The ADB and a $1-billion clean energy fund
AS oil prices continue to soar and business establishments and residential consumers are feeling the crunch, there is a glimmer of hope twinkling: The Asian Development Bank is hosting a Clean Energy Week. Significantly and surprisingly, the event will guide the ADB as the bank “begins to rethink its own energy policy” as stated on the ADB website.
The ADB did something that some of us thought it never does: It listened. Greenpeace International and its partner communities have long been criticizing the bank for its continued support for fossil-fuelled power projects. Millions of dollars in loan assistance from the bank have been invested in various natural gas, diesel and coal-fired power plants in Asia. The problem with fossil fuels is their carbon dioxide (CO2) emissions. CO2 causes global warming or climate change. Rising sea levels—one of the impacts of climate change—will affect people in Asia tremendously. Already Asia is the region in the world affected by the most number of floods. Because most Asian countries are so densely populated, a greater number of people are affected—more lives lost, more homes destroyed than when floods occur elsewhere in the world.
Some oil industry insiders believe that while oil-producing countries will continue to increase production, they won’t be able to keep up with the increase in demand. The result is soaring oil prices. Asia has turned to coal as an alternative and cheaper source of energy. According to Greenpeace International, coal consumption in Asia increased 70 percent over a four-year period. Coal is “the most abundant of the fossil fuels, with an estimated 1,000-year reserve” (Greenpeace: Burning Our Future).
The problem with this cheap, abundant source of energy is its large contribution to global warming. The effects of climate change are disastrous to the environment, to people and to the economies. This is not about protecting the environment but about protecting ourselves from a hardship that we could probably survive but not prosper from. Unfortunately, governments in the region, faced with urgent problems such as budget deficits, unemployment, poverty, foreign debt, insurgency or even civil war, seldom have the resources and time to formulate and implement an energy policy based on alternatives to traditional fossil-fuelled power.
This is where the ADB comes in. The bank and its highly-paid professionals are not facing the same pressures and challenges as the governments of the bank’s developing member countries. The ADB has the resources, the luxury of time and the peace of mind to think ahead and plan long term for all of us. Clean energy and energy efficiency are among the priority issues in the upcoming G8 summit, and the ADB will reportedly be playing a major role.
Developing countries rarely factor in impacts on health from pollution. We do not put a money value on, for instance, respiratory illnesses resulting from pollution and the subsequent loss of productivity. Factoring in this hidden cost into the cost of polluting fossil fuels would make renewables such as wind power more competitive. In the short run, however, a shift to renewable energy would result in electricity rates maybe as much a 100 percent higher than current rates. This would have immediate negative impact on the local economies so subsidies and incentives are necessary. Cleaning the transport sector is another great challenge.
Greenpeace challenged the ADB to take a leadership role in creating a future of clean and abundant energy supply—or face irrelevance. The ADB accepted the challenge. The bank announced a $1-billion clean energy fund and is rethinking its own energy policy. Now the time is for action. The output of the Clean Energy Week will show whether the ADB is indeed assuming a leadership role or whether the destination remains fossil-fueled global warming. In such a scenario not only the ADB but most of our existing institutions will eventually face their final irrelevance.