MANILA — A recent report by the Intergovernmental Panel on Climate Change signaled the need for the world to aggressively cut its carbon emissions to prevent further impacts of climate change.
That call could not be more urgent in the Asia-Pacific region, which includes many of the countries most vulnerable to worsening weather conditions and rising sea levels. But the region is also huge polluter. More than 90 percent of the world’s coal power plants are located in Asia, while several new ones are being developed.
The Asian Development Bank no longer funds “dirty energy.” Yet it still funds fossil fuel and “selective” coal projects, leading watchdogs to question whether there is a disconnect between its policies and commitments to help address climate change.
Against this backdrop, Devex spoke with Preety Bhandari, ADB director on climate change and disaster risk management, to discuss how the bank plans to respond to this threat.
The conversation below has been edited for length and clarity.
I want to start with the recent IPCC report, showcasing the impact a 1.5 degree Celsius-rise in global temperature will have. What's your take on that?
The IPCC report is really striking. The reality is that even with a 1.5-degree temperature rise, there is going to be a significant impact on the economic systems and social systems, and of course on the natural systems.
We have to be serious, globally, about taking action to reduce greenhouse gas emissions. And the report gave us that 12-year time period. That's something that has resonated with the audience as well, that we have 12 years to get our act together. And it's not that it's not doable, but it needs a lot of political will. It needs human ingenuity, technological innovation at a scale that we haven't known. But I think, most importantly, it needs political will to take action at a multilateral level.
We spoke to ADB President Takehiko Nakao at the launch of the Strategy 2030, where there's a clear commitment by ADB to ensure 75 percent of its operations will support climate change adaptation and mitigation. There is also a commitment to increase financing to $80 billion from 2019-2030. With operational plans due to come out following the launch of the strategy, I wonder if there is one in particular on climate change?
In 2017, we had launched our climate change operational framework, which was from 2017-2030. That clearly outlines ADB’s long-term directions. In the context of Strategy 2030, we have this new commitment. And the climate change operational framework already provides us with the frame for action.
But we are also doing an operational plan, including for operational priority 3, which is about climate change, building resilience and environmental sustainability. So we are currently working on that plan.
The World Bank, particularly the International Finance Corporation, its private sector arm, recently made announcements on reducing investments on coal. I wonder how ADB is responding to that announcement?
The way ADB is responding to investments in coal is of course in tandem with our energy policy, which clearly says that we will do coal only under certain circumstances where the country does not have any option and it is in the context of providing basic energy services.
More on ADB’s strategy:
But we have also, in that context, said that if we do coal, then we will make sure that it is [using] the best available technology. But if you look at our investments in the last five years, you won't see investments in coal. So that is the broad frame within which we are working. But in the context of Strategy 2030, when we're talking about the seven operational priorities, actions related to investments in the energy sector will also come to the fore.
Civil society is criticizing the bank for its investments in coal and other unclean energy. Will ADB be coming out with a policy saying “we're no longer supporting coal investments?”
For that you'd have to talk to my energy sector colleague [Yongping Zhai], who's the chief. There are some internal discussions taking place. I think he'd be best placed to respond to that.
How difficult is it to immediately transition to that kind of policy? With high energy requirements in many countries in the region, some currently don't have the means to transition to renewables.
I would leave it to my colleague to answer that, but I think you should also focus on the fact that ADB has a clean energy target. We were probably one of the first banks to have a clean energy investment target of $2 billion per year, which we achieved at least two years in advance of the [target date]. So there is a holistic view also of this particular issue. I think my colleague for the energy sector will be best placed to respond to that.
As director on climate change, you're aware of what’s happening on the ground. There are questions in terms of synergies and coherence of policies within the bank. Where are you currently on the discussions to push for ADB to make sure that we don't go beyond 2 degrees warming in the 12 years that we have?
There is a healthy discussion within the bank on all these imperatives that we have. And if you look at Strategy 2030, it is, you know, making reference to all the multilateral agreements, and how we will be responding to [these]. And I can assure you that we will be responsive and responsible ... moving forward.
“The battle for climate change [will] be won or lost in the Asia-Pacific region. We realize we have a responsibility to help the countries in our region to meet their climate ambitions as they are articulated in the Paris Agreement on climate change.”—
Strategy 2030 has just been released, so we are in the process of developing our operational plans and all these relevant discussions are taking place in terms of integrated approaches, in terms of differentiated approaches.
But with the IPCC report giving us only 12 years, can't the bank push for stronger policies on climate?
I think you should look at it also from the perspective of how much ambition the bank has shown in saying that 75 percent of its portfolio of projects will be incorporating climate considerations. I think you should take your cue from that. You should also take your cue from the fact that we have talked about a dollar figure from ADB's own resources — that we will be contributing $80 billion in climate investments.
We have said at various points that the battle for climate change would be won or lost in the Asia-Pacific region. We realize we have a responsibility to help the countries in our region to meet their climate ambitions as they are articulated in the Paris Agreement on climate change.
And while we will be responsive to these demands, we also see this window of opportunity — we can create a demand for shifting the investment portfolios. And we are launching programs in the context of our Strategy 2030 on helping our developing member countries convert their nationally determined contributions or their climate pledges to climate investment plans.
There could be a multitude of institutions helping with that investment, or it could be domestic investment, but ADB would be happy to support as well.
We are hoping to launch a program very soon called “NDC Advance,” initially to help a few countries move from their aspiration level of climate pledges to actual investments, as well as what those investments would look like and how ADB could be a partner in financing some of those investments.
And we are also looking at other ways: How you can help reduce emissions, for example. This includes the role of new carbon markets, which are coming up in the context of the Paris Agreement, mobilizing the private sector, and looking at cities as a locus of action both for mitigation and adaptation.
Do you have a timeline for the operational plans?
Yes — I think by the end of the first quarter of 2019 we will have the first drafts ready after they had been consulted internally.
You talked about the importance of multilateralism, and I understand ADB can’t be doing all the lifting. There are other players now in the Asia-Pacific region. We have the New Development Bank, we have the Asian Infrastructure Investment Bank. Is ADB trying to influence these organizations in terms of doing more on climate change?
I think you should look at it from the mandate of each organization, and the extent we can partner with them, and the investments to bring to scale. We are beginning to do that with AIIB.
We've already taken a leadership role in the projects, announcements, and commitments we've made. That's an ambition that we have. But we also realize that comes with its challenges. But we're hoping to live up to that challenge.