AIIB investment skewed towards fossil fuel despite green promises

19.10.2021

The Asian Infrastructure Investment Bank (AIIB) invested more than half a billion US dollar in the Bangladeshi energy sector over the last five years. However, they haven’t invested a single penny on green and clean energy in this country, which is outright opposite of their commitment to environment and social standard.

A new report “Financing Fossil Fuels Failing Our Future” reveals AIIB’s continuous, controversial investment in fossil fuel in Bangladesh. It reveals that this Beijing- headquartered multilateral development bank has invested over 600 million US dollars in the Bangladeshi energy sector with a staggering y-o-y growth of 23%, none of which contributed to greening Bangladesh’s economy.

The report is jointly published by the Bangladesh Working Group on External Debt (BWGED), Coastal Livelihood and Environmental Action Network (CLEAN), NGO Forum on ADBRecourse and Urgewald.

“AIIB shareholders like the UK are pledging to stop funding fossil fuels but keep backing fossil fuel in climate vulnerable Bangladesh through AIIB. Not one of AIIB’s energy investments in Bangladesh supports renewables. This is unacceptable in a time of climate crisis. Time’s up AIIB – finance out of fossils now,” said Petra Kjell, Campaign Manager Recourse.

The report reveals some disturbing facts around the combined cycle power plant in Bhola. The local communities are still awaiting compensation for land acquisition while the operating company NBBL (Nutan Bidyut Bangladesh Ltd.) showed unprecedented irresponsibility as disposal of sand and debris from the construction site blocked a local canal causing flooding of croplands.

“This report reveals a critical reality check. Not a single investment in the energy sector in Bangladesh has been used towards meeting the ‘last mile’ needs of local communities through decentralized renewables; instead the AIIB’s so-called ‘infrastructure for tomorrow’ has not only wreaked havoc on the livelihoods of local people, but also left a trail of flawed, corrupt or non-existent consultation processes”, said the report co-author Tanya Lee Roberts-Davis.

According to the report, AIIB is a post-Paris agreement multilateral development bank committed to align its finance flow with the objectives of the Paris agreement. In May this year, AIIB amended its Environment and Social Framework (ESF) with an aim to better help its clients make progress on their contributions to the Paris Climate Agreement and achievement of the sustainable development goals. However, this policy apparently doesn’t reflect on its practice.

“AIIB is a bank with a dominant Chinese share, and Germany being the biggest non-regional shareholder. Both should combine their promises and translate them into responsibility. They should implement hard rules including strict time-bound information disclosure to stop doing harm to the people and environment”, said Dr. Nora Sausmikat, lead of the China Desk of Urgewald.

The report also pointed out that AIIB is directly facilitating coal power dependency by connecting the coal-fired plants of the Chattogram-Cox’s Bazaar area with the national grid through constructing 27-km overhead and underground transmission lines.

“AIIB breaches its own policies for not financing coal through financing transmission lines in the Chattogram zone. It also violated its safeguard policies by not disclosing the project information and giving inadequate compensation. The bank has to compensate the people for its irregularities as there is no court to sue the bank”, said Professor Shamsul Alam, Energy Adviser of the Consumers Association of Bangladesh (CAB).

Read the report here.