The Asian Development Bank (ADB) announced on Friday that it will not finance coal mining or oil and natural gas activities in the future, as a result of a draft energy policy supporting low carbon transition in Asia and the Pacific. Set up in the early 1960s and headquartered in Manila, the ADB has since channelled $42.5 billion into the energy sector across the region.
The Philippines-based bank noted that there had been “profound changes in the energy landscape” since it last updated energy policy in 2009, the latter being “no longer adequately aligned with the global consensus on climate change”. ADB, which focuses on eradication poverty in Asia, hopes to support new job creation in cooperation with local communities and stakeholders through enabling coal’s exit from the continent. To this end, the multilateral development bank did not reveal a timeline but it did detail conditions under which fossil fuel projects would continue to receive funding, such as where no other cost effective technology was available.
Recently, Asia’s major economies have been shifting reliance away from coal towards more sustainable options. South Korea has vowed to end overseas financing for coal-fired power plants. Japan cancelled the last coal plant in its pre-construction list. Last month China committed to peaking its coal consumption by 2025, before gradually phasing out its coal dependence. However, it is also partnering with Pakistan currently for building China Pakistan Economic Corridor (CPEC)- a collection of infrastructural projects, under which the bulk of new energy generation capacity will come from coal-based plants.
The latest step by the ADB is in line with Asian countries’ efforts to end carbon reliance and it comes after green groups had urged the bank earlier this week to end loans to the entire fossil fuels sector. Tim Buckley, director of the Institute for Energy Economics and Finance Analysis (IEEFA), welcomed the policy as “a step in the right direction” following “a phenomenal momentum” towards accelerating the energy transition across Asia in recent months. Adding that the greater Asia region was moving at a million miles an hour, he said that rapid shifts towards clean energy were taking place in countries like Vietnam at a pace unforeseen even a year ago. It is well-known that compared to 2019, the installed solar rooftop capacity increased by 25 times in Vietnam last year, and 9.3 GW of peak solar capacity was connected to the national power system while only 1.2 GW of coal power was added to the grid in 2020.