How can the ADB Energy Policy update help people and the climate?

As the ADB undertakes a review of its current energy policy, the institution has the opportunity to equitably expand energy access and become a climate leader. To do so, the ADB should integrate robust stakeholder engagement practices and actionable plans for Paris Alignment and a just energy transition within the 2021 Energy Policy. 

Concurrent with the review of its 2009 Safeguard Policy Statement (SPS), the Asian Development Bank (ADB) is also undergoing a review of its existing Energy Policy, established twelve years ago. Due in part to global commitments on energy access and climate, ADB is updating its approach to energy projects to conform with the ADB Strategy 2030

ADB is currently hosting stakeholder consultations and has indicated that it will disclose a revised draft integrating stakeholder input on August 10, 2021. Under the current timeline, stakeholders will be able to submit written comments on the draft by August 31, 2021. ADB plans to present the final Energy Policy to the board in October 2021. 

Several operational priorities in the ADB Strategy 2030, in particular poverty reduction, gender equality, climate change, and liveable cities, should guide the update of ADB’s Energy Policy. As these priorities are also directly pertinent to the SPS, the ADB’s approach to address them should be consistent in the Energy Policy and the SPS so that both policies work to raise the standards at the ADB. While climate and energy are key issues to consider, ADB investment in the energy sector should also be guided by other global commitments on child rights, disability, and stakeholder engagement.

In June 2021, BIC submitted written comments to the ADB’s 2021 Energy Policy Review regarding stakeholder engagement, climate-related metrics, and fossil fuel projects. To best protect project-affected communities during energy projects and support global commitments on energy access and climate, we urge the ADB to: 

  1. Establish clear timelines, metrics, and targets for Paris Alignment. Given that the ADB and other multilateral development banks (MDBs) jointly voiced their intention to align lending with the Paris Agreement, the updated Energy Policy should outline a process for aligning all ADB energy lending and operations with high probability and equitable pathways that limit warming to well below 1.5°C before 2023. 
  2. Implement a comprehensive analysis of all greenhouse gas emissions across ADB’s lending portfolio. The full scope of ADB’s impact on the climate includes more than energy-related projects but rather its entire portfolio and ongoing projects from which ADB has divested. A comprehensive and transparent analysis of greenhouse emissions associated with a project needs to include scope one, two, and three emissions. This is crucial for some projects where most climate pollution may not be point-source, such as hydropower and fossil gas projects. An emissions analysis also needs to be relevant to the timeline required to act on climate change, meaning a ten to twenty-year time horizon should be used for measuring the global warming potential of non-CO2 greenhouse gas. Methane is 26 times more potent than CO2 over a century, but 87 times more potent than CO2 over 20 years.
  3. End all direct and indirect fossil fuel finance, including gas. The ADB should amend the Energy Policy to exclude midstream and downstream gas financing and support, including through technical assistance grants, associated facilities, and policy advice. This means removing conditions that would allow further fossil gas financing. If the ADB will not fully bar gas finance, it should implement a combination of conditions that limit it to rare exceptions where alternatives to gas are not viable. Since the Paris Agreement, the ADB has financed at least $4.9 billion in fossil fuels, almost all of which (96%) have gone to gas. Without a clear end to gas finance, the ADB cannot be a climate leader.  
  4. Uphold human rights. The ADB must obtain full free, prior, and informed consent from communities impacted by ADB-financed energy projects prior to implementation. As energy projects can be linked to increased social tensions and human rights abuses, the ADB also needs to affirm zero tolerance for retaliation against those who voice concerns surrounding ADB-funded projects and put in place protocols to address retaliation against project-affected people and civil society when it occurs.   
  5. Harmonize the stakeholder engagement policies of the updated SPS with the Energy Policy. Meaningful stakeholder engagement is essential to inclusively and sustainably expand energy access. Strengthening stakeholder engagement requirements and practices in the Energy Policy and SPS, particularly with children, women, LGBTQI individuals, and persons with disabilities, will better enable these groups to contribute to project design and implementation and secure their access to project benefits. 

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