ADB raises climate financing target
The fight against climate change will be won or lost in Asia and the Pacific, and we are committed to serving as a climate bank and a long-term climate partner for our region. MASATSUGU ASAKAWA President of the Asian Development Bank
WASHINGTON: The Asian Development Bank will boost its climate financing goals by $20 billion to a new target of $100 billion for the 2019-2030 period and aims to launch its concept for retiring coal-fired power plants at the COP26 climate conference in Scotland next month.
The plans, disclosed by ADB president Masatsugu Asakawa in an interview with Reuters, increase a previous $80 billion goal for climate financing for developing countries in Asia for the decade announced in 2018.
“The fight against climate change will be won or lost in Asia and the Pacific, and we are committed to serving as a climate bank and a long-term climate partner for our region,” Asakawa said.
The additional $20 billion in financing support will provide support for climate mitigation efforts including low-carbon energy sources, climate adaptation projects and private sector projects.
“ADB now plans for $66 billion for climate mitigation financing through 2030, including for new energy storage, energy efficiency and low-carbon transportation investments,’’ Asakawa said.
The Manila-based lender will plan for climate adaptation financing of $34 billion, including agriculture, urban and water adaptation projects.
The bank also plans to boost its private sector operations to attract more private sector capital to finance new climate technologies and innovations, using $12 billion from its balance sheet to attract up to $30 billion in new private capital, due to increased demand for such financing, according to Asakawa.
The plans were presented on Tuesday to US Treasury Secretary Janet Yellen, who had convened a meeting with multilateral development banks, including ADB and the World Bank, to discuss their efforts to boost climate financing in line with the 2015 Paris Agreement.
“The ADB has finished an initial feasibility study and is now embarking on a longer study of the concept in three target countries — Vietnam, the Philippines and Indonesia,’’ Asakawa said.
The initial feasibility study provided a framework for the ADB to engage with a broad set of country, regional and global stakeholders to support the transition from coal to clean energy.
“The interest is growing among other developing countries to join the initiative at a later date,’’ Asakawa said.
ADB and its partners, including British insurer Prudential Plc, lenders Citigroup In and HSBC Holdings Plc and BlackRock Real Assets, are aiming to complete and launch a pilot investment fund in 2022 and make its initial power plant purchase next year or early 2023.
“The concept is not included in the ADB’s overall climate financing goals, because most of the money will come from private investors and donor sources, including philanthropists,’’ Asakawa said.
A study by the Institute for Energy Economics and Financial Analysis estimated that retiring half the coal power plants in Indonesia, the Philippines and Vietnam would require as much as $55 billion in financing, requiring strong support from Southeast Asian governments to attract financing.
The ADB will announce the partnership to design and establish the Energy Transition Mechanism (ETM) at COP26.
“Even now, some philanthropists have already shown interest in investing in this new initiative. So we plan to launch the ETM at COP26 in Glasgow,” Asakawa said.
Asakawa added that he hoped to be able to present the plans along with Indonesian Finance Minister Sri Mulyani Indrawati and Philippines Finance Minister Carlos Dominguez.