Keynote address by Masatsugu Asakawa, President, Asian Development Bank, at the Sydney Energy Forum, 12 July 2022, Sydney, Australia
Your excellencies, Ministers, Distinguished Speakers, Ladies and Gentlemen.
It is a pleasure to join you here in Sydney and I am grateful to the Government of Australia for the invitation to speak at such a relevant and timely event.
Before I talk about energy issues, please allow me to express my sincere gratitude to Prime Minister Albanese and others for their very warm words about Prime Minister Shinzo Abe. Such heartfelt condolences will surely give comfort to his family and the Japanese people.
Today I will offer a few reflections on each of the themes of this plenary from the perspective of Asia and the Pacific and our work at Asian Development Bank.
Before I begin, let me provide some background on my organization, ADB.
The Asian Development Bank is a multilateral development bank (MDB), established in 1966. Back then, the Asia-Pacific region was the poorest region in the world.
Today, Asia is a global powerhouse that contributes to more than half of the world’s economic growth. Asia’s stunning development had lifted more than a billion people out of extreme poverty since 1990.
ADB has supported this journey to prosperity. We have seen that dramatic economic transformations are possible, despite the pessimism over fifty years ago about the industrialization and development of Asia.
We have also seen how better policies and institutions contributed to Asia’s postwar economic success. They nurtured market economies, a vibrant private sector, and technological innovation.
My friends, we know that Asia’s economic transformation is far from complete. And so, ADB will continue to support our developing member countries on their path to a more prosperous, inclusive, resilient, and sustainable future.
To do this, we must meet the challenges we face today. One of these is climate change. This brings me to the themes of our session.
Let me turn now to the first theme, decarbonization. The world needs to decarbonize. Asia and the Pacific is now responsible for more than 50% of global greenhouse gas emissions. The impacts of climate change are worsening, especially for small island nations and the most vulnerable populations. The battle against climate change will be won or lost in Asia and the Pacific.
ADB is introducing solutions that can turn the tide. The Energy Transition Mechanism, or ETM, for example, will retire coal power plants early and has the potential to be the largest carbon reduction model in the world.
Our new energy policy articulates this commitment to support the low-carbon energy transition in Asia and the Pacific. It reflects our decision to withdraw from coal financing and to ensure access to affordable, sustainable, and modern energy for all. It also recognizes the important role of new technologies, and how access to these technologies will be key to seeking greater ambition in the nationally determined contributions of our developing member countries.
I also strongly believe that the transition to clean and efficient energy sources is fully compatible with robust economic growth. We should invest in low carbon development – not only because it can put us on a path to a net zero future, but because it will increase prospects for strong and sustainable growth.
However, there is another aspect of the low carbon transition that requires the same level of commitment from us: to ensure that the energy transition is just, inclusive, and sustainable. Affected workers, communities, and women need to be protected from the negative impacts of the transition, for example, through social protection measures. They also need to have access to the benefits of the transition by building skills for green jobs.
To help finance the transition, countries need sustainable domestic sources of revenue to support green development. Domestic resource mobilization will also help to avert the fiscal crises that undermine broader economic and social stability.
II. Energy security
Let me turn to today’s second theme of energy security. This is a critical issue facing many parts of the world right now, including in our region. Developing countries are being swept up in the economic and geopolitical instability affecting energy and other markets. We have all seen the long lines at petrol stations in many countries, while others are suffering from load-shedding and rolling blackouts. We need to place energy security at the top of the agenda.
Energy efficiency and renewable energy investments can help us improve energy security by reducing dependency on costly fossil fuel imports in the region and increasing self-sufficiency.
Energy efficiency is the fastest and lowest cost option for countries to reduce energy demand and help manage energy supply disruptions from the energy crisis and increasing extreme weather events. In addition to improving energy efficiency, renewable energy can help countries to diversify their current energy supply mix with cheaper and low-carbon energy resources.
III. Scale and pace of the transition
Let me turn to our final theme. My friends, we all need to pick up the scale and pace of the energy transition.
ADB is doing this in a number of ways:
- Last year, we elevated our ambition to provide $100 billion in cumulative climate finance between 2019 and 2030;
- We are de-risking investments to crowd in more sources of funding including substantial private sector investment;
- We are issuing green and blue bonds; and
- We see our response to the coronavirus disease (COVID-19) pandemic and other crises as opportunities to transform economies toward green development by working with development partners, including the Australia Climate Partnership Fund.
As I am here at the Sydney Energy Forum, I want to ask you to join us in our efforts to support these approaches. In particular, let me call for swift collective action on one of ADB’s newest and most important initiatives, our Innovative Finance Facility for Climate in Asia and the Pacific, or IF-CAP.
IF-CAP is an innovative guarantee facility that will scale up our financing – financing by MDBs – leveraging at least “$3-4 of financing for every $1 put in.” When we think about the trillions of dollars required, it is only possible to raise the required volume of resources through leveraged approaches like IF-CAP. We all committed to shift $100 billion from developed to developing countries annually for climate action. The traditional multilateral approach of financing that provides “$1 in, $1 out” is important but will not be sufficient.
I would like to take this opportunity to thank the Australian Government for their support for these initiatives.
In closing, let me thank you for inviting me here to speak with you today. I also want to say how much I am looking forward to the discussions about how we can work together to implement these ideas. Our collective action must be urgent, and at the scale needed, to solve the climate and energy crises.