ADB’s energy policy draws fire, despite renewables boost

www.environmental-finance.com
25 June

The Asian Development Bank (ADB) is to double its clean energy investments to $2 billion from 2013. However, it is to maintain its support for coal-fired generation and some large-scale hydro plants, drawing criticism from environmentalists.

"While $2 billion annually is a significant commitment, this represents only a fraction of the region's financing needs in the area of clean energy," said ADB president Haruhiko Kuroda last week, during its 'climate and clean energy week'. "But we expect that this contribution will catalyse significant additional resources from the private sector, carbon markets and other sources."

The commitment is part of the ADB's Energy Efficiency Initiative, which set a target of investing $1 billion annually by 2008 - a target which it says it has exceeded. However, the Manila-based multilateral bank's updated energy policy - approved by its board on Friday - will see the ADB continue to support environmentally controversial power sources.

"ADB will also selectively support large hydroelectric power plants," it said. "However, such financing will be based on the economic benefits and the projects will comply with ADB's social and environmental safeguards requirements." Large-scale hydro projects often involve the displacement of local populations and the destruction of valuable habitats - and, particularly in tropical countries, the creation of their reservoirs leads to significant greenhouse gas emissions, caused by decaying vegetation.

Also, ADB will continue to support coal-fired plants: "To meet the electricity needs of the region, large capacity additions will be required for which coal-based generation will grow. ADB will encourage DMCs [developing member countries] to adopt available cleaner technologies, such as fluidised bed combustion, supercritical and ultra-supercritical boilers, and flue gas desulfurisation.

"As new technologies - such as integrated gasification combined cycle and carbon capture and storage (or sequestration) - are shown to be technically feasible and economically viable, ADB will support their deployment in DMCs to increase their financial viability," the policy states. It also said it will "selectively support coal-based power projects if cleaner technologies are adopted and adequate mitigation equipment and measures are incorporated into the project design.

"For all the brave words uttered during the meeting on climate leadership, ADB's new energy policy is seriously flawed," said Greenpeace Southeast Asia climate and energy campaigner Amalie Obusan. "For the ADB, 'clean energy' are words that do not mean anything." Greenpeace slammed the energy policy as "business as usual, with no intention of removal of coal, oil or gas from its portfolio to make way for investments in tried, tested and real 'clean energy' technologies such as wind, solar and modern biomass.

"Instead it is shifting funds to clean coal, with dubious techniques such as fluidised bed combustion, supercritical and ultra-supercritical boilers, and flue gas desulphurisation." The ADB notes that "nearly a billion people still lack access to electricity and Asia's energy needs are expected to double by 2030, presenting major supply and energy security challenges as well as accelerating climate change." However, its energy policy does state, as its first principle, that "support for energy efficiency improvements and renewable energy projects will be prioritised and broadened to reach as many sectors in as many ways as possible." It will also continue to eschew financing nuclear energy generation.