AIIB urged to stop financing fossil fuels immediately, help build economic resilience
As the 2020 Asian Infrastructure Investment Bank's Annual Meeting is held today, a group of peoples' movements across Asia called on the Beijing-based multilateral financial institution to end its financing of fossil fuel projects and help build economic resilience as countries grapple with recovery plans in response to the coronavirus pandemic.
July 28, 2020
As the 2020 Asian Infrastructure Investment Bank's (AIIB) Annual Meeting is held today, a group of peoples' movements across Asia called on the Beijing-based multilateral financial institution to end its financing of fossil fuel projects and help build economic resilience as countries grapple with recovery plans in response to the coronavirus pandemic.
"We are living in the most climate-vulnerable countries in the Global South that suffer from fossil fuel projects supported by financiers like the Asian Infrastructure Investment Bank. The toxic impacts of these projects not only undermine global climate goals, but also exacerbate the consequences of the coronavirus crisis. We need climate-friendly responses both for the Covid-19 pandemic recovery and the climate crisis," the open letter of the Asian People's Movement on Debt and Development (APMDD) said, addressing the board and officers of the AIIB.
"We are fighting for survival, justice and an end to inequality. We ask AIIB to take concrete measures to end its support for harmful fossil fuel projects and to help governments tackle the immediate health and economic challenges posed by the pandemic, instead of funding the climate crisis" said Lidy Nacpil, coordinator of APMDD.
Nacpil said AIIB should immediately close the loopholes in its energy policy in order to stop financing fossil fuels.
"Its current energy policy leaves the door open to financing coal, oil and gas despite publicly promoting itself as a facilitator and supporter of the Paris Agreement. Its policy allows it to consider so-called carbon efficient oil-fired and coal-fired power plants if these will replace existing less efficient capacity, or if no viable or affordable alternative exists in specific cases. This is why AIIB has been able to embark on fossil fuel projects that undermine global climate goals," added Nacpil.
The AIIB website says the 2020 AIIB Annual Meeting brings together AIIB's Governors and Senior Management in a virtual session to discuss "how to build a more inclusive and resilient tomorrow," in response to the COVID-19 pandemic. Originally planned to be held in-person, the virtual meeting will be the first for AIIB.
"The APMDD letter urges AIIB to make a crucial decision to quit fossil fuels and to prioritize investments in clean energy and climate resilient infrastructure because we are racing against time to avoid a climate catastrophe. We believe such a decision will have far reaching consequences in terms of climate mitigation, as well as sustainable and just recovery for developing countries," said Nacpil.
APMDD cited the 2019 annual emissions gap report of the UN Environment Programme (UNEP), which finds that global emissions must fall by 7.6 percent a year until 2030 to stay within the goal of the Paris agreement of keeping temperature rises within the 1.5C ceiling, the safest level to avoid disastrous consequences, according to scientists.
"Emissions continue to rise because crucial financial institutions, such as AIIB, have yet to go beyond the rhetoric of the Paris goals and continue to invest in coal, oil and gas," the open letter said.
The group called out AIIB's lack of clear strategy on how it plans to achieve its own climate mitigation goals despite pledging in 2017, along with other multilateral development banks, to align its policies and activities with the Paris Agreement.
"A report by Bank Information Center Europe finds that for every $1 the AIIB has invested in renewables, it has invested at least twice as much in fossil fuels. AIIB also finances fossil fuels through the back door: it currently channels 15 percent of its total spending via indirect lending through financial intermediaries, like infrastructure and private equity funds," it said.
APMDD called AIIB "a huge disappointment for a post-Paris financial institution that promotes itself as a leader in clean and green infrastructure finance" based on the following actions:
- The USD 20M investment in the expansion of Shwe Taung Cement Company's plant in Myanmar's Mandalay Region. The expansion involved the investment in a new kiln that aims to increase production capacity from 1,500 to 4,000 tons per day of cement material, which translates to a substantial increase in the volume of coal burned and greenhouse gases emitted.
- The 2016 investment in Summit Power International, a Singaporean holding company which operates 13 power plants in Bangladesh — all of which run on oil and liquefied natural gas.
- The USD 100 million capital investment for India's National Investment and Infrastructure Fund. Groups across India raised concerns over a significant risk associated with the NIIF: its mandate of reviving long-stalled public infrastructure, particularly coal, power, petroleum, railways and road projects.