The Asian Development Bank (ADB) has confirmed that it will not provide any support for coal extraction and power projects in the coal and oil sectors, but will continue to allow some natural gas financing as it seeks to help transition the Asia Pacific toward renewable energy.
The ADB’s board approved the multilateral development bank’s new energy policy during a meeting on Wednesday (October 20), says a press release.
While the policy bars the bank from most fossil fuel financing, there are some limited carve-outs for oil trading.
The organisation, which lends around US$5bn annually in the energy sector, has had to juggle a desire to help slash greenhouse gas emissions in the Asia Pacific while still supporting member states that are largely reliant on fossil fuels for power production.
“This new policy locks in our strong commitment that ADB will not fund new coal power production,” says ADB president Masatsugu Asakawa.
“Together with our elevated ambition to deliver US$100bn in climate financing to our developing member countries in 2019-2030, it provides a clear path for ADB’s contribution to an environmentally sustainable energy future.”
“ADB’s new energy policy will support our developing member countries in the critical and urgent task of expanding access to reliable, affordable, and clean energy,” Asakawa says.
Around 350 million people in the Asia Pacific do not have an “adequate” power supply while 150 million have no access to electricity at all, according to the bank.
Earlier in the week the lender announced it is aiming to deliver US$100bn in climate financing to developing countries between 2019 and 2030, a US$20bn jump on an earlier commitment made in 2018.
The extra financing will be put toward climate change mitigation and adaptation projects, the bank said in an October 13 statement. It will also try to boost its private sector financing.
The lender has 67 member countries and provided US$31.6bn in loans, grants, equity investments and guarantees last year. Pakistan, Vietnam and Bangladesh are its top three recipients for trade and supply chain finance.
The ADB’s new policy comes during a flurry of private sector initiatives – along with commitments by governments and export credit agencies – ahead of the COP26 summit in Glasgow in November, aimed at breathing new life into the fight against climate change.