The Asian Infrastructure Investment Bank (AIIB), a China-backed multilateral development bank (MDB), warns governments against building new fossil fuel power stations during the current global energy crisis, as reported by Reuters on October 27. The AIIB called for heavy-polluting state-owned firms to rapidly make green transitions to align with the global effort to reach net zero carbon emissions. Last October, AIIB announced its commitment to aligning its operation with the objectives of the Paris Agreement by July 1, 2023, following its promise to have 50% of its overall approved financing be climate finance by 2025. However, despite its ambitious commitments, AIIB is currently still investing twice as much in fossil fuels as it does in renewable energy.  

The Covid-19 pandemic caused a rapid drop in energy demand, resulting in a supply-demand imbalance in the energy market. The situation escalated into a global energy crisis following Russia’s invasion of Ukraine. With Russia being one of the largest oil producers in the world, Russia’s invasion of Ukraine threatened the energy supply to Europe and soared energy prices across the globe. Facing shortages and increased prices in oil, gas, and electricity markets, governments may be pressured to open or reopen heavily polluting power stations to increase their energy supplies, which could lead to detrimental and long-lasting environmental harm. Fatih Birol, the Executive Director of the International Energy Agency (IEA), has suggested that governments put more effort into renewable energy transition to meet energy demand instead of bringing in more fossil fuels. 

Sources: 

https://www.reuters.com/business/energy/china-backed-aiib-warns-governments-not-panic-build-fossil-fuel-power-stations-2022-10-27/

https://www.weforum.org/agenda/2022/05/first-global-energy-crisis-how-to-fix-davos-2022/

https://www.iea.org/news/world-energy-outlook-2022-shows-the-global-energy-crisis-can-be-a-historic-turning-point-towards-a-cleaner-and-more-secure-future

https://www.aiib.org/en/news-events/news/2021/AIIB-to-Fully-Align-with-Paris-Agreement-Goals-by-Mid-2023.html

https://www.re-course.org/wp-content/uploads/2021/10/Ten-AIIB-ESS-Essentials-1021-FINAL-v2.pdf