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ADB’s Support to Climate, Environment, and Poverty Reduction: Challenges and Opportunities

ADB’s Support to Climate, Environment, and Poverty Reduction: Challenges and Opportunities

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Presentation by Jitendra SHAH, ADB

The Environments of the Poor in the Context of Climate Change and the Green Economy
Making Sustainable Development Inclusive (New Delhi, India: 24-26 November 2010)

This conference is a joint event by ADB and various development partners from donor organizations (ILO, JICA, UNDP/UNEP) research networks (ADBI, EEPSEA, NCAER, SANDEE, TEEB, TERI) and funding facilities and other initiatives (CDIA, GMS-EOC, APCF). In addition, AFD, and DFID and GTZ expressed their interest in participating.
Presentation by Jitendra SHAH, ADB

The Environments of the Poor in the Context of Climate Change and the Green Economy
Making Sustainable Development Inclusive (New Delhi, India: 24-26 November 2010)

This conference is a joint event by ADB and various development partners from donor organizations (ILO, JICA, UNDP/UNEP) research networks (ADBI, EEPSEA, NCAER, SANDEE, TEEB, TERI) and funding facilities and other initiatives (CDIA, GMS-EOC, APCF). In addition, AFD, and DFID and GTZ expressed their interest in participating.

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Published by: ADB Poverty Reduction on Dec 08, 2010
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ADB’s Support to Climate, Environment, and Poverty Reduction: Challenges and Opportunities

The views expressed in this paper/presentation are the views of the author(s) and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors, or the governments they represent. ADB does not guarantee the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented, nor does it make any representation concerning the same.

Jitendra (Jitu) SHAH, Asian Development Bank 24 November 2010

ADB Strategic Programs:
• Strategic, Operational, Knowledge, and External • Five priorities and three modalities • Examples – Energy, Transport, Land Use and Forests, Resilience, and Capacity Development

Challenges: Working across departments, internal and external coordination and funding – where are those billions? Opportunities: New market mechanisms
GEF, Adaptation Fund, Copenhagen Green Fund, CIF – implementation REDD+, CP3 fund, venture capital fund, tech transfer marketplace – implementation, +++

ADB Climate Change Program


Scaling-up Clean Energy


Prior ities

Encouraging Sustainable Transport and Urban Development Managing Land Use and Forests for Carbon Sequestration Promoting Climate-resilient Development Strengthening Policies, Governance and Capacity

Strategic Level
Climate Change Mitigation and Adaptation
• ADF adaptation projects/project components: $49.5M in 2005 to about $1B in 2009 & $1.4B in 2010 • Energy-food-human security / water-energy-food nexus • CC & poverty reduction, adaptation & DRR, improving knowledge base, clean energy agenda • Policy, governance, institutional development/mainstream • Social dimensions

Operational Level
Cascading Climate Change Program
►Strategy 2020 ►Priorities for Action, Adaptation Program ►Climate Change Implementation Plans ►Sector and Thematic Strategies ►Regional and Country Partnership

►Projects and Technical Assistance

ADB Examples: Asia Regional Energy Overview
Energy Consumption, Security and Pollution
•Rapid economic growth - Energy demand increase between 2005 and 2030: 92%. Fossil fuels are central due to low cost. •Major Asian economies are among the global top CO2 and pollution emitters Asia will contribute 45% of CO2 in 2030 – up from 31% in 2007 •Asia is the front line in the fight against climate change. The Energy decisions made in the region will decide if the fight is won or lost.

Catalyzing Rapid Clean Energy Technology Diffusion
•First Asia Solar Energy Forum lower barriers •Quantum Leap in Wind/Small Wind Scale up •Asia Clean Technology Exchange Buyers and sellers •Asia Climate Change and Clean Energy Venture Initiative - equity •Climate Public Private Partnership Fund - investment
vehicle for private equity for the poor

•Energy for All – TA for scaling up access to clean energy
•Carbon Capture and Storage (CCS) •Renewable Energy Certificate (REC) •Regional Policy and Regulatory Dialogues

Clean Energy Activities: Outputs, Outcomes and Impacts (2008-2009)
Inputs Outputs Outcome

58 million tons CO2/yr aba

B Clean Energy Program clean energy investments $2.951 billion 120,095 GWh saved

9,583 MW installed generating capaci

Source: ADB database

Sustainable Transport & Urban Development
Transport in Asia - The Inconvenient Truth Transport is a key driver of development, but …
•Motorization doubling every 5-7 years •Congestion costs 2%-5% of Asian GDP •Road accidents costs 2%-5% of Asian GDP •Energy use ~ 30% of World energy •Fuel security - US$50-150/barrel •CO2 - 23% from transport sector •Local pollution – health problems and cost

Encouraging Sustainable Low-Carbon Transport


• Meet growing developing country demand for sustainable transport • Introduce new investment and advisory activities to scale up ADB's support for sustainable transport

ADB’s Sustainable Transport Initiative
•Scaling-up urban transport – scale-up operations, promote model projects such as BRT and rail MRT •Mainstreaming climate change – model projects for mode shifting and distance shortening •Improving cross-border transport and logistics – more effective transport and trade facilitation •Supporting road safety and social sustainability – scale-up, strengthen approach, and partner with road safety organizations and social development institutions

Opportunities for New and Enhanced Operations

Early Opportunities: Scaling-up Urban Transport
BRT projects in Lanzhou and Pimpri, Pune, Ulaanbaatar Metro Rail projects in Ho Chi Minh, Hanoi, Tbilisi





Integrated urban transport in Kathmandu, Dhaka, Davao, Vientiane, Xian, Yerevan

Primary bus routes Tertiary Sa4 bus (neighbour) routes Bus only routes Bus stops and interchanges Pedestrian routes Primary pedestrian only area Pedestrian priority zone Bishnumati Link Road

Junction improvements Demonstration junction


New traffic lights Area covered by CCTV Minor off street parking Major off street parking PPP developments

(including southern extension)



Early Opportunities: Mainstreaming Climate Change

Ø Afghanistan: Hairatan to Mazar-e-Sharif (75km) Ø PRC: Energy Efficiency and Safety Enhancement Investment program Ø Cambodia: Rehabilitation 600 kms of track

Afghanistan, People’s Republic of China, Cambodia, Bangladesh, Viet Nam, India, Azerbaijan

•Road projects – national,
state highway and rural roads ØCO2 emitted over full life cycle ØOngoing Study on Reducing Carbon Emissions from Transport Projects ØImpact Assessment

•Carbon Footprinting

of Transport Projects

Asian Cities and Climate Change
Cities – central to mitigate climate change
•Consume 85% of energy; emit 75% of GHG; produce 80% of GDP

Asian Cities
•1.1 billion new urbanites over the next 20 years (3% p.a.) •Many Asian mega-cities particularly vulnerable to climate change

•Climate change puts $trillions in economic output and millions of people at risk •Urgent need for GHG reduction (e.g. efficiency gains) and adaptation

ADB’s Response
•Investments in urban sanitation (SW and wastewater)
ØThe Cities Development Initiative for Asia (CDIA) helps cities structure environmentally-sound infrastructure projects for financing and develops their capacity to adapt

ADB’s Water Operations Strategic and Operational Level
Water Policy 2001 promoting water as:

•a service that must be delivered efficiently; •a resource that must be managed sustainably

Water Financing Program Operation:
annually during the period 2006-2010

(launched in 2006, supported by Water Financing Partnership Facility)

•Doubling ADB’s water investments – over $2 billion •Supporting investments with reforms and capacity
development, including regional cooperation

•Seeking to benefit 340 million people

ADB’s Water Operations: Knowledge Work (2010)
•Economics of Sanitation Initiative •Issues and Challenges of Reducing Non-Revenue

•Case Studies on Good Water Management in 8
Asian cities

•Investing in Basin Management in Asia-Pacific •Sanitation Decision Support System
17 regional water knowledge hubs established to date

Targeting the Poor: An Example of Project Intervention
Connecting urban poor communities through “small piped water network”

•Providing poor people with the same standard of
significantly lowers pilferage, and ensures cost recovery directly connected to piped system

service as any regular customer of a formal utility

•Involvement of civil society in billing and collection •Serves as stepping stone to get poor communities

Measuring Water Impacts on Poor
•Opportunities gained through time saved in accessing
clean water

•Availability of safe drinking water and improved sanitation
improves health; fewer sick days translate into higher productivity land resources poor

•Improved irrigation efficiencies mean better use of scarce •Better flood and drought management reduces risk to •Better managed watersheds allow land to be more
The cumulative impacts of these benefits to the poor are significant

Observations on REDD+ Development in Asia & Pacific
§ High REDD+ Potential: Financial/economic,
environmental, socio-cultural, local/global § Wide Engagement & Support: Countries actively engaged, multilateral & bilateral support § Mixed Attentions: National REDD+ policies, institutions, MRVs, governance, sub-national, pilots (at various levels), IPs/communities § Regional Exchange: Interactions & sub-regional cooperation and communication could be improved, lessons sharing and transboundary cooperation

Very High REDD+ Potential

•Southeast Asia: 40% of global C sequestration potential •Top 10 countries $2.8b from 50% reduction by 2020 if $5/t

Southeast Asian Land Use & Forests

25% 75%

Shrinking Forests of Kalimantan

Source: UNEP/GRID-Arendal, 2007

ADB Re-engaging in forest management…

ADB REDD+ Support

§ Technical assistance, networking, learning § Five REDD+/Land Use Pilots
§ § § § Heart of Borneo Program (Indonesia) Mekong Basin: Lao PDR, Viet Nam, Cambodia China: Jiangxi, and 3 Western Provinces Philippines: Forests in River Basin Management

§ Forest Investment Program: Indonesia ($6080m) and Lao PDR ($20-40m) § Partnerships to widen access to expertise § Knowledge development and dissemination

Promote Climate Resilience Development

Development Planning

• • •

PPCR: BAN, CAM, NEP, TAJ, Pacific (PNG, Samoa, Tonga) LAO, Palau, SRI, IND, Coral Triangle Initiative Downscaled analysis: Southeast Asia, HCMC, Mekong, Khulna Project climate proofing: transport, water, others… (Solomon Islands, Timor-Leste, VIE) Portfolio Assessment; Climate and Disaster Risk Screening Tool Resilience in ADB Country Partnership Strategies
Building resilient roads in Solomon Islands

ADB Operations

• • •

Strengthening Policies, Governance, and Capacity

• BHU: Capacity Building of the National Environment Commission in Climate Change • PRC: Carbon Capture and Sequestration Strategic Analysis and Capacity Strengthening • NEP: Strengthening Capacity for Managing Climate Change and the Environment • Pacific: Strengthening the Capacity of Pacific developing member countries to respond to climate change • SRI: Strengthening Capacity for Climate Change Adaptation

Assistance Modalities

Financing: Concessional Resources
• ADB’s Clean Energy Financing Partnership Facility (CEFPF)
Pledges: approx. $103m; target $250m • ADB’s Climate Change Fund (CCF): for innovation/incubation

$40m (depleted) + $10m new replenishment; open for contributions • MDBs’ Climate Investment Funds (ADB as implementing agency)
• •

Pledges: $6.1B About $2b for climate change under GEF-5 ($1.4 for mitigation from the GEF Trust Fund and an estimated $600m for adaptation from the LDCF/SCCF). To be launched soon for rapidly enlarging the solar energy market, target $500 million

• Global Environment Facility (ADB as executing agency)

• Asia Accelerated Solar Development Fund (AASDF)

Leveraging: Clean Energy Funds
Annual ($million) 2009 Cumulative ($million) 2007-2009

CE Investments

CE Investments


CEFPF: $14.1 CCF-CE: $5.4

CEFPF: $28.5 CCF-CE: $23.9

CE = clean energy; CEFPF = Clean Energy Financing Partnership Facility; CCF-CE = Climate Change Fund – Clean Energy Component

Private Sector Financing

Direct Project Financing
• IND: Wind Power (local currency) • THA: Biomass Power (loan + guarantee) • THA: Solar Power (local currency) • PRC: Municipal District Energy (local currency + A&B loan) • PRC: Energy Efficiency Multi-Project Financing Program (partial credit guarantee)

Indirect Investments (Equity)
• IND: PPP for Renewable Energy Development (JV - 4) • $20m seed capital for 5 clean energy private equity funds • Call for Climate Change and Clean Energy Technology “Climatech” Venture Capital Funds

Carbon Financing
ADB Modality
Financin g

Standard “Pay-onDelivery”
2. Carbon Credits 1. Carbon Credits 2. $/€

1. $/€

1. Tech Asst

Cash Flow

Project phase: Development

Commercial Operation

Year:   0       1       2       3       4       5       6       7       8

“Make the carbon market work for Development Finance”

Challenges moving ahead
• What can be done to better channel private capital towards climate change solutions? • How can we spur innovation, transfer, and diffusion of technology for low-carbon and climate-resilient growth? • How can we overcome emerging developing country capacity constraints to absorbing climate financing and to implementing their own climate change actions? • How can countries cooperate to enhance energy security? • How do we address rapid deforestation and loss of biodiversity? • How can economies prepare for drastic changes in climate patterns and extreme weather events and particularly their impacts on water availability and food production?

“On the Fire” at ADB
• • • • • • • •
Climate PPP Fund with pension funds and sovereign wealth funds Venture capital funds for mitigation and adaptation technologies Low-Carbon Technology Marketplace (in line with UNFCCC Climate Technology Center proposal) Technical assistance program to enable “nationally appropriate” responses to climate change Major initiatives on solar and wind power Low-Carbon Transport Partnership and Fuel Security Partnership REDD-plus pilot carbon finance scheme for Asia-Pacific Climate Resilience Initiative to support adaptation measures in key sectors and help build a climate resilient Asia

Example: Mobilizing Private Capital for Technology Innovation, Transfer and Diffusion
• Asia Clean Technology Exchange will establish a marketplace that will bring together commercial buyers and sellers of low carbon technologies and assist them with transactions • Asia Climate Change and Clean Energy (AC3E) Venture Capital Initiative will provide early stage support to companies Ø Equity infusion of up to $100 million across 5-7 VC funds Ø Technical assistance (TA) to provide supplementary technological advice to VC funds: to be funded by development institutions, donor governments, and philanthropic organizations • Climate Public-Private Partnership Fund will mobilize private equity investment at scale in low carbon and resource efficient infrastructure in Asia

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