- Oct 19, 2021
- 9 min read

Letter to ADB Board of Directors regarding upcoming vote on the ADB’s 2021 Energy Policy (R-paper)

In advance of October 20th, when the ADB Board of Directors is scheduled to decide whether or not to approve the 2021 Energy Policy (R-Paper), we are calling for the vote to be suspended until its provisions are thoroughly scrutinized and revised according to a more nuanced consideration of:

the current energy and climate challenges facing remote, rural, urban and peri-urban communities across Central, South and Southeast Asia and the Pacific,
the latest climate data and analytics available[1],
robust assurances of alignment with all international human rights frameworks, inclusive of the right to a clean, healthy and sustainable environment, as recognized this month by the UN Human Rights Council, and all ILO Conventions, as well as
ensuring public disclosure and accessibility of associated guidance documents, open to a process of robust consultation.

Until and unless the ADB management and staff go back to the drawing board, the R-Paper as it stands demonstrates a severe lack of ambition in the face of the absolute urgency to end the expansion of new fossil gas, oil and coal-related infrastructure facilities and to invest in distributed renewable technologies that are appropriately scaled, non-resource intensive, and prioritize decentralized, community owned and operated systems across the region.

Significantly, the R-Paper’s suggestions for the way forward still lack any substantive promises to support investments in an energy transition that would ensure projects, policies and plans financed will explicitly uphold international human rights conventions and frameworks related to a just, inclusive, sustainable transition and rights to a clean, healthy environment. Instead, the wording of its provisions have shifted towards heavily relying on outdated assumptions about deploying gas as a bridge fuel, and expensive, risky, resource-intensive technologies not fit for the purposes of supporting a forward looking agenda for just transition. Taken together, the revised provisions in this final version of the policy can only be expected to facilitate carbon lock-in and exacerbate social, economic and ecological crises across Asia and the Pacific (most especially due to new wording that implies boosting support for grossly expensive and risky LNG terminals, oil and gas pipelines, carbon capture and storage ventures, geothermal and waste-to-energy projects as well as large-scale dams).

Furthermore, the revised version of the policy now lacks any explicit reference to substantively enable electrification for last-mile, remote, island and conflict affected communities (e.g. by maximizing the potential of decentralized renewables, or supporting off-grid renewable solutions for the purposes of universal access); suggesting instead a future reliant on dirty, unnecessary, outdated petroleum-based technologies is somehow acceptable for the purposes of meeting the needs of the some of the most climate vulnerable populations in the world.

Energy Sector Climate Financing Are Not An Assurance of Paris Alignment

We are fully aware of the ADB’s recent announcement on scaling-up climate financing in the next ten years. In fact, we expect no less from a public development bank that claims to direct its investments towards ensuring a “prosperous, inclusive, resilient, and sustainable Asia and the Pacific”. Yet without any public disclosure of what – if any – robust screening criteria will be applied to avert exposure to investments directly involved in the expansion of fossil fuel and other resource-intensive sectors, there are no assurances that the ADB’s financing for mitigation, adaptation and resilience will not significantly undermine global efforts to limit temperature rise to 1.5C.

In light of critical questions raised both by the ADB’s own Independent Evaluation Department in their most recent thematic report on the ADB’s track record in climate action over the past ten years, as well as the testimonials of groups working in and with communities affected by the ADB’s energy sector financing, it is clear that R-Paper’s provisions to support transmission and distribution infrastructure, household connectivity projects and power generation sites reliant on gas, oil, mega-dams and waste incineration, simply do not fit the check-box of aligning with the imperatives of the Paris Agreement.

In addition, we note with concern that the R-Paper uses more explicit language to promote private sector and financial intermediary modalities, two specific areas critiqued by the IED as routinely failing to clearly meet any climate-related targets or take into account assessments of related climate risks [CRAs}. For example, according to the report: “Financial intermediary projects were problematic since the exact nature of the subprojects is unknown [at the time of appraisal] and CRAs are often ambiguous”. (para. 203)

We are also cognizant of ADB’s new online portal announcing its self-proclaimed debut as the ‘climate bank’ of Asia and the Pacific. In this regard, we note the featured infographic about the Energy Policy Review, which suggests the policy will support principles for an energy transformation, such as (i) end-use efficiency, (ii) low and zero carbon infrastructure, (iii) electrification of transport, industry, cooling and heating systems, (iv) the decarbonization of grids and ( v) provision of distributed renewable energy. The online posting reiterates support will be focussed on last-mile access, off-grid solutions, a rapid phase-out of coal, a just transition, strengthened regulatory frameworks, regional cooperation and connectivity, and comprehensive development impacts.

We rigorously denounce the R-Policy as failing to reflect a robust application of the above principles, undermining rather than upholding climate science and a people-centred rights-based framework. It is in this regard that we wish to bring your attention to the following key concerns illustrating why we are denouncing the policy as one which is neither Paris-aligned[2] nor geared towards supporting an inclusive, sustainable, just transition across Asia and the Pacific.[3]

On last mile connectivity and off-grid solutions:

The revised 2021 Energy Policy lacks any concrete commitments to meet the electrification needs of last-mile communities, with several references existing in earlier drafts deleted. Instead, supporting last-mile energy access is noted only once (para. 96), and in this regard, only in relation to the recommendations for borrowing member states to adjust and implement updated power development plans. This adjustment is alarming, considering recommendations of the ADB’s Independent Evaluation Department that the Bank needs to shift gears towards meeting the needs of remote and hard to reach communities, and that this is where the ADB’s finances are most needed in order to support a just, inclusive energy transformation in the region.
Petroleum-based systems are explicitly suggested for meeting the needs of communities without access to main electrification grids, as opposed to earlier wording suggesting they would be used as back-up for renewables. This is unacceptable given that better, economically and environmentally sustainable decentralized options exist that would not rely on new oil and gas extraction and avoid putting communities at risk of exposure to noxious emissions or contaminated soil and waterways.

On the rapid phase-out of coal and “just transition”:

The revised wording in the policy fails to explicitly exclude support for operations reliant on coal, including via channeling investments into co-fired projects, via T & D infrastructure and industrial processes.
Fossil gas projects, including LNG terminals (para. 76), are explicitly promoted as part of the energy transition, as are petroleum-based systems, specifically in isolated and remote areas, and fragile and conflict-affected situations (para. 74), creating unnecessary and unacceptable conditions for carbon lock-in rather than supporting the critical need for an immediate, urgent shift towards renewables.
The use of fossil gas based ‘blue hydrogen’ has now been added into the provisions of the policy for deployment in hard-to-decarbonize sectors, rather than limiting financing hydrogen options to those exclusively based on ‘green technologies’. In light of the most recent climate science from IPCC’s AR6, there is simply no time to waste still financing projects that are fossil fuel reliant when newer, cleaner technologies and solutions are emerging and available to be scaled up.
No screening criteria is included to ensure financial intermediary subprojects do not facilitate further burning of coal, oil or gas – indicative of a critical lack of due diligence on the part of the ADB, given that other MDBs have already taken steps in this direction.
Wording on the ADB’s support for advising borrowing countries towards a just transition remains ambiguous, and without references to Paris-alignment or international frameworks, such as those developed by the ILO, nor any indication of how planning for the transition will be rolled out in communities affected by the ADB’s own investments in fossil fuels or other climate mis-aligned operations (e.g. large dams and waste-to-energy projects).

On strengthened regulatory frameworks:

With increased promotion of public-private partnerships and support for private sector involvement, there are no guarantees that stringent national and international regulatory frameworks will not end up being undermined, including those related to access to information, the right to a healthy environment, measures to promote zero/minimal waste production and environmental protection (including for example, the increasing trend in borrowing member countries to recognize rivers as living entities), as well as labour rights, women’s rights, indigenous peoples’ rights and the rights of people with disabilities among others.
Socially, environmentally and economically risky as well as unproven technologies, such as carbon capture and storage facilities for fossil fuel-based power plants as well as industrial-scale blue hydrogen projects and infrastructure (reliant on fossil gas burning) are further promoted in the R-Version (paras. 73, 77, 78).
Wording on the social cost of carbon has become highly ambiguous in terms of the base rate, annual scaling, and how calculations will align with international best practices. This is particularly concerning in light of the IED’s recent analysis (see pg xxii) suggesting that the ADB remains in a laggard position in this regard (in relation to other MDBs), as current carbon pricing by the ADB is set against standards from 2014 (IPCC AR 5) as opposed to more updated evidence-based analyses.
The R-Version still lacks any suggestion of time-bound commitments to align equity investments, loans and direct project financing in the energy sector with the provisions and objectives of the Paris Climate Accord.

On increased energy security through regional cooperation

Power connectivity provisions in the R-Version more explicitly highlight the LNG and gas projects, without any accountability or regulatory frameworks suggested on how to cope with cross-border resource-related disputes and accidents, or how such projects would avert carbon lock-in. Given the challenges in terms of enforcing robust regulatory frameworks to protect the rights of people in border zones, holding project proponents accountable for ecological harm, let alone demanding reparations when damage to peoples’ livelihoods and environments may be irreversible, there is no reason financing such risky projects should be retained in the ADB’s 2021 Energy Policy.
No screening is suggested to ensure T & D infrastructure do not facilitate the operation of associated coal powered or co-fired coal and gas facilities, large-scale hydropower dams or waste-to-energy and nuclear power sites that would undermine not only the Bank’s own safeguards, but also global efforts to maximize resilience and minimize the expansion of resource-intensive projects, effectively wreaking havoc on surrounding ecosystems and local people.

On the bank’s development impacts:

Wording related to commitments to renewable energy development, especially for hard-to-decarbonize sectors such as industrial processes, heating and cooling have been removed, revealing a complete lack of foresight given the rapid technological advances that mean cleaner, non-fossil fuel reliant systems do exist, and could be deployed with the Bank’s support.
The provisions on large-scale hydropower projects have been revised, removing support for key assurances related to safety, accountability and ecological considerations, most especially for affected communities living around, upstream or downstream of dams (with requirements for cumulative impact assessments or involvement of independent environmental, social, and dam safety experts deleted in the R-Version in para. 70). In effect, retaining the notion that large-scale dams can be developed sustainably, combined with dropping such precautionary requirements in the planning, development and operational stages of these projects, amounts to nothing less than putting the lives of millions of riparian peoples in countries across the region on the line.
Large-scale waste-to-energy projects for heating or electricity purposes (para. 71) and large-scale biogas projects that feed into current gas networks (para. 78) remain options for the Bank’s investments, rather than taking into consideration the ways in which communities in surrounding areas will be affected.

Finally, the R-Version fails to provide any clarity on whether accompanying guidance notes will be made publicly available, let alone subject to a process of robust public consultation.

We therefore urge you to scrutinize the R-version’s provisions and ask you to consider if you are willing to be held accountable for the damage to communities, ecosystems and to global climate ambitions this policy inevitably will incur. Although the 2021 Energy Policy will be reviewed and revised again within the coming five years, this is no excuse for dismissing the impacts it will have over this time. Indeed, if this policy is approved as it stands, we trust you are aware that civil society groups, including those in the communities most impacted by the ADB’s own investments, will be holding the Bank responsible for the implications of the 2021 Energy Policy’s provisions put into practice.

Thank you for your time and we look forward to hearing any response you may have.

Signed on behalf of the following organizations:

350 Pilipinas, Philippines

350.org Asia, Asia

Aksi! for gender, social and ecological justice, Indonesia

Asian Peoples' Movement on Debt and Development (APMDD), Asia

Bank Information Center, USA

Center for Energy, Ecology, and Development, Philippines

Centre for Environmental Justice

CLEAN (Coastal Livelihood and Environmental Action Network), Bangladesh

Community Empowerment and Social Justice Network (CEMSOJ), Nepal

ENVIRONICS TRUST, India