"Asian Development Bank and the Asia Pacific Partnership: Forging Ties for Clean Development"
Speech by
Haruhiko Kuroda
President
Asian Development Bank
At the 2nd Asia Pacific Partnership on Clean Development and Climate Ministerial Meeting
15 October 2007
New Delhi, India
Introduction
Distinguished guests, ladies and gentlemen, good evening. The 7 partner countries of the Asia Pacific Partnership (APP) represent about 50% of ADB's shareholders so I am grateful for this opportunity to engage with you. I was present at APP's inaugural meeting and was impressed by its ambition. It is encouraging to see the positive results of this collaboration. The identification of more than 100 projects, including flagship projects, covering the energy intensive sectors of APP member countries is indeed a significant milestone. More importantly, work has begun on their implementation. We have likewise moved forward on the clean development agenda and I would like to thank you for giving me the opportunity to discuss our views and recent activities on this area.
"Think Globally, Act Locally"
While climate change and global warming will have many impacts, the greatest concern is its adverse impacts on people's health, safety and livelihoods-with the poor and vulnerable expected to be disproportionately affected. Climate change is, therefore, both an environmental and economic development issue of immense significance in the Asia and Pacific region.
It is very encouraging to see the emerging consensus on actions needed, most recently the APEC Leaders' Sydney Declaration on climate change, energy security and clean development committing their countries to working towards the aspirational goal of reducing their energy intensity by at least 25 percent by 2030. This followed the agreement between industrialized nations and the emerging economies during the G-8 Heiligendamm Summit held in June this year to cooperate more closely on such areas as energy efficiency and promoting cleaner technologies to reduce carbon emissions. And we look forward to the upcoming UNFCCC Conference in Bali to encourage the movement towards a low carbon world. With uncertainty about the post-2012 framework increasingly becoming an impediment to additional investments in clean energy projects, it is indeed high time for the global community to look beyond the first commitment period of the Kyoto Protocol.
However, the impacts of global climate changes are felt at the national level. While international responses are essential, they must be supplemented by a concerted national response. ADB is committed to support the common goals of the emerging global and regional framework, and to continue national mitigation and adaptation efforts. As the region's development bank, we recognize the important role that energy plays in the growth and development of our member countries. As such, it is imperative that we place climate change at the highest priority and find ways to move the collective responses into action at the national level.
Importance of Enabling Policies and Clean Technologies
Policies to promote clean energy and the deployment of low carbon technologies are an integral part of this collective response. Low-carbon solutions not only reduce adverse environmental impacts at the local, regional, and global levels but can also enhance energy security - a critical concern in Asia given its rapidly expanding energy demand. Many such technologies already exist; however, despite their potential benefits, their application in Asia has been slower than desired.
This suggests that policy makers will have to create the right incentives for their development and use, address market failures and barriers, and attract financing. It is important to putting a cost on the external impacts of carbon emitting activities, and to develop innovative mechanisms to finance the additional cost of new technologies, especially during the initial period. Effective mechanisms for cooperation, technology transfer, and knowledge sharing will be needed and, as APP has demonstrated, private-public sector partnership can play a crucial role in this area.
ADB's Response
ADB has already financed several clean energy projects in the region. These include, among others, the Sipat Super Thermal Power Plant in India, the first plant to utilize supercritical technology in the country and the Tata Power Wind Energy Financing Facility in the of state Maharashtra. In China, we financed the Shanxi Coal Mine Methane Development Project, which will capture coal bed and coal mine methane to provide an alternative fuel source for power generation and for industrial, commercial and residential use. We also supported a 98-MW run-of-river hydropower plant under the Gansu Clean Energy Development Project; and the Industrial Energy Efficiency and Environment Project, which replaced outdated production processes and equipment in the chemical, cement, and iron and steel industries. The technologies have now been widely replicated throughout the country.
In addition, we are working with India's state governments to establish energy conservation funds, and with China's provincial governments, utilities, and private partners to create virtual power plant generating capacity and to develop wind and hydro projects.
Our commitment to supporting Asia's transition to a low carbon economy is highlighted in a soon to be finalized updated energy strategy, which will guide our sector operations in the future.
Meanwhile, our comprehensive Clean Energy and Environment Program is helping to fill gaps in financing, capacity and knowledge; create enabling policy and regulatory environments; and promote cooperation. The Program comprises several distinct initiatives including; the Energy Efficiency Initiative which aims to expand our clean energy portfolio to $1 billion a year by 2008; the Carbon Market Initiative which provides upfront financing and technical support to developers and sponsors of projects with GHG mitigation benefits that can quality as an eligible Clean Development Mechanism project under the Kyoto Protocol; the Sustainable Urban Transport Initiative which will provide advice and financing for public transport innovations and new mobility patterns to reduce GHG and other pollution; an Energy for All initiative which will increase access by the poor to clean and efficient energy services; establishment of Knowledge Hubs to support and strengthen the region's capacity to generate innovative concepts, science, technology, and management processes in all aspects of clean energy and climate change adaptation; and the Climate Change Adaptation Program which helps countries assess vulnerabilities and develop investment and management responses to climate change.
I would like to highlight our Energy Efficiency Initiative as a conduit for ADB to collaborate with APP. On the policy front, as part of this initiative, we are helping our developing member countries identify barriers and prepare investment and action plans on energy efficiency. China and India are two of our target countries where we want to scale up clean energy investments.
On the technology front, like APP, the initiative supports clean energy-based technologies such as wind and solar power, cleaner coal technologies, distributed generation, efficient and cleaner industrial processes, among others. We have been in dialogue with APP to develop risk sharing mechanisms to catalyze local financial institutions in China and India to increase lending for energy efficiency projects and have submitted a proposal for your consideration. I hope we are able to move forward further on this.
Under the same Initiative, our Clean Energy Financing Partnership Facility provides additional financing for technical assistance projects and also for grant components of loans. We are especially excited about the facility because it has generated additional resources for us to develop and implement innovative financing mechanisms to make new technologies commercially attractive. Japan and Australia have already committed significant resources to the Facility, bringing it close to half of its 250 million dollar target.
Through our private sector operations, we are actively seeking out and targeting clean energy projects for financing. We are currently evaluating proposals from financial institutions for establishing equity funds for clean energy projects.
Finally, as part of our Clean Energy and Environment Program, we host the annual Asia Clean Energy Forum. The forum serves as a platform for an exchange of experience, best practices and new ideas among a diverse group of stakeholders from within and outside the region. This year, the Forum drew the participation of well over 400 experts from about 40 countries. It is shaping up to be one of the premiere clean energy events in the region. We appreciate the participation of APP and invite it to be a permanent part of this event, to co-sponsor it with us and to use it a platform for sharing our mutual progress and achievements.
Conclusion
While there are clear signs of positive steps being taken, we also recognize that there are many challenges ahead of us. In the context of global agreements, ADB will continue the efforts to achieve our common goals. However, we also recognize that we cannot do this alone and that we need to have strong partnerships. Climate change affects all of us. Accordingly, we need joint efforts to develop global solutions to expedite local actions.
As I mentioned earlier, we look forward to working with APP on two fronts; developing innovative financing mechanisms in China and India to promote greater deployment of energy efficiency, and to work together to put on a annual Clean Energy Forum, as the premiere platform for the sharing of best practices on clean energy and climate change in the region. In addition, we stand ready to explore other avenues for collaboration with APP.
On behalf of ADB, I would like to take this opportunity to further strengthen our current partnerships, and build new ones to ensure a cleaner, safer, healthier world for future generations.
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