Key Takeaways

World leaders gathered for COP26 in Glasgow at a critical time in the battle against climate change. The event comes just a few months after the Intergovernmental Panel on Climate Change (IPCC) issued a dire warning: that some disruptive climate change impacts are now irreversible and the target of limiting global temperature increases to around 1.5oC above preindustrial levels over the next two decades—the central goal of the Paris Agreement in 2015—looks increasingly dim without quicker and deeper cuts in greenhouse (GHG) emissions.

  The COP26 climate conference in Glasgow in November comes after the IPCC warned that the world is off target to curb climate change and could face catastrophic climate consequences in future.

COP26 agenda

Each COP is important in its own way but COP26 is especially critical. The Paris Agreement has what is known as a ‘ratchet mechanism’ in which countries submit new and more ambitious goals every five years for their nationally determined contributions (NDCs)—their blueprint for reducing GHGs. That first five-year milestone was reached last year, but the coronavirus disease (COVID-19) pandemic saw the postponement of COP26 until 2021. Now, the hope is the rescheduled COP26 can mobilize higher ambitions and more concrete plans for meeting and even scaling up these NDCs. Ramping up climate action in our region will be key. As the source of more than half the world’s GHGs, it’s clear that the battle against climate change will be won or lost in Asia and the Pacific.

ADB’s climate work

So what is ADB doing to help? As Asia and the Pacific’s climate bank, ADB is leveraging its resources, financing, technical assistance, partnerships, and—more and more—innovating to meet this challenge.

Asia and the Pacific's Climate Bank

Energy Transition Mechanism

ADB is working with Indonesia, the Philippines, and Viet Nam to study the feasibility of a program called the Energy Transition Mechanism (ETM). The study aims to pilot the formation of an ETM facility in each country—comprising public, private, and philanthropic financing—to purchase coal-fired power plants thus accelerating their retirement and helping jumpstart reliable and affordable clean energy. While the full feasibility study is still in the early stages, ETM has the potential to be one of the largest carbon reduction programs in the world. Retiring 50% of the coal plants in the three pilot countries alone could avoid 200 million tons of CO2 per year, the equivalent of taking 61 million cars off the road.

Green and blue bonds

ADB is also spearheading green and blue bonds to raise funds for projects that reduce carbon emissions, build up climate resilience, and improve the health of oceans. ADB’s green bond issuance program was launched in 2015 and has since raised some $10 billion. In 2021, ADB issued its first ever blue bond to fund ocean-related projects in Asia and the Pacific. The bonds are part of ADB’s Action Plan for Healthy Oceans and Sustainable Blue Economies, launched in 2019, which targets providing investments and technical assistance of at least $5 billion by 2024. 

  ADB is an active issuer of green bonds to support climate change mitigation and adaption projects, raising around $10 billion to date, and it also issued its first blue bond in 2021 to fund ocean related projects.

ADB raises climate finance ambition

ADB also recently announced it is raising its ambition for 2019-2030 cumulative climate financing to $100 billion, while ensuring that at least 75% of projects will address climate change mitigation and adaptation by 2030.

Ensuring a just transition to net-zero carbon emissions

Shifting countries toward a net-zero carbon emissions path involves substantial adjustments and raises concerns about how all groups, particularly the poor and vulnerable, can benefit from the changes. In response, ADB and other multilateral development banks (MDBs) have agreed to a set of principles to help countries make a just transition from the use of fossil fuels to green, renewable energy. The MDBs will work with national development banks and other financial institutions to develop funding and policy strategies that will promote economic diversification and inclusion for marginalized groups. Making sure the transition to a low-carbon growth model is done fairly and inclusively is part of the commitments made at the 2015 Paris Agreement.

  ADB is Asia and the Pacific’s climate bank and it is scaling up its climate financing ambition to a cumulative $100 billion from 2019 to 2030 to support developing member countries.

Pandemic response provides model for climate change battle

Making the massive adjustments to achieve net-zero economies by 2050 and to build resilience to future climate extremes is a daunting task. However, the COVID-19 pandemic offers a glimpse of what can be achieved with cooperation and collective will. Effective vaccines were developed around the world in record time and MDBs, including ADB, moved quickly to respond to the immediate health crisis and put in place mechanisms for a green, resilient, and inclusive recovery.

The world, and especially here in Asia and the Pacific, must do the same and more to address climate change.