Q&A: ADB to boost climate investment
- Asian Development Bank (ADB) commits US$80 billion by 2030 to tackle climate change
- ADB will focus on railways and waterways rather than roads in the key transport sector
- Mitigation to get priority over adaptation given Asia Pacific’s rapidly growing emissions
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ADB’s new US$80 billion pledge favours climate investments in vulnerable countries.
[MANILA] Woochong Um, director-general of sustainable development and climate change, Asian Development Bank (ADB), Manila, says that the bank intends to multiply the impact of its own financing by luring in greater private sector investment in climate solutions for its vulnerable member countries.
“One of the things I’ve learned about adaptation myself is that measuring it by how much you spend is maybe not the right approach. Some of the best adaptation projects don’t cost more money as long as you develop and design the project properly”
Woochong Um, Asian Development Bank
In this interview with SciDev.Net, Um, who is attending the annual Climate Week NYC (24-30 September) in New York, shares his thoughts on the Japan-led bank’s ambitious climate target for 2030, its expanded presence in the Pacific and the lessons learned from its climate investments thus far.
ADB recently announced a new plan to commit US$80 billion by 2030 to tackle climate change and ensure that 75 per cent of its overall investments will be climate relevant in that period. How do you plan to achieve these ambitious goals?
To achieve them requires collaboration with everybody. The public sector and the countries themselves really have to want to do this. We are trying to help developing countries with their nationally determined contributions (national pledges to reduce emissions and increase adaptive capacity to climate change, which were created to help achieve the 2015 Paris Agreement) to set the foundation for this work. ADB obviously cannot do everything by itself. We are actively working with other multilateral development banks, who themselves, are trying to collectively work with private sector investors to get the trillions of dollars channelled into some of our countries.
In ADB’s strategy 2030, crowding in private sector investment is our big concern. How do we make Asia and the Pacific more attractive for commercial financiers because that’s where the big money is? And when you talk to a lot of the private sector investors they mention investing in emerging markets. The problem is that when you ask them which countries, they point to (relatively richer countries) like Korea and Taiwan, not countries like Afghanistan and the Pacific small island developing states or SIDS (where it is most difficult to steer much-needed private sector investment). That’s where we can play a significant role in creating the enabling environment, not just from the policy side, but more importantly, with ADB getting involved in the investments themselves, we reduce the overall risk for commercial investors. We hope to do more of this moving forward. We feel nervous about the speed in which the world is progressing with climate action. We need to move faster.
What are some of the key areas that ADB is targeting for its climate investment?
Transport is a key area where we expect, in the next 12 years, to make a huge difference. Currently, the contribution of greenhouse gas (GhG) emissions from the transport sector is not as big as energy. It’s something like 27 per cent, but overall emissions in this sector in the next 15 years or so will grow exponentially based on the development of highways and roads. So, we need to look at how we can help developing countries in the region become economically competitive. By that I mean enabling people to have access to transport to get to work and being able to move their goods without putting too much stress on the environment and trying to limit the increase in GhG emissions. This means that we have to help countries adopt more long-distance railways and inland waterways, not just rely on road infrastructure in both rural and urban settings.
ADB has already surpassed its current target of US$4 billion by 2020 for climate change mitigation spending, which namely has to do with increasing renewable energy and other initiatives that aim to reduce GhG emissions. How do you plan on building upon these achievements in your new strategy?
While it’s intuitively easier to envision what we’re going to do about increasing renewable energy in the future, the rapidly sinking costs of the technology means that there is less need for us to step in with loans that have a low-interest, long-term payback. So, we will have to double down on our efforts to maintain a robust project pipeline in this space. We will also have to scale up in other sectors like waste management. Biodegradable wastes generate GhG emissions, such as methane, which has nearly 25 times the global warming potential of carbon dioxide over a 100-year period. It’s a big issue and so is the growing urban footprint. In fact, urban footprint or as we like to call it ‘liveable cities’ is one of the seven priority areas under our new corporate strategy 2030. It means providing an infrastructure that is low carbon and climate resilient, but which is also inclusive and contributes to economic growth. We need to take a multi-pronged approach.
In contrast to mitigation, ADB is struggling to meet its current spending goals for climate change adaptation to help developing countries build resilience to global warming. While adaptation is critically needed, it remains chronically underfunded throughout the developing world. What lessons have you learned that you think might be useful for organisations grappling with adaptation financing?
One of the things I’ve learned about adaptation myself is that measuring it by how much you spend is maybe not the right approach. Some of the best adaptation projects don’t cost more money as long as you develop and design the project properly. You need to pay careful attention to the planning stage. So, if you’re building road infrastructure make sure that you build it in the right location and ensure that it can withstand sea-level rise. Things like that. Of course, there are cases where we do need to spend money to make infrastructure more resilient. Educating developing country governments, citizens and the private sector about the features and benefits of climate change adaptation is another important step. It doesn’t require a lot of money but has wide-ranging impact. Moving forward, we need to discuss how adaptation will feature into our new climate investment target. We foresaw these challenges and that’s also why we have both targets, the US$80 billion goal and the 75 per cent target. I expect, and I could be wrong, but a big part of the US$80 billion will go towards mitigation. For adaptation we’ll invest wherever it is needed in order to safeguard livelihoods and infrastructure.
In terms of our overall lending, the Pacific is not a big investment destination, but we do have 14 member countries over there, each with its own set of opportunities and challenges. We will continue to do what we can to support them. They’re all vulnerable in terms of climate impact and we need to make sure that they’re not left behind. Our strategy 2030 talks about building resilience and sustainability. In the Pacific, inclusiveness and resilience are very important to achieving sustainable development and to help achieve prosperity. In an overall sense, we are trying to expand climate and disaster risk related support everywhere, not just the Pacific, but in Central and West Asia and in other places as well.
This piece was produced by SciDev.Net’s Asia & Pacific desk.