Towards a swift and just end to coal:
A statement of civil society and communities in Asia-Pacific urging the
Asian Development Bank not to gamble with our climate plight
with a premature coal buy-out scheme
November 1, 2021
Beginning November 1, global leaders are coming together in what will be a most critical conversation for the climate at the 26th Conference of Parties in the United Kingdom. As announced by the Asian Development Bank (ADB), they will be co-hosting an event on November 3rd in Glasgow with the Governments of the Philippines and Indonesia to launch the Energy Transition Mechanism (ETM) partnership. The ETM proposes the early closure of operating coal-fired power plants in Asia by buying them out from current operators, starting with three pilot countries: the Philippines, Indonesia, and Vietnam. The intention of such an announcement is reportedly for ADB and its partners to seek “finance and other commitments” for the mechanism.
We are in agreement with ADB that the communities across the Philippines, Indonesia, Vietnam, and all other countries in Asia and around the world must immediately stop being subjected to harms inflicted by coal-fired power. This initiative to assist borrowing member countries to move away from coal is a step in the right direction for ADB in beginning to take account of the loss, harm, and damage it has wreaked against vulnerable and fossil fuel-affected peoples after decades of supplying vast amounts of financing to destructive energy projects. We also agree that existing coal-fired power plants must stop spewing poison into our atmosphere at the soonest possible time, in a manner that properly accounts for the involvement of and implications to local communities and the environment, energy rate payers, and state, commercial, and other stakeholders.
There is, however, currently a worrying lack of granular information on the proposed mechanism, and many questions which remain unanswered and under-evaluated on its capacity to assist DMCs in raising their climate ambitions, shorten rather than prolong the lifespan of coal facilities, provide a leverage for a transition to renewables, and protect end-users from exposure to increased costs of power. Civil society and community stakeholders have also had little opportunity to consult the details of the ETM, seek clarity, and provide input. An announcement at COP risks making the ETM as it stands a "fait accompli" in the eyes of policy makers, the world climate community, private investors and players, and other stakeholders who are expected to play a critical role in or be affected by the mechanism.
We, the undersigned civil society groups, communities, and advocates for climate justice and action, issue this statement to demand that ADB forego its plan to announce the ETM at COP 26. We urge ADB not to gamble with our lives, the realities of the climate crisis at hand, or the possibility of ending coal in a swift, just, and genuinely transformative manner with a premature buy-out scheme that remains shrouded in uncertainty.
We present some of our most pressing concerns and questions on the ETM:
There remains no clarity as to the basis of an upper limit of 15 years nominated for coal-fired power plants (CFPPs) to keep operating under the proposed mechanism, and on how the ETM would avoid creating incentives for operators of older CFPPs to extend their planned lifespan in the expectation of receiving finance or for operators of proposed CFPPs to continue with their projects knowing that the risks of stranding assets and potential losses will be mitigated by a buy-out scheme. A 15-year winding down period means exposing the power sector of pilot countries to 15 more years of unreliable, inefficient, and polluting coal-fired power, especially as details are still wanting on how ADB and its partners intend to ensure that closures are genuinely and significantly earlier than they would otherwise be. In this 15-year period, coal facilities allowed a maximum lifespan may also become outcompeted by cheaper renewable energy sources, which would then fail to be fully tapped.
While the mechanism’s alleged purpose is to “remove coal plants that are so dominant in [grids of Asian countries selected as pilot locations to] unlock significant scale-up of renewables, storage,” and others, the ETM, as it stands, provides no assurance that capacities lost to early retirement of coal plants will be replaced by renewable energy sources. ADB’s expressed support to fossil gas as affirmed in its recently approved energy policy, despite latest climate science clearly dictating a need to put a swift end to all fossil fuel plants across the world, also casts doubt that the renewable energy sector will be the one to benefit fully from the proposed model phasing coal out. In fact, there are no assurances in place to avoid a situation in which the ETM would serve as a bridge not to truly clean energy from renewables, but simply to a future powered by a different, yet similarly, destructive fossil fuel in the form of gas.
Buying out these coal plants would absolve CFPP companies from internalising the negative externalities they create, especially in countries with weak regulatory mechanisms to hold companies accountable for social, environmental, and climate impacts. CFPP companies are instead assured of financial payment from the sale of coal facilities, many of which have already profited greatly at the cost of the health of host communities and the environment for decades.
Involvement or potential involvement of coal financiers and developers in the scheme raises serious questions about the genuine intentions of actors engaging in the ETM, in terms of hastening a coal phase-out in the broader national and regional contexts. Financial institutions the ADB is reportedly working with in shaping and realizing the coal buy-out scheme include Citi, HSBC, Blackrock, and Prudential. As such, the bank is engaging entities that are still funding, directly or indirectly, or are proposing to develop expanded coal-fired power plant capacities at other sites elsewhere – regionally and/or globally. The ETM also has no expressed means of barring or restricting participation from any other such entity or imposing sanctions on actors that fail to commit to a coal exit elsewhere. The glaring question thus remains as to whether the ETM will effectively support the expansion of coal-fired power generation, even as its goal is to reduce it.
At a time when prices of fossil fuels in Asia, Europe, and other parts of the globe are reaching record highs due to a global energy crunch, the ADB must provide assurances that the ETM will not force electricity end-users to shoulder additional costs of keeping CFPPs running—whether through maintenance and fuel supply, or excessive compensation to CFPP operators. As of yet, the ADB has been unable to address this concern, given that many candidate facilities are covered by confidential or opaque power purchase agreements and protected from market-based pricing pressures. Renewable energy and storage alternatives, meanwhile, are rapidly developing.
Communities and civil society and people’s organizations have had little opportunity to engage the ADB’s processes of formulating the ETM, and any form by which it will be announced is barely representative of their unique concerns, challenges, and needs in accessing sustainable energy while moving away from coal. Disclosures on the ETM so far also fail to sufficiently address how it plans to create safeguards for local communities from the continued air pollution and other health and environmental harms of keeping the plants open for another 15 years.
The ADB recognises and acknowledges constraints on the ETM, but has yet to seriously address them. In its Technical Assistance Concept Paper, for example, the ADB notes that barriers to increasing the proportion and capacity of clean energy in the region have multiple causes, including tariffs, business models, and grid design. It refers to “inadequate sector governance and transparency” reflected in “limited public disclosure of the terms and conditions of power purchase agreements owing to the region’s preference for negotiated bilateral agreements rather than reverse auctions.” It also notes that this has led to “information asymmetry, conflicts of interest, high transaction costs, noncompetitive pricing and often poor quality of service.” Many of these constraints would likely hinder the ability of the ETM, in the form it has so far been described, to benefit communities and meet climate constraints.
In a few correspondences and discussions that some of the undersigned civil society organizations have had with representatives of ADB, the Bank itself recognizes that its analyses of the technical feasibility of removing CFPPs from the grid are far from completed - with a draft of the fund structure itself not due until June 2022 - and that broader consultation efforts with stakeholders have yet to be pursued. And while civil society organisations and other stakeholders have not had sufficient opportunity to scrutinise details, far more detailed discussions meanwhile appear to have been afforded to private investors and even media.
In the face of these concerns, we call on the ADB and its partners to delay plans to begin seeking “finance and other commitments” at the upcoming COP. It is only right that the ADB, a Bank mired with a legacy of promoting dirty energy resulting in the suffering of communities from pollution and an intensifying climate crisis, takes the lead in consigning coal to history. But it must take this challenge head-on, in line with all international human rights conventions and agreements, and in a manner that is transparent, genuinely transformative, aligned to climate imperatives, prioritizing a swift and just end to coal, along with access for communities to clean, affordable, and sustainable energy.
SIGNED,
NGO Forum on ADB, Regional
Center for Energy, Ecology, and Development (CEED), Philippines
350.org Asia
350 Pilipinas, Philippines
Aksi! for Gender, Social and Ecological Justice, Indonesia
ALTSEAN-Burma, Myanmar
Alyansa Tigil Mina (ATM), Philippines
Asian Peoples Movement on Debt and Development (APMDD), Regional
Auriga, Indonesia
Bukluran ng Manggagawang Pilipino (BMP), Philippines
Bukluran ng Manggagawang Pilipino: Southern Tagalog, Philippines
Catholic Bishops Conference of the Philippines National Secretariat for Social Action (CBCP-NASSA) - Caritas Philippines, Philippines
Center for Renewable Energy and Sustainable Technology (CREST), Philippines
Coastal Livelihood and Environmental Action Network (CLEAN), Bangladesh
Community Resource Centre Foundation, Thailand
Concerned Citizens of Sta. Cruz, Zambales (CCOS), Philippines
Convergence of Initiatives for Environmental Justice,Inc. (CIEJ), Philippines
Diocese of San Carlos, Negros Occidental, Philippines
EcoWaste Coalition, Philippines
Environment and Social Development Organization (ESDO), Bangladesh
Environmental Legal Assistance Center (ELAC), Philippines
Episcopal Commission on Indigenous Peoples (ECIP) - National Secretariat, Philippines
Fellowship for the Care of Creation Association Inc. (FCCAI), Philippines
Freedom from Debt Coalition, Philippines
Fresh Eyes, United Kingdom
Friends of the Earth, US
Friends of the Earth, Japan
Gender Action, International
Greenpeace Indonesia, Indonesia
GrowthWatch, India
Health Care Without Harm, Philippines
In Defense of Human Rights and Dignity Movement (iDEFEND), Philippines
Initiative for Right View, Bangladesh
Indian Social Action Forum (INSAF), India
Indonesian Center for Environmental Law, Indonesia
Jamaa Resource Initiatives, Kenya
Justice, Peace and Integrity of Creation Commission - Association of Major Religious Superiors in the Philippines (JPICC-AMRSP), Philippines
Kaakbay Atimonan, Philippines
Kanopi Hijau Indonesia, Indonesia/Bengkulu
Karavali Karnataka Janabhivriddhi Vedike (KKJV)
Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML), Philippines
Laudato Si' Movement Pilipinas, Philippines
Lay Empowerment for Transparency and Principled Politics (LET-PP), Philippines
Living Laudato Si’ Philippines, Philippines
Mekong Watch, Japan
Mindoro Greens, Philippines
Missionary Sisters of St. Columban, Philippines
PALAG Mindanao, Philippines
Palawan Alliance for Clean Energy (PACE), Philippines
Partido Lakas ng Masa (PLM), Philippines
Prelature of Infanta-Community Organization of the Philippines, Inc. (PI-COPI), Philippines
REpower Negros, Philippines
SaLika Agriculture Cooperative in Naujan, Mindoro, Philippines
Save Sual Movement, Philippines
SEARICE, Philippines
Social Action Center of the Diocese of Tandag, Philippines
Solidaritas Perempuan, Indonesia
Tanggol Kalikasan, Philippines
Trend Asia, Indonesia
Vietnam River Network, Vietnam
WALHI West Java, Indonesia
Yayasan Srikandi Lestari, Indonesia
YES Mindoro, Philippines
Youth Group on Protection of Environment, Tajikistan
Zambales Lingap Kalikasan (ZALIKA), Philippines
To:
Masatsugu Asakawa, President of the ADB; Ahmed M. Saeed, Vice President of the ADB;
Pradeep Tharakan, Principal Climate Change Specialist, Southeast Asia Department, ADB;
Robert Guild, Chief Sector Officer, Sustainable Development And Climate Change Department, ADB;
Priyantha D.C. Wijayatunga, Chief of Energy Sector Group, ADB;
Toru Kubo, Director, Energy Division, Southeast Asia Department, ADB;
David Elzinga, Senior Energy Specialist (Climate Change), Southeast Asia Department, ADB; Chris Morris, NGO and Civil Society Centre, ADB
All ADB Executive Board of Directors
All ADB Alternate Executive Board of Directors
Cc:
Ministry of Finance of the Republic of Indonesia;
Department of Finance of the Philippine Republic,
Ministry of Foreign Affairs of Denmark;
Ministry of Finance of Japan; HM Treasury (UK);
U.S. Department of the Treasury, Bezos Earth Fund;
Climate Investment Funds (CIF);
The Rockefeller Foundation;
University of Tokyo - Center for Global Commons;
Prudential Insurance Growth Markets;
HSBC/Sustainable Markets Initiative Financial Services Task Force;
UNSE4ALL & other ETM sponsors and supporters
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