The Asian Development Bank (ADB) is expected to draw up a revised energy policy over the next 12 months toward helping member developing countries to “reduce dependence on coal fuel and eventually phase out coal,” just falling short of an outright ban on financing coal-fired power projects.
Yongping Zhai, chief of the ADB’s energy sector group, said in a statement the multilateral lender was updating its energy policy given the fundamental changes in the energy sector and rising concerns about climate change as well as the ongoing global energy shift away from fossil fuels.
Zhai said that based on a schedule of the policy review, a draft of the revised policy is scheduled to be submitted to the ADB board of directors by November 2021.
The energy expert noted that the low-carbon shift would be a big challenge considering that most Asian countries have been dependent for so long on fossil fuels.
This is especially for coal, which is considered a source of affordable electricity and represented about 60 percent of power generation across the region in 2018. In the Philippines, 52 percent of electricity produced that year was derived from coal.
“This means that phasing out coal will be a complex and enduring process,” he said. “On the other hand, it is impossible for any country to rely on a single source for affordable, reliable, sustainable and modern energy in the near-term.”
Thus, the Philippine-based bank will push for a well-balanced energy mix where renewable energy will have an increasing share.
In terms of the phasing out coal, ADB intends to set standards and requirements such as emission intensities and minimum efficiency levels. It will also promote low-carbon and climate-resilient technologies such as carbon capture and storage for coal-based facilities.
Last August, the ADB’s independent evaluation department recommended that the ADB formally withdraw from financing new coal-fired energy projects. This was based on an assessment of the bank’s energy policy over the past 10 years.
The evaluation report found that while the Philippines-based ADB has refrained from investing in coal-fired power plants since 2013, it now needs to align its policy to this practice and clarify its formal institutional position.
Groups that advocate clean energy such as the Center for Energy, Ecology and Development (CEED), said ADB had been profiting from high-carbon development projects and strategies despite the bank’s pronouncements that recognize the need to address climate change.
“ADB must no longer dally in fully embracing its role as a climate actor,” CEED executive director Gerry Arances said in a statement. “It is only by ending its coal financing, with the subsequent goal of a full decarbonization, that the bank can truly contribute to transformative and climate-responsible development in Asia.”