Does AIIB’s Energy strategy include coal financing?

The Asian Infrastructure Investment Bank (AIIB), launched in January 2016, is an influential new player in the future of Asia’s development. Not least because it aims to counter the Western dominance of the World bank and the International monetary Fund, but also because it claims to counter climate change for Asia and focus on “sustainable energy for Asia”.

At its Annual Governors’ Meeting in June 2017, the Asian Infrastructure Investment Bank launched its energy strategy. Friends of the Earth Asia-Pacific members joined civil society organisations to demand the bank fulfils its promise to be a “lean, clean and green bank”.

Too good to be true? No more funding for coal.

Prior to the release of it’s energy strategy rumours began that the China-backed bank would not provide funding for coal. Was this the truth or just a smokescreen?

Hemantha Withanage representing Friends of the Earth Asia-Pacific was told by AIIB vice-President Mr Joachim von Amsberg that of the 400 energy projects in the pipeline, not a single one is a coal project. The AIIB President Mr Jin Liquin stated that the AIIB would “help members meet nationally determined contributors (NDCs) under the Paris agreement.” [Page 2 of the AIIB energy Report]. He reiterated von Amsberg’s reassurance that there are no coal projects in the pipeline and that the bank would not fund projects that risked environmental and reputational impacts.

It sounded like good news, but there was a catch.

The devil is in the detail: Energy report assigns coal a ‘significant role’

Sadly it transpires that the top officials claims are at odds with the bank’s official energy strategy:

“While fossil fuels will continue to play a significant role in the energy mix of most of its member countries, the Bank will focus on supporting and accelerating its members’ respective transitions toward a low-carbon energy mix, including lower carbon emissions from fossil fuels. .. In many countries, gas-fired power generation would form part of such transition.”

Paragraph  37, AIIB Energy Strategy

The report continues, “Carbon efficient oil- and coal-fired power plants would be considered if they replace existing less efficient capacity or are essential to the reliability and integrity of the system, or if no viable or affordable alternative exists in specific cases.”

This is a cop-out. This statement clearly contradicts the pubic claims of this supposed “lean, clean and green bank”. As ever, the devil is in the detail.

We are facing a crisis of planetary proportions. We need a complete transformation in the way we generate, transport and consume electricity. Just last month, Friends of the Earth APAC released a shocking report damning the Asian Development Bank’s 50 years of disastrous coal funding.

“Action to curb greenhouse gas emissions by replacing dirty energy with renewable alternatives has never been more important for the safety of people in the Asia Pacific region.”

Hemantha  Withanage,  Centre for Environmental  Justice, Sri Lanka

Our reliance on dirty energy must end now. We do need energy, it is a fundamental need and right for the people of our region and the world. But the current dirty energy system has never delivered for the poorest. It has left an estimated 1.2 billion people without access to electricity. Community owned renewable energy is the best way to boost energy access for the poorest.

Silver lining on nuclear energy

There is, thankfully, something to celebrate in AIIB’s energy strategy:Paragraph 39 on ‘Nuclear power generation’  states

“Financing of nuclear plants will not be considered by the Bank.”

Of course, there is a loophole in that “Should demand arise for very special cases of support for safety improvement, the Bank could possibly consider engagement” But actually the Bank does not seem very keen to support nuclear power. Friends of the Earth International and APAC are opposed to dangerous and damaging nuclear energy, so we welcome this move.

We will keep our eyes on the AIIB, and continue to hold the President to his public promise to cease funding coal projects, to stand with communities fighting dirty energy and to push for a much-needed energy transformation for people and the planet.

Image: Hemantha  Withanage,  Centre for Environmental  Justice, Sri Lanka and Norly Grace Mercado, Legal Rights and Natural Resources Centre, Philippines at AIIB’s Annual Governors’ Meeting, June 2016