The Asian Infrastructure Investment Bank (AIIB) is having its 4th Annual Meeting in Luxembourg this week. NGO Forum on ADB along with its member networks demands that the infrastructure Bank disclose its plans to address the climate crisis, including alignment with the Paris Agreement on climate change.
Despite AIIB’s efforts to align its activities with the goals of the Paris Climate Agreement it is still is lagging behind other financial institutions. In contrast to other MDBs, the AIIB has not yet made public a plan for how it will address the climate crisis. Despite claiming to be a “green” bank, there is little evidence of how the AIIB is seeking to ensure that its policies and operations support efforts to address climate change, rather than undermining them. The failure of the Environmental and Social Standard (ESS) to exclude funding for coal and its emphasis on reliance on natural gas is of deep concern.
Rayyan Hassan, executive director of NGO Forum on ADB stated that “Since its inception in 2016, the AIIB has financed fossil fuel-related transmission infrastructure. It has also continued to proliferate gas power plants in the Asia region, especially in Myanmar and Bangladesh. While AIIB has also invested in energy efficiency projects, there can be no halfway measures to achieve a Paris alignment to 1.5 degrees. The AIIB must commit to a time-bound phase-out plan from all forms of fossil fuel investments.”
To date only 8% of the AIIB’s total investments have gone towards renewable energy, a figure vastly outstripped by its investments in fossil fuels, currently at a fifth of the total portfolio. This translates into almost 60 percent of AIIB’s energy sector investments going towards fossil fuels and just a fifth going to renewable energy. This figure excludes funding through financial intermediaries (FIs), which would boost the fossil fuel total still further.
In Bangladesh, one of the world’s most climate-vulnerable countries the AIIB has approved over $400 million in funding but none has gone towards renewable energy. Instead, the AIIB has funded a greenfield natural gas and diesel power plant and a host of other gas and heavy fuel oil plants supported by a sub-investment in Summit Power International through the AIIB’s investment in the International Finance Corporation (IFC) Emerging Asia Fund, a Financial Intermediaries (FI).
Hasan Mehedi, chief executive officer of Coastal Livelihood and Environmental Action Network (CLEAN) said that “Coastal zone of Bangladesh is facing adverse impacts of climate change now. AIIB’s dirty investments are aggravating the impacts quickly.”
The AIIB should take a proactive stance and ramp up its support for renewable energy as well as for energy access, prioritizing the needs of energy-poor communities. This should include support for decentralized renewable energy, clean cooking solutions and support for the communities living in the so-called ‘last mile’, far away from the grid– steps proven to also address gender inequality.
NGO Forum on ADB calls on the AIIB to make explicit its goals and targets for ensuring the AIIB upholds its commitment to being “green” and addressing climate change by:
Developing a climate change action plan, with clear and ambitious goals and targets for how the AIIB will align its policies and operations with the Paris Agreement and its goal to limit global warming to 1.5°C. This should be done in collaboration with stakeholders, including civil society.
Ruling out any financing for coal, including ensuring that none of AIIB’s investments results in an increase in coal use, whether for power generation or industrial uses and associated facilities, such as transmission lines and railways or ports primarily meant for the transportation of coal.
Setting out a road map for shifting investments from fossil fuels to renewable energy by 2020, including matching the World Bank’s commitment to end financing for upstream oil and gas. This should include an institutional-wide cap on all greenhouse gas and carbon emissions financed by the AIIB.
Implementing an exclusion list, including mitigation measures linked to false climate solutions causing extensive social and environmental harm, such as ‘clean coal technology’, carbon capture and storage, large hydropower dams and geothermal projects.
Closing the fossil fuel loopholes in FI lending, including requiring all FI clients to track and disclose coal and other fossil fuel investments; not investing in clients with more than 5% portfolio exposure to coal; and investing only in FI clients who commit to develop a portfolio decarbonisation plan within a year of investment, which aims to achieve emissions reductions in line with targets set under the Paris Agreement.
Committing to investment in energy access and scaling up decentralized renewable energy, clean cooking solutions and innovative business models to provide access and control for “last mile” communities. The AIIB should set ambitious energy access targets at the portfolio and individual investment level.