The role of multilateral lenders in reducing climate change
As Asia and the Pacific face and recover from the covid pandemic, we must continue our quest for sustainable development and take action against climate change, the existential challenge of our time. Our region must take its place at the forefront of this effort. The region, which now accounts for 36% of global GDP, has made great strides in economic development and poverty reduction. But it is also responsible for around 80% of global coal consumption and up to 60% of CO2 emissions. Many countries have suffered the devastating consequences of climate change: floods, droughts, heat waves and storms.
Now is the time to act boldly. We must be fully committed to tackling climate change, including by meeting the emissions reduction targets under the Paris Agreement, while promoting economic growth and putting the region’s development on a green path. .
This will require major changes in the energy sector. These include avoiding the use of fossil fuels and switching to low-carbon fuels, deploying more renewable energies, improving energy efficiency, reducing final energy demand. and encourage investment in low-carbon technologies.
Broad commitment across the region, as well as appropriate country-level support from development partners, will be needed to achieve the goal of limiting global warming to no more than 2 degrees above pre-industrial levels. . We must get back on the path to low-carbon sustainable development, balance efforts to mitigate and adapt to climate change and ensure universal access to energy, as more than 200 million people in the area still have no electricity.
Global action to achieve net zero emissions by the middle of the century has accelerated over the past year. Countries that have committed to carbon neutrality include the People’s Republic of China, Fiji, Japan, the Republic of Korea, the Maldives, the Marshall Islands, Singapore and Timor-Leste. In November, the 26th Conference of the Parties (COP26) will be held in Glasgow. More countries should submit more ambitious Nationally Determined Contributions (NDCs) and underscore their commitment to carbon neutrality.
The Asian Development Bank (AfDB) stands ready to assume a leadership role in the region to meet these commitments. We aim to scale up our climate finance and capacity building efforts to help our developing member countries (PMCs) achieve their NDCs. As part of our Strategy 2030, the goal is to focus 75% of AfDB operations on climate change adaptation and mitigation. We will also provide at least $ 80 billion in climate finance from 2019 to 2030, which averages around $ 6.6 billion per year. This year, we are confident to provide more than $ 6 billion for climate change mitigation and adaptation through a variety of measures, including investment in clean energy.
The AfDB will contribute to the global effort envisioned by COP26 on several fronts. We will foster increased collaboration and cooperation, balanced efforts to mitigate and adapt to climate change, and a holistic approach that integrates ecological, social and financial aspects of resilience across our operations. We are aligning our operations to support the goals of the Paris Agreement.
We will continue to use our private sector operations to support this agenda, filling investment gaps and spearheading technological and business innovation in the search for sustainable solutions. The energy transition requires comprehensive long-term planning combined with effective innovations. ADB is committed to helping our DMCs formulate and implement technology roadmaps to achieve their NDCs.
Our support benefits from major technological advances which have made it possible to reduce renewable energy production costs by up to 80% in the case of solar photovoltaic energy. Emerging technologies such as smart grids, energy storage and hydrogen are facilitating the integration of renewables into power grids and distributed energy systems. Smart technologies have improved the flexibility and resilience of power grids. Digitization has boosted energy efficiency on the demand side.
Innovative energy projects take advantage of synergies between the public and private sectors for cross-sectoral impact. In Thailand, for example, ADB provided long-term financing for a 10 MW wind power project with an integrated pilot 1.88 MW pilot battery energy storage system. It is the first private sector project in the country to integrate large-scale wind power generation with battery storage. In Mongolia, our $ 100 million loan for the country’s first large-scale energy storage project will increase the use of renewable energy by providing large energy reserve, load transfer capacity and backup. emergency. This will support the decarbonization of Mongolian coal-dependent energy system.
We are reviewing the AfDB’s energy policy in light of the profound changes in the energy landscape. We have consulted with stakeholders and plan to update it by the end of 2021. We envision an energy policy aligned with global commitments under the Paris Agreement and responsive to the needs of our DMCs as they build sustainable and resilient energy systems. And, while the final decision will have to be made by our board of directors, it could include a formal withdrawal from funding for new coal-fired power plants.
Masatsugu Asakawa is President of the Asian Development Bank
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