Clean energy financing at Asian Development Bank

Presenting data from Asian Development Bank (ADB), this paper attempts to examine the bank's energy for development portfolio within a 12-year period beginning in 1997, the year when the Kyoto Protocol was adopted. This paper seeks to understand the implications of this particular assistance to climate change mitigation in terms of filling the gaps in providing resources for energy-related projects. With more than US $12 billion development assistance to support the energy sector in the last 12 years, ADB was able to mobilize substantial support from 2005 onwards. The paper also shows that annual energy assistance was virtually stagnant and even lacking before 2005. Evidence suggests that some efforts are being made to fill the resource gap and to mitigate climate change especially in 2008. While analysis suggests that there has been a substantial increase in financing to lower greenhouse gas emitting energy projects, the shift tends to be fragile. ADB still favors financing large profitable projects and concentrates its portfolio mostly to selected regions and countries. For ADB to provide significant contribution to climate change mitigation, several challenges remain to be met in the future from increasing funding to meet demands for increasing number of renewable and efficiency projects to expanding assistance especially in underserved countries and regions.

Research highlights
► Energy sector funding at ADB continues to evolve. Although the increasing trend on clean energy support would have been driven by factors other than climate change, there apparently has been at least some recognition that cleaner energy technology – both renewable and efficient – need to be promoted and diffused.
► Demand for energy and financing in Asia and the Pacific is expected to increase. Therefore, the availability of funds will continue to be critical for energy-related projects. Availability of investment to meet this need is therefore compelling.
► Assistance geared to support capacity building, policy development and policy reform needs to be continuously increased.
► Support for renewable and efficiency projects in countries and regions that previously received less attention from ADB needs to be shored up to increase the visibility, reach and effectiveness.