives in the existing power industry (those affected by privatization, reengineering, power plant closures/shifting, etc.) are not adequately addressed. And there are no clear transition programs for those working in industries affected by "green restructuring," e.g., the transport sector. Nor are there clear systems of getting the support of host communities to renewable projects. The transformation, transition, adjustment, and adaptation issues are many and adversely affect the numerous poor the most. It is high time that governments, at both the national and local levels, together with the power industry players and partner development agencies, give serious attention to how to address the just transformation, transition, adjustment, and adaptation challenges in a holistic manner. Getting the views, suggestions, and support of the people on the ground is an initial must policy step.
ON NON - SOVEREIGN LENDING INCLUDING FINANCIAL INTERMEDIARIES
There has been a growing concern across CSOs monitoring the safeguards of multilateral development banks (MDBs) with respect to private sector financing and financial intermediaries (FIs). Information disclosure, accountability mechanism and meaningful consultation via FIs at the ADB are particularly poor. There is still a glaring gap that needs to be addressed on the lack of analysis on the individual FI sub – projects during project preparation. Several layers of intermediation without adequate disclosure of information in the guise of protecting commercial interests further complicates risk management.
This poses grave concerns on how the ADB, the clients and sub – projects adequately ensure that communities are protected. The changes in the new lending modalities have led to a more diverse portfolio but it is not immune from complex social and environmental risks which are further amplified in the energy portfolio. ADB’s Strategy 2030 identified that in addition to renewable energy projects, private sector operations will pursue projects for energy efficiency, waste to energy, battery storage, other emerging energy technologies and climate adaptation. However, we as civil society will keep on ringing the alarm bells that moving towards greater transparency will yield better development impact and protect communities directly affected by these investments.
Unless all these demands are met and vividly reflected in the ADB's Safeguard and Energy policies, DMCs, and their communities will continue to suffer from climate impacts, remain poor, and find it difficult to recover from the onslaught of the Covid-19 pandemic. Thus, defeating the very purpose and reason for the Bank’s existence as a development financing institution.
Endorsed by the following organizations –
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