Clean Energy

ADB and Climate Change

Climate Change and its Impacts

Climate Change Science. There is now broad scientific consensus that human-caused greenhouse gas (GHG) emissions have led to higher global temperatures, and unless abated, will have an ever greater impact on the world’s climate system. Any increase in mean temperatures of more than 2oC over pre-industrial levels is predicted to have devastating impacts on people’s lives, economic infrastructure and natural environments around the world.

Development Challenge. While climate change is by nature an environmental issue, it is of greatest concern because of its adverse impacts on people’s health, safety and livelihoods—with the poor expected to be disproportionately affected. Crop yields in Central and South Asia could decrease by 50% by 2050, and accelerated glacial melting is already contributing to increased flooding. Climate change is, therefore, an economic development issue of growing significance to the Asia and Pacific region.

Asia’s Growing GHG Emissions. A majority of the historical GHG buildup in the atmosphere is a result of developed country emissions. But Asian developing countries are now the fastest growing source of new emissions, and they will soon be the largest absolute source. Emissions from the People’s Republic of China (PRC) are roughly equal to those of the United States, and these are the two largest emitters. India and Indonesia also rank in the top 10 emitting countries due to the combined effects of their fossil fuel consumption and deforestation.

National Responses. In addition to actions by the developed countries, the developing countries of Asia and the Pacific are already working to understand specific climate change threats and how best to cope. They are gradually developing strategies and programs for both their climate change mitigation efforts (reducing GHG emissions, and thus contributing to the global solution) and adaptation measures (improving their resilience to local climate change consequences).

Global Action. While national responses are essential, the need for collective global action is clear. Pollution disincentives such as carbon pricing are needed to promote low carbon technologies and energy use. A global transition toward low-carbon economic growth has begun. Commitments to reduce GHG emissions have been made by many industrialized countries under the UN Framework Convention on Climate Change (UNFCCC), most notably reduction targets under the Kyoto Protocol’s current commitment period ending in 2012. The European Union has committed to even deeper emission reductions by 2020. Developing countries are now being asked to join this global mitigation effort.

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Implications for ADB Operations

Mitigation Support. ADB is already providing access to new investment financing mechanisms for energy efficiency improvements, renewable energy and other low-carbon infrastructure. ADB needs to help create enabling policy and regulatory frameworks to internalize the costs of carbon emissions, support the development and transfer of energy efficient and low carbon technologies and practices to its developing member countries (DMCs), attract associated financing, and address market failures and barriers. Transportation patterns need to adjust, with more fuel efficient vehicles and greater reliance on public transport. In addition to infrastructure investments, ADB may need to enhance its in-house capacity in land management to advise DMCs on measures to increase the productivity of rural resources while reducing contributions to climate change from deforestation and other land-use changes.

Adaptation Support. There will be increasing demand for defensive or adaptive investments in both urban and rural settings to avoid the negative consequences of climate change and eventually pressure to support the millions of people in Asia and the Pacific expected to become “climate refugees.” A combination of development assistance and insurance or other market schemes is necessary to cope with climate-triggered disaster events. Coastal cities, flood prone areas and low-lying infrastructure will need to be protected. The design of water supply systems, ports development or hydropower projects may need significant adjustments to deal with greater precipitation variability. There will be increased demands for drought and flood resistant crops, irrigation innovations and other technological and management measures. Separately, ADB will need to assess the extent to which its own country programs and specific sector and project investments require “climate proofing”.

Broader Implications. The transition to a climate-neutral development path in Asia and the Pacific will generate a range of new demands for ADB assistance in policy support, capacity development and investment financing. ADB will need to consider climate change impacts on the region’s development and poverty alleviation prospects and what it should do to help DMCs move their economies onto low-carbon growth paths and adapt to new risks. In this regard, ADB’s on-going initiatives in energy efficiency, carbon markets, sustainable transport, urban services and adaptation will play a key role. ADB is also well positioned to promote innovative approaches for financing projects that will reduce emissions much beyond 2012. At the same time, ADB will be under greater scrutiny to minimize its own corporate environmental footprint, including GHG emissions from facilities and actions such as travel and events management, so it can lead by example.

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Core Messages

1. Climate Change is Happening. The scientific community has presented overwhelming evidence that rising global temperatures, resulting from human-caused GHG emissions, have had and will have an impact on the world’s climate. ADB notes the key findings of the UK Stern Report released in October 2006 and the IPCC reports released throughout 2007.


2. New Development Threat. Climate change presents a barrier to sustainable economic growth in the region, threatening to undermine recent economic accomplishments. The poorest people in the poorest countries are expected to suffer first and greatest. Thus, addressing climate change is pivotal to promoting Asia’s development future.


3. Mainstreaming Climate Change. Given the strong scientific evidence of increased risks, support is needed for both mitigation and adaptation measures to address climate change.


4. Mitigation: Energy Efficiency and Carbon Pricing. Energy efficiency improvements and other low-carbon solutions not only reduce adverse environmental impacts at the local, regional, and global levels but can also enhance the region’s energy security, which is a critical concern given rapidly expanding energy demand and associated dependence on oil imports. Pricing of externalities and other market-based policies can create incentives for the development and adoption of clean and efficient technologies and practices in both production and consumption.


5. Adaptation. Even with ambitious mitigation measures, the world is already locked into significant levels of climate change, and adaptation measures will be needed to improve the resilience of vulnerable communities. Thus, there is a need to integrate climate change adaptation into planning and investment at the project, municipal, national, regional and global levels.


6. Partnership. Climate change is a global issue, but the solution will hinge to a large degree on how quickly the rapidly growing economies of Asia and the Pacific can transition onto a low-carbon development path. ADB is already working to support its DMCs by filling gaps in financing, capacity and knowledge, helping create enabling policy and regulatory environments, and promoting collective action. ADB stands fully committed to help meet the challenges presented by climate change and welcomes partnerships with both developed and developing nations, as well as leading knowledge institutions in Asia and the Pacific.

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ADB Activities and Climate Change

ADB has for a number of years been active in promoting clean energy initiatives to minimize adverse local and regional impacts of climate change. Within the context of the UNFCCC, ADB has assisted its DMCs to build capacity to prepare for the opportunities offered by the Kyoto Protocol, and in developing pre-feasibility studies for CDM and GHG abatement projects.

Under its Asia Least-cost Greenhouse Gas Abatement Strategy program, ADB took the lead in developing the first set of national level GHG inventories and in identifying mitigation projects for 11 countries (Bangladesh, People’s Republic of China, India, Indonesia, Republic of Korea, Mongolia, Myanmar, Pakistan, Philippines, Thailand, and Viet Nam).

ADB’s efforts have contributed significantly to developing capacity among selected DMCs to integrate climate change issues in their development process. Subsequent to the Kyoto Protocol, at the request of several DMCs, ADB undertook a capacity building program for Implementation of the Kyoto Protocol and the Clean Development Mechanism in 15 DMCs, targeting the relevant government departments and organizations in each country. This also enabled more meaningful participation by these countries in the international negotiations.

In 2001, ADB brought together several trust fund initiatives provided by the governments of Canada, Denmark and the Netherlands to launch its renewable energy, energy efficiency and climate change program. These initiatives are an integral pat of ADB’s energy 2000, ADB’s energy policy, which recommends the reorientation of the energy sector to address regional and global environmental impacts.

The Clean Development Mechanism Facility at ADB was established in August 2003 to provide technical support to DMCs in accessing additional financial resources for CDM-eligible projects. During its 3–year implementation, the CDM Facility assisted DMCs in sourcing funds for emissions reductions and processing the CDM requirements for identified projects.

The Carbon Market Initiative aims to harness the emerging carbon market into catalyzing development of clean energy projects in Asia and the Pacific. It will provide developing countries access to additional financial resources and technical support for promoting energy efficiency and renewable energy projects that are eligible for use of the Clean Development Mechanism.

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