Civil society groups across South, Southeast and Central Asia are raising the alarm as the Asian Development Bank (ADB) gears up to announce a new Energy Policy that — unless recalibrated — will fail to reflect the realities of climate science and local peoples’ burning concerns.
On September 6th, the ADB’s Board of Directors is set to discuss the proposed framework that will guide the Bank’s energy portfolio for at least the next five years. Just last month, the most recent IPCC report (AR6) was released; a so called “code red for humanity” that issues a stark warning: coal, oil and gas must be left in the ground, with no new infrastructure built to extract or burn these fuels if we are to have a chance at survival. Civil society groups note with concern the ADB is prepared to continue financing not only fossil fuel dependent projects, but also large-scale hydropower and waste-to-energy projects that simply have no role in a forward looking agenda for a just, inclusive and sustainable transition in the region. In effect, the ADB’s publicly posted “Energy Policy Working Paper” critically fails to take into account the latest climate science, undermining – rather than bolstering – global efforts to limit global heating to 1.5C.
The Working Paper has been hastily rushed to the Board of Directors for approval with only a two week window for public review and input (August 16th – 31st), meaning non-English speaking communities with little or no access to the internet — the very people who are impacted by the ADB’s projects — are effectively excluded from opportunities to give any meaningful comments on the draft.
As Rayyan Hassan, executive director of NGO Forum on ADB elaborated: “The Working Paper of the ADB’s Energy Policy Review was released in English as late as 16 August on the ADB website. While the coal exit language has been retained, loopholes remain. There is nothing stopping the ADB from supporting investments in coal via financial intermediary lending, or in transport and connectivity infrastructure that will enable further coal trade and extraction.” He also added that the Working Paper fails to incorporate the urgency of the IPCC AR6 report, and does not apply stringent or time-bound criteria on ending support for further expansion of fossil fuel infrastructure, most especially for new gas-dependent operations.
“For a 54-year old MDB, we expect the ADB to immediately halt its financing for fossil fuels, helping to shift the region towards renewable energy especially through solar and wind technologies. The ADB must ensure adequate considerations are made to the climate emergency as per the IPCC report and update the draft accordingly. The ADB has to emerge from this review with an Energy Policy anchored in support for transformative and renewable energy in line with a 1.5 degree target, and it has to act now,” Hassan added.
The Draft Energy Policy veers dangerously towards promoting projects that will lock some of the most climate vulnerable countries on the planet into a future dependent on large-scale power projects that threaten peoples’ livelihoods and health, while emitting heavy methane and other greenhouse gas emissions. As Avril De Torres from Center for Energy, Ecology and Development (CEED) Philippines explained: “A 1.5°C-aligned transition is an imperative for climate-vulnerable Asia, and the IPCC made clear what this looks like: a swift end to our dependence on all fossil fuels, not just coal. ADB seems to be deaf to the IPCC’s climate code red, with its Working Paper still bent on churning more carbon and methane through dirty energy, especially fossil gas, and false solutions like carbon capture. We also hope the ADB clarifies its coal buy-out scheme in the Philippines and neighboring countries, and how this fits – or contradicts – its no coal policy”. She continued: “As nations that stand to lose the most if we fail to bring global temperature rise back down to no more than 1.5°C by the end of this century, we cannot allow the ADB Board to approve a Working Paper that is nowhere near the ambition needed to address the climate crisis in this most critical decade.”
Nora Sausmikat from Urgewald, based in Germany, urged the ADB to close all loopholes for facilitating fossil fuel extraction and infrastructure expansion, affirming that: “Only green hydrogen produced with renewable energy is sustainable and reduces carbon emissions.” She further noted that: “True climate solutions cannot include any advice for nuclear energy. Looking at the whole project cycle from uranium mining to waste disposal, this technology is in no way climate friendly, but dangerous and costly.”
As Petra Kjell from UK-based Recourse explained: “Since its last Energy Policy was implemented in 2009, ADB has invested over $6 billion in financial intermediaries such as private equity funds and banks. It is imperative that ADB publish the name, sector and location of all high and medium risk projects it supports through FIs. Otherwise, no one will be able to track and monitor ADB’s fossil fuel commitments. Without transparency reforms, we will simply have to believe ADB that no FI money is ending up supporting fossil fuels.”
Hasan Mehedi of the Coastal Livelihood and Environmental Action Network affirmed:
“In the Energy Policy Working Paper, the ADB did not set any deadlines for ending fossil fuel investments. ADB is not merely a bank, but a policy influencer in relation to member countries in Asia and the Pacific. If ADB doesn’t set a deadline for fossil fuel investments and support achieving 100% renewables in the region, how will the member countries achieve it? Any further financing of fossil fuel projects will even jeopardize goals to achieve net zero emissions by 2050 – let alone real zero. ADB has to stop offering financing for fossil fuels, including fossil gas, now, and that should be reflected in their new Energy Policy.”
Civil society groups are also questioning why the ADB’s Working Paper explicitly suggests support will be extended to Waste-to-Energy projects, when better, cleaner and locally appropriate energy solutions exist. According to Yobel Putra of the Global Alliance for Incinerator Alternatives – Asia Pacific: “Waste-to-Energy is waste incineration in disguise. The bank has admitted that the energy generated from this burning technology is insignificant compared to other energy sources. In fact, it will only heat up our planet and spew toxic pollutants which will accumulate in our food chain for a very long time. With its heavy reliance on burning fossil-based plastic, investing in incineration is clearly not Paris-aligned. It is more carbon intensive than coal-fired power plants.. It also hinders measures on waste reduction, reuse, recycling, and composting”.
The suggestion in the Working Paper to finance large-scale biomass operations has similarly raised concerns among advocates across the region. As Peg Putt of the Biomass Working Group’s Environmental Paper Network explained: “Large-scale energy generation from forest and plantation grown biomass is a damaging false solution that the ADB should exclude from supporting as part of a low carbon transition. Logging and burning forest wood immediately releases carbon emissions on par with coal, harms forests and depletes their ability to draw down carbon, whilst it also marginalises forest communities”.
NGO Forum on ADB members and allies are also alarmed by the provisions related to large-scale hydropower. Asserted Gary Lee of International Rivers: “For decades, large dams have driven the displacement of millions worldwide, while emitting vast quantities of methane – one of the worst greenhouse gases that the IPCC is calling for drastically reducing. The science and historical evidence is clear–if we want to tackle the climate and biodiversity crisis, increase resiliency and food security, and protect the rights of people. The ADB’s energy policy must prohibit financing for new large hydropower projects.”
In practical terms, the NGO Forum on ADB members across the region have also repeatedly raised concerns that the way in which the roll out of the Energy Policy review has taken place has not provided a meaningful basis for open, accessible consultations with communities affected by the Bank’s own project investments. From the perspective of Vidya Dinker of the Indian Social Action Forum/GrowthWatch: “The ADB seems to have played an elaborate hoax on us. They kept us hooked with coming-soon announcements of a robust review of their energy policy. In an expression of good faith, despite the draft paper unveiled in May being only in English, CSOs struggled but extensively engaged with the bank on it. Why then do we have the same issues and some more, with this 2nd and last draft before us? Four months of ‘consultations’ that ignored community voices, even basic foundational asks like translations into 5-6 major Asian languages to facilitate meaningful consultation, continued subterfuge on guidance notes, marks this as an opaque and hopelessly meaningless exercise.”
It is in this context that civil society groups have taken a stand to demand the ADB adopt a new Energy Policy that is in line with what the science and times demand of us, underscoring that better energy options exist for the region, that are locally appropriate, decentralized to meet the needs of urban and rural people alike, and Paris-aligned.
Surging electricity demand is putting power systems under strain around the world
Global electricity demand surged in 2021, creating strains in major markets, pushing prices to unprecedented levels and driving the power sector’s emissions to a record high. Electricity is central to modern life and clean electricity is pivotal to energy transitions, but in the absence of faster structural change in the sector, rising demand over the next three years could result in additional market volatility and continued high emissions, according an IEA report released today.
Driven by the rapid economic rebound, and more extreme weather conditions than in 2020, including a colder than average winter, last year’s 6% rise in global electricity demand was the largest in percentage terms since 2010 when the world was recovering from the global financial crisis. In absolute terms, last year’s increase of over 1 500 terawatt-hours was the largest ever, according to the January 2022 edition of the IEA’s semi-annual Electricity Market Report.
The steep increase in demand outstripped the ability of sources of electricity supply to keep pace in some major markets, with shortages of natural gas and coal leading to volatile prices, demand destruction and negative effects on power generators, retailers and end users, notably in China, Europe and India. Around half of last year’s global growth in electricity demand took place in China, where demand grew by an estimated 10%. China and India suffered from power cuts at certain points in the second half of the year because of coal shortages.
“Sharp spikes in electricity prices in recent times have been causing hardship for many households and businesses around the world and risk becoming a driver of social and political tensions,” said IEA Executive Director Fatih Birol. “Policy makers should be taking action now to soften the impacts on the most vulnerable and to address the underlying causes. Higher investment in low-carbon energy technologies including renewables, energy efficiency and nuclear power – alongside an expansion of robust and smart electricity grids – can help us get out of today’s difficulties.”
The IEA’s price index for major wholesale electricity markets almost doubled compared with 2020 and was up 64% from the 2016-2020 average. In Europe, average wholesale electricity prices in the fourth quarter of 2021 were more than four times their 2015-2020 average. Besides Europe, there were also sharp price increases in Japan and India, while they were more moderate in the United States where gas supplies were less perturbed.
Electricity produced from renewable sources grew by 6% in 2021, but it was not enough to keep up with galloping demand. Coal-fired generation grew by 9%, serving more than half of the increase in demand and reaching a new all-time peak as high natural gas prices led to gas-to-coal switching. Gas-fired generation grew by 2%, while nuclear increased by 3.5%, almost reaching its 2019 levels. In total, carbon dioxide (CO2) emissions from power generation rose by 7%, also reaching a record high, after having declined the two previous years.
“Emissions from electricity need to decline by 55% by 2030 to meet our Net Zero Emissions by 2050 Scenario, but in the absence of major policy action from governments, those emissions are set to remain around the same level for the next three years,” said Dr Birol. “Not only does this highlight how far off track we currently are from a pathway to net zero emissions by 2050, but it also underscores the massive changes needed for the electricity sector to fulfil its critical role in decarbonising the broader energy system.”
For 2022-2024, the report anticipates electricity demand growing 2.7% a year on average, although the Covid-19 pandemic and high energy prices bring some uncertainty to this outlook. Renewables are set to grow by 8% per year on average, serving more than 90% of net demand growth during this period. We expect nuclear-based generation to grow by 1% annually during the same period.
As a consequence of slowing electricity demand growth and significant renewables additions, fossil fuel-based generation is expected to stagnate in the coming years, with coal-fired generation falling slightly as phase-outs and declining competitiveness in the United States and Europe are balanced by growth in markets like China and India. Gas-fired generation is seen growing by around 1% a year.
Canada’s bold policies can underpin a successful energy transition
Canada has embarked on an ambitious transformation of its energy system, and clear policy signals will be important to expand energy sector investments in clean and sustainable energy sources, according to a policy review by the International Energy Agency.
Since the IEA’s last in-depth review in 2015, Canada has made a series of international and domestic climate change commitments, notably setting a target to cut greenhouse gas emissions by 40-45% from 2005 levels by 2030 and a commitment to reach net zero emissions by 2050.
To support those climate and energy targets, governments in Canada have in recent years worked on a number of policy measures, including an ambitious carbon-pricing system, a clean fuels standard, a commitment to phase out unabated coal-fired electricity by 2030, nuclear plant extensions, methane regulations in the oil and gas sector, energy efficiency programmes and measures to decarbonise the transport sector.
“Canada has shown impressive leadership, both at home and abroad, on clean and equitable energy transitions,” said IEA Executive Director Fatih Birol, who is launching the report today with Jonathan Wilkinson, Canada’s Minister of Natural Resources. “Canada’s wealth of clean electricity and its innovative spirit can help drive a secure and affordable transformation of its energy system and help realise its ambitious goals. Equally important, Canada’s efforts to reduce emissions – of both carbon dioxide and methane – from its oil and gas production can help ensure its continued place as a reliable supplier of energy to the world.”
Canada’s profile as a major producer, consumer and exporter of energy presents both challenges and opportunities for reaching the country’s enhanced targets. Energy makes up 10% of gross domestic product and is a major source of capital investment, export revenue and jobs. Moreover, Canada’s highly decentralised system of government means that close coordination between federal, provincial and territorial governments is essential for a successful energy transition.
“This report acknowledges Canada’s ambitious efforts and historic investments to develop pathways to achieve net-zero emissions by 2050 and ensure a transition that aligns with our shared objective of limiting global warming to 1.5 degrees Celsius, “ said Minister Wilkinson. “These are pathways that make the most sense for our people, our economy and our country and will also yield technology, products and know-how that can be exported and applied around the world.”
The IEA finds that emissions intensity from Canada’s oil and gas production has declined in recent years, but the sector remains a major source of greenhouse gases, accounting for about a quarter of the country’s GHG emissions. Along with strong action to curb methane emissions, improving the rate of energy technology innovation will be essential for the deep decarbonisation that is needed in oil and gas production, as well as in the transport and industry sectors. Canada is actively advancing innovation in a number of key fields, including carbon capture, utilisation and storage; clean hydrogen; and small modular nuclear reactors, with a view to serving as a supplier of energy and climate solutions to the world. The IEA notes that further federal support for research, development and demonstration would help accelerate progress towards these goals.
The IEA is also recommending that Canada’s federal government promote a comprehensive energy efficiency strategy in consultation with provinces and territories that sets clear targets for energy efficiency in the buildings, industry and transport sectors
The IEA report highlights that Canada’s electricity supply is among the cleanest in the world, with over 80% of supply coming from non-emitting sources, thanks to the dominance of hydro and the important role of nuclear. To further support the expansion of clean power and electrification, the report encourages increased interconnections among provinces and territories to ensure balanced decarbonisation progress across the country.
The IEA commends Canada on its efforts to advance a people-centred approach to its clean energy transition, including initiatives to promote diversity and inclusion in clean energy sectors; programmes to increase access to clean energy in northern, remote and Indigenous communities; and actions to enable just transitions for coal workers and their communities.
“Canada has laid out a comprehensive set of policy measures and investments across sectors to meet its climate targets, including a strong clean energy component to its Covid-19 economic recovery efforts,” said Dr Birol. “I hope this report will help Canada navigate its path toward economy-wide emissions reductions and a net zero future.”
Iran to add 10GW to renewable energy capacity
Iranian Energy Ministry and some of the country’s private contractors signed memorandums of understanding (MOU) on Sunday for cooperation in the construction of renewable power plants to generate 10,000 megawatts (10 gigawatts) of electricity across the country.
The signing ceremony was attended by senior energy officials including Energy Minister Ali-Akbar Mehrabian and Head of Renewable Energy and Energy Efficiency Organization (SATBA) Mahmoud Kamani, IRIB reported.
The MOUs were signed following the Energy Ministry’s public call for the contribution of private companies in a project for developing renewable power plants in the country.
According to SATBA, after the ministry’s public call, so far 153 requests for the generation of 90,000 megawatts (MW) have been submitted to the ministry by private companies.
Speaking in the signing ceremony, Energy Minister Ali-Akbar Mehrabian said: “When the private sector invests in this industry [the renewables], the government is obliged to return the equivalent of the investment plus its interests to the investor.”
Mehrabian noted that the government has allocated over 30 trillion rials (about $101 million) for the development of renewables in the budget bill for the next Iranian calendar year (begins on March 21), saying that it is an unprecedented budget in this area.
Further in the ceremony, SATBA Head Kamani mentioned some of the Energy Ministry’s plans for the development of the country’s renewable energy industry, saying: “Export of renewable energy is a goal that has been targeted by the government.”
“Constructing renewable power plants for the cryptocurrency miners is also being seriously considered,” he added.
Back in December 2021, Kamani had announced plans to create 10,000 MW capacity of new renewable power plants across the country within the next four years.
He had put the current capacity of the country’s renewable power plants at 905 MW, saying that such power plants account only for one percent of the country’s total power generation capacity.
“Currently, 30 percent of the world’s electricity needs are provided by renewable energy sources, and some countries have even declared 2030 as the final year of using fossil fuels,” he said.
“We are far behind the global standards in the development of renewable energy,” he regretted.
Referring to another program for the development of renewable energies in the domestic sector, Kamani noted that to encourage households for constructing such power plants the Energy Ministry has announced that it will buy their surplus generated electricity at a guaranteed price.
He further pointed to the indigenization of the knowledge for the construction of the equipment used in renewable power plants as another priority of the Energy Ministry and SATBA, saying: “Currently, the construction of solar panels and wind power plants is completely indigenized, and we must strengthen our producers to finally become able to build all the required equipment from start to finish, in this regard, of course, some enterprises have announced their readiness.”
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