By Fabiana Negrin Ochoa
The Asian Development Bank says a coming change to its energy policy will define its position on fossil fuels, an issue under the spotlight amid mounting calls from the U.S. and global environmental advocates for multilateral banks to stop financing nonrenewable fuels like oil and gas.
The new policy "will prioritize support for the low-carbon transition in Asia and the early phase-out of coal power plants in Asia Pacific," Yongping Zhai, head of the bank's energy sector group, said Wednesday.
The Manila-based bank didn't offer further details on major changes to the policy, which sets the parameters for the billions of dollars in lending the institution makes to energy projects in the Asia-Pacific. It plans to release a revamped draft of the policy as soon as this month, with a final document ready by November, when the United Nations holds its annual climate change conference.
The ADB also reaffirmed goals of ensuring that 75% of its projects address climate change mitigation and adaptation by 2030, and of delivering $80 billion in climate finance between 2019 and 2030.
The update Wednesday comes amid growing calls for powerful lenders to cut off financing for coal and other polluting power projects in light of worldwide targets to reduce greenhouse-gas emissions and transition to cleaner fuels. At an ADB meeting on Tuesday, John Kerry, the U.S. climate envoy, called on multilateral banks to stop financing coal projects and for a framework to phase out other fossil fuel investments.
"We encourage the Asian Development Bank to fully align with the Paris Agreement with a clear timetable," Mr. Kerry said, referring to the 2015 U.N. accord aimed at cutting global greenhouse gas emissions and limiting global warming. He urged the bank to set higher funding targets for financing climate projects and create a more restrictive policy for financing fossil fuel projects.
The ADB, which last year made a record $31.6 billion in loans and other financial assistance to governments and the private sector, hasn't made any new investments in coal-fired power plants since 2013 and says it has no coal-power projects in its lending pipeline. However, it has faced criticism from environmental advocates for not fully exiting coal projects, a move that was recommended last year in an internal evaluation at the bank.
Roger Fischer, who sits on the ADB's board of directors, on Wednesday said the internal review made a convincing case that the current energy policy is "outdated on many counts."
"Time's running out. We need improved action on climate now," he said.
Environmental advocacy groups have also criticized the ADB for not committing to turning off the financing taps for natural gas. A report released Monday by Fossil Free ADB, an international coalition of NGOs and movements, and clean-energy advocacy group Oil Change International, said the bank put more than $4.7 billion into gas projects from 2016 to 2020 via a combination of direct loans, grants and technical assistance. The money helped establish major projects like Reliance Power Ltd. and Jera Co.'s liquefied natural gas and power plant in Bangladesh.
Fossil Free ADB said natural gas projects pose a climate threat due in part to the leaking of methane along the supply chain, as well as the locking in of decades of new carbon emissions from long-lived carbon-intensive infrastructure.
As governments and institutions ramp up climate ambitions in the lead-up to the U.N. Climate Change Conference in November, the ADB must stop financing fossil fuels, said Susanne Wong, chief author of the report. "If it doesn't, it risks being left behind."
Write to Fabiana Negrin Ochoa at email@example.com
(END) Dow Jones Newswires
May 05, 2021 21:58 ET (01:58 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.