APMDD reaction to new AIIB statement on coal financing
APMDD’s reaction to the statement of AIIB President Jin Liqun at the launch of the AIIB-Amundi Climate Change Framework on September 9, 2020 that the bank will not finance any coal-fired power plants and any project functionally related to coal
11 September 2020
We welcome this new announcement of the AIIB President that the bank “will not finance any coal-fired power plants" and “any project functionally related to coal.”
We hope we will not see a repeat of the disappointment in 2017 when AIIB officials made similar announcements but failed to deliver on them.
In January of 2017, AIIB officials promised to avoid financing coal mines and coal-fired power plants. During the AIIB Annual Meeting in June 2017 in South Korea, Liqun, in his opening address said: “…there are no coal projects in our pipeline, and we will not consider any proposals if we are concerned about their environmental and reputational impact.” Ahead of that meeting, AIIB’s vice president Thierry de Longuemar, speaking in Beijing, said “there are things it won’t finance, like coal-fired power plants.”
In the same year, the AIIB made an equity investment in the International Finance Corporation’s Emerging Asia Fund (EAF), which provided equity financing to support a cement plant expansion project in Myanmar that became controversial because of issues on pollution and land acquisition. It has since made other investments that backed fossil fuels, enabled by its Energy Sector Strategy that lacks a prohibition against fossil fuels.
A report of the Bank Information Center Europe states that after over two and a half years of operation, having made over US$5 billion worth of investments, nearly a third of AIIB investments has backed fossil fuels. “This stands in sharp contrast to its investment in renewables at only just over 10% – and this primarily into large-scale projects. In its energy sector portfolio this translates into a staggering 61% of investments towards fossil fuels, against only 22% for renewables. And this is not counting support for fossil fuels invested indirectly by AIIB through financial intermediaries. In one example, instead of helping Bangladesh to scale up renewable energy, almost half of the AIIB’s total direct investments in this climate-vulnerable country supports fossil fuels, including a new greenfield gas power plant.”
The AIIB’s current policies and practices run counter to its efforts to brand itself as a green bank. We urge the AIIB to revise its Energy Sector Strategy to explicitly exclude coal, oil and gas from its potential investments, phase out of all existing finance and assistance for fossil fuels, direct and indirect, by the end of 2021, and commit to increased support for a just transition away from fossil fuels. This is the concrete outcome that we expect from Jin Liqun’s statement.
There is no more space to further expand fossil fuel production. If we are to meet the climate goals, there should be no further investments on fossil fuels, especially from public finance institutions like the AIIB. We should all be gravely concerned that huge volumes of public money will still be used through public finance institutions to support the production of 120% more oil, gas and coal worldwide by 2030, creating a “production gap” that makes climate goals much harder to reach.
Public finance institutions like the AIIB wield enormous power in ending fossil fuel finance and realizing a just transition to clean energy. They have a key role in rapidly scaling up investments in energy efficiency and renewable energy in order to make progress towards Sustainable Development Goal 7, universal access to affordable, reliable, sustainable and modern energy by 2030.