In a submission to the Asian Infrastructure Investment Bank’s (AIIB’s) consultation on its draft updated Energy Sector Strategy (ESS), Recourse strongly encouraged AIIB to fully refresh the strategy, recognising a number of advances and commitments in the past two years, in climate science, international commitments and technological innovations.
The first iteration of AIIB’s ESS, approved in 2017, was a disappointment. Despite AIIB being a post-Paris multilateral development bank (MDB) with a mission to be ‘green’, the ESS lacked restrictions on fossil fuel investments and provided little impetus for borrowers to shift towards low carbon alternatives. The results are telling. For every $1 AIIB spends on renewable energy options, it spends almost double on fossil fuels.
In October 2021, AIIB announced a new target to become Paris aligned by July 2023. A year earlier it announced a target for 50% of all approved financing to be directed towards climate finance by 2025. Moreover, AIIB shareholders have increased their individual and collective action on climate change, such as the UK’s new Export Finance policy, committing the UK to stop supporting the fossil fuel energy sector overseas. This commitment also determines the UK’s engagement at MDB board level. At COP26, AIIB shareholders representing nearly a quarter of AIIB’s voting power committed to end direct international public finance for unabated coal, oil, and gas by the end of 2022 and to prioritise clean energy finance. Other MDBs have also raised the bar by strengthening their policies, including the ADB’s exclusion of financing for coal power in its new Energy Policy (however, not for other fossil fuels, such as gas).
In the submission, Recourse provides a summary overview of key concerns, including how the ESS downplays the threat of climate change; uses outdated analysis of the potential for renewable energy; and continues to promote fossil gas. Recourse calls on AIIB to raise its ambition and start playing a leadership role in shifting the trajectory towards a more sustainable path, building on efforts to align with the Paris Agreement and its 1.5°C aspiration, by ensuring the revised ESS is fossil free and climate proof, and in line with the Sustainable Development Goals.
Read the full submission here.