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
 Outline
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
Modalities
Finance Knowledge Partnership

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
Strategies
►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
•Energy for All – TA for scaling up access to clean energy
for the poor
•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

$2.951
B Clean Energy billion clean energy investments
Program
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
Objectives:
•

• 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
Opportunities for New and Enhanced Operations

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

PP P
P
P T
P
T
Integrated urban transport
P T in Kathmandu, Dhaka,
P
P T
P
P P T Davao, Vientiane, Xian,
T
Yerevan
T
T
Primary bus routes Junction improvements

Tertiary Sa4 bus (neighbour) routes

Demonstration junction
Bus only routes

T
Bus stops and interchanges New traffic lights

Pedestrian routes Area covered by CCTV

Primary pedestrian only area Minor off street parking

P
Pedestrian priority zone Major off street parking

P
PPP developments
Bishnumati Link Road

(including
southern
extension)
 Early Opportunities:
Mainstreaming Climate Change
Railways
• Afghanistan, People’s Republic of
China, Cambodia, Bangladesh,
Ø Afghanistan: Hairatan to Viet Nam, India, Azerbaijan
Mazar-e-Sharif (75km)
Ø PRC: Energy Efficiency and
Safety Enhancement
Investment program
Ø Cambodia: Rehabilitation 600
kms of track

•Road projects – national,

state highway and rural roads
ØCO2 emitted over full life cycle
ØOngoing Study on Reducing
Carbon Emissions from
Transport Projects
•Carbon Footprinting
of Transport Projects
ØImpact Assessment
 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
Consequence
•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;
and
•a resource that must be managed sustainably
Water Financing Program Operation:
(launched in 2006, supported by Water Financing Partnership Facility)

•Doubling ADB’s water investments – over $2 billion

annually during the period 2006-2010
•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
Water
•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
service as any regular customer of a formal utility

•Involvement of civil society in billing and collection

significantly lowers pilferage, and ensures cost
recovery

•Serves as stepping stone to get poor communities

directly connected to piped system
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
•Improved irrigation efficiencies mean better use of scarce
land resources
•Better flood and drought management reduces risk to
poor
•Better managed watersheds allow land to be more
productive
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 REDD+ Support
ADB Re-engaging in forest management…

§ 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 ($60-
80m) 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
• ADB Operations
• Project climate proofing: transport,
water, others… (Solomon
Islands, Timor-Leste, VIE)
• Portfolio Assessment; Climate and Building resilient roads
Disaster Risk Screening Tool in Solomon Islands
• Resilience in ADB Country
Partnership Strategies
 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
• Global Environment Facility (ADB as executing agency)
• 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).
• Asia Accelerated Solar Development Fund (AASDF)
• To be launched soon for rapidly enlarging the solar energy market,
target $500 million
 Leveraging: Clean Energy Funds
Annual ($million) Cumulative ($million)
2009 2007-2009

$888.4
$348.1 CE Investments
CE Investments

$52.4
CEFPF: $28.5
$19.5 CCF-CE: $23.9
CEFPF: $14.1
CCF-CE: $5.4

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
Standard
ADB Modality “Pay-on-
Delivery”

Financin Cash
g 1. 1. 2. 1. 2. Flow
Tech Carbon Carbon
$/€ $/€
Asst Credits Credits

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