Nakao signals ADB may soon shun support for ‘dirty’ coal power projects

By  Cai Ordinario - June 19, 2019

https://businessmirror.com.ph/2019/06/19/nakao-signals-adb-may-soon-shun-support-for-dirty-coal-power-projects/

With its energy policy currently undergoing a thorough review, the Asian Development Bank (ADB) may soon drop its coal investments altogether.

In the opening session of the Asia Clean Energy Forum (ACEF), ADB President Takehiko Nakao said the only coal project that the Manila-based multilateral development has supported under his term is the Jamshoro Power Generation Project in Pakistan, which was  approved in 2013.

This could also be ADB’s last coal project, he added.

The ADB, Nakao said, is going to evaluate how feasible it is for projects in various developing member-countries (DMCs) to implement zero coal investments, while maintaining economic growth. Currently, he said, one-third of the world’s gross domestic product  is fueled by the region and by 2050, half of the global GDP.

“We should address our policies to the new reality,” Nakao said. “I don’t know when we will totally dismiss the possibility of a coal project because, in some countries, there is less access to other options. But we will consider this carefully.”

Nakao said the push to clean energy and renewables has been greater given the targets set under the Sustainable Development Goals (SDGs) and the Paris Agreement crafted in the Conference of the Parties (COP) 21 in 2015.

Nonetheless, Nakao said, the ADB has begun investing in clean energy and renewables. This policy has been included in ADB’s Strategy 2030, which outlines the projects and programs the bank will be undertaking in the next 10 years.

Energy investments, Nakao said, are crucial not only for ADB, but also countries in the region given that it supports industry, households, provides more convenient lives for women, education, health and other sectors.

Nakao said, however, that energy access has been lacking, or even absent, for around 350 million people in the region. This is the reason for the need to find solutions to address the gap and the need to respond to climate change.

“We are supporting renewable energy, we don’t support coal anymore. In very exceptional cases, we may support [it] but we haven’t done that since the final project in Pakistan, Jamshoro Power Generation Project. We are already moving toward renewables, [which] means solar, geothermal and wind, and transmission also. We support the supply of these energies,” Nakao said.

Nakao added the challenge when it comes to investing in clean energy and renewables is the speed at which these can be done given the pace by which new technologies are being created.

United States-based Rocky Mountain Institute cofounder and Chief Scientist Amory Lovins agreed with Nakao and said that the pace by which governments and even the private sector work may be slower compared to technological advancements.

Lovins said in the United States, the cost of wind and solar energy has been declining since 2003. In terms of electric vehicle batteries, the costs had also been on the decline with battery pack price averaging below $200 per kilowatt-hour.

“[Technology] is [moving] so fast that before you even complete the documents, the analysis has changed. Costs are dropping for renewables 10, 20, 30 percent per year,” Lovins said. “[The question is] how do you manage risk? The risk of either doing what you wished you hadn’t or not doing what you wished you had. We have to minimize those types of regrets. And in times of rapid change, this is the supreme challenge.”

In his opening remarks, ADB Vice President Bambang Susantono quoted United Nations Secretary-General António Guterres, who said that energy was “the golden thread that connects all the Sustainable Development Goals.”

Susantono said ADB has taken this to heart. The bank has committed at least 75 percent of its operations to support climate- change mitigation and adaptation efforts by 2030. Climate finance from ADB’s own resources will reach $80 billion for the period 2019-2030.

Based on historical trends, ADB’s lending, equity, grants, and programs in support of renewable and energy efficiency could contribute significantly to this target.