The Asian Development Bank (ADB) will increase its climate financing goals by USD20bn to a new target of USD100bn for the 2019-2030 period, as reported by Reuters on October 12. The USD20bn added to the goal will be directed to developing low-carbon energy sources, climate adaptation projects, and climate-related private sector projects for developing countries in Asia. Of the total amount stated in the new goal, USD66bn will be invested in climate mitigation, including new energy storage, energy efficiency, and low-carbon transportation. The remaining USD34bn will be channeled towards climate adaptation in agriculture, water, and urban environments.
ADB announced the new target during a meeting to mobilize climate financing in line with the Paris Agreement between US Treasury Secretary Janet Yellen and other multilateral development banks such as the World Bank. On top of the USD100bn goal, ADB aims to expand private sector operations by improving operational efficiencies. The expansion is supported by a recovering market demand, new technologies and innovation in climate financing, and new areas of business for private sector climate operations. ADB will use USD12bn from its own balance sheet for the expansion as well as up to USD30bn in anticipated private investments.
In addition, ADB disclosed plans to launch an initiative called the Energy Transition Mechanism (ETM) at the upcoming COP26 climate conference. The ETM aims to buy up coal-fired power plants in Asia and retire them within 15 years, as an initiative to accelerate the transition to clean energy. The development bank has been working on its concept with financial firms such as UK insurance company Prudential [PRU:LN], Citi [C:US], HSBC [HSBC:US], and BlackRock Real Assets. The ETM is not included in ADB’s overall climate financing goals, since funds for the project will come from private investors and philanthropic sources.