Regional : Regional Initiative on Accelerated Energy Transition for the Pacific Small Island Developing States

Sovereign Project | 56329-001

ADB is collaborating with regional and international partners to support, study, and pilot the ETM, which aims to catalyze public and private capital to accelerate the transition to clean energy in ADB DMCs. Fossil fuel is a primary electricity source of ADB Pacific DMCs. The proposed KSTA will support the preparation of an Accelerated Energy Transition (AET) for them. The AET will aim to mitigate the negative impact of systemic, external market risks, while supporting regional priorities in achieving energy efficiency and renewable energy targets and strengthening economic resilience and sustainability. The AET will apply differentiated approaches, depending on the situation.

Project Details

Project Name
Regional Initiative on Accelerated Energy Transition for the Pacific Small Island Developing States
Project Number
56329-001
Country / Economy
  • Regional
  • Cook Islands
  • Fiji
  • Micronesia, Federated States of
  • Kiribati
  • Nauru
  • Niue
  • Palau
  • Papua New Guinea
  • Marshall Islands
  • Samoa
  • Solomon Islands
  • Tonga
  • Tuvalu
  • Vanuatu
Project Status
Active
Project Type / Modality of Assistance
  • Technical Assistance
Source of Funding / Amount
TA 10153-REG: Regional Initiative on Accelerated Energy Transition for the Pacific Small Island Developing States
Source Amount
Technical Assistance Special Fund US$ 1.00 million
Operational Priorities
  • OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
  • OP6: Strengthening governance and institutional capacity
  • OP7: Fostering regional cooperation and integration
Sector / Subsector
  • Energy / Energy sector development and institutional reform

  • Finance / Finance sector development

Gender
No gender elements
Description
ADB is collaborating with regional and international partners to support, study, and pilot the ETM, which aims to catalyze public and private capital to accelerate the transition to clean energy in ADB DMCs. Fossil fuel is a primary electricity source of ADB Pacific DMCs. The proposed KSTA will support the preparation of an Accelerated Energy Transition (AET) for them. The AET will aim to mitigate the negative impact of systemic, external market risks, while supporting regional priorities in achieving energy efficiency and renewable energy targets and strengthening economic resilience and sustainability. The AET will apply differentiated approaches, depending on the situation. Development of the AET will be informed and guided by (i) regional- and country-level research and policy dialogue; (ii) facilitation of a regional senior officials' platform to promote continued strong country ownership and support for the AET; and (iii) capacity development to strengthen knowledge and share experience in a range of potential mitigation measures. The AET process will develop a structure to integrate the benefits of addressing systemic and external risks through market solutions with increased country commitment to energy efficiency and renewable energy targets. The AET's country design and implementation are consistent with Pacific DMCs' energy plans and national goals under the Paris Agreement.
Project Rationale and Linkage to Country/Regional Strategy

Despite resource, technological, and capacity constraints, Pacific DMCs have committed to achieving 50% renewable energy generation by 2050. ADB is committed to supporting a just energy transition for the Pacific DMCs, and achieving prosperous, inclusive, resilient, and sustainable development.

Systemic risks distort energy-sector investment planning in the Pacific DMCs, specifically in renewable energy. Even if future energy demand could be anticipated, Pacific DMC governments tend to prioritize short term non-market interventions and tariff adjustments to ease the cost of energy for consumers. Heightened uncertainty and perceived political risk cause private investors to delay investment decisions until power tariff settings stabilize and non-market interventions are addressed. Uncertainty adds risk to the transition to renewable energy, increasing the possibility of inappropriate and/or irreversible choices that could affect energy costs in the long-term. Further, delays in prioritizing appropriate technologies to generate clean, efficient, renewable, and affordable power may result in a need to divert productive resources to compensate for weaknesses in infrastructure, with potentially constraining implications for the development process in the Pacific DMCs.

The last 20 years have seen an unprecedented rise in the scope and impact of systemic non-market risks such as the volatility of hydrocarbon prices, cost of technology, and supply chain disruptions caused by the coronavirus disease pandemic. The 2022 Russian invasion of Ukraine has pushed oil prices to a peak, with volatility nearly twice of that observed in 2020-2021.

Pacific DMCs rely heavily on imported fossil fuel for their primary energy supply, although efforts are underway to reduce this, supported by ADB among others. During the transition phase, they are especially vulnerable to higher, more volatile prices that ultimately ripple through all segments of their economies. As prices fluctuate, so does the cost of electricity production in the Pacific DMCs, with far-reaching effects on fiscal and trade balances, the cost of doing business, and household living standards, including food security. The economic effects of high prices manifest over time in real terms as a greater share of oil imports as a percentage of GDP, a high proportion of oil in the primary energy supply, and rising oil imports and expenditure.

The proposed TA responds to the request articulated by ADB's Pacific DMCs to: (i) address the immediate knowledge needs and priorities associated with potential mitigating measures against systemic risks and non-market distortion events (e.g., imported fuel price volatility and fuel supply chain disruption); (ii) accelerate progress in research and analysis for transition to clean energy sources; and (iii) report to the next Pacific DMC Governors' Meeting, scheduled for May 2024. The TA is fully aligned with the aim of ADB's Pacific Approach, 2021-2025 to build and support a more resilient Pacific subregion; and with that of the Pacific Islands Forum's 2050 Blue Pacific Continent Strategy to strengthen investments that promote energy efficiency and a transition to renewable sources of energy. The TA is aligned with the ADB's Country Knowledge Plan and included in the indicative country pipeline and monitoring reports for the PIC 12, PNG, and Fiji.

Impact

Negative impact of systemic risks and distortions in achieving energy efficiency and renewable energy targets in Pacific DMCs mitigated.

Project Outcome

Description of Outcome

Pacific DMCs' capacity for AET plan and implementation strengthened

Progress Toward Outcome

Implementation Progress

Description of Project Outputs

Analyses and research for an AET delivered

Pacific DMC government agencies' capacity to design AET strengthened

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Cook Islands - Nation-wide; Fiji - Nation-wide; Kiribati - Nation-wide; Marshall Islands - Nation-wide; Micronesia, Federated States of - Nation-wide; Nauru - Nation-wide; Niue - Nation-wide; Palau - Nation-wide; Papua New Guinea - Nation-wide; Samoa - Nation-wide; Solomon Islands - Nation-wide; Tonga - Nation-wide; Tuvalu - Nation-wide; Vanuatu - Nation-wide

Summary of Environmental and Social Aspects

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples

Stakeholder Communication, Participation, and Consultation

During Project Design
During Project Implementation

Contact

Responsible ADB Officer
Abbasov, Rafayil
Responsible ADB Department
Sectors Group
Responsible ADB Division
Energy Sector Office (SG-ENE)
Executing Agencies
Asian Development Bank

Timetable

Concept Clearance
17 Apr 2023
Fact Finding
-
MRM
-
Approval
27 Sep 2023
Last Review Mission
-
Last PDS Update
31 Jul 2023

Funding

TA 10153-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Sep 2023 - 27 Sep 2023 31 Dec 2026 - -
Financing Plan/TA Utilization
ADB Cofinancing Counterpart Total
Gov Beneficiaries Project Sponsor Others
1,000,000.00 0.00 0.00 0.00 0.00 0.00 1,000,000.00
Cumulative Disbursements
Date Amount
03 May 2024 0.00

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

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The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Accelerated Energy Transition Study and Capacity Development Firm - Consulting Closed

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.