Asian Development Bank to end coal, oil financing

The Asian Development Bank (ADB) is planning to end financing of coal-fired power projects and oil, gas and coal mining, making it the latest financial institution to pull back from the fossil fuel sector.

The pledge is part of a new draft energy policy that focuses on supporting the low-carbon transition in Asia. The government-backed bank said it will continue to finance natural gas projects, including pipelines, LNG terminals, storage projects and gas-fired power plants, but only if no other technologies can provide the same energy service at an equivalent cost, including the social cost of carbon.

Japan and the US are the largest shareholders in the Philippines-based ADB, which lends to social and economic projects in the region. It said it will help its 68 member countries finance emissions-control technologies at existing power plants but will not invest in modernising or upgrading such plants unless they are re-engineered to use cleaner fuels, such as gas or renewables.

The bank will support its members to reduce their dependence on coal and eventually phase out coal-fired generation completely — something it acknowledged would be a tough task, given coal generated almost 60pc of electricity in Asia in 2018.

The ADB financed around $42.5bn of energy projects of all types from 2009-19, largely in the power sector, with Pakistan, India, China and Indonesia among the top recipients. The new draft policy will be considered by its board in September-October this year.

Private-sector banks in Asia have also been cutting their exposure to thermal fuels, especially coal. Singapore's largest bank DBS last month pledged to phase out its thermal coal exposure by 2039. Japan's Sumitomo Mitsui Banking and Mizuho Bank withdrew from domestic and overseas coal-fired power development projects as of May and June 2019, respectively, while Malaysia's CIMB became the first southeast Asian bank to commit to a coal-exit strategy with a deadline in December.

By Kevin Foster