AIIB president says he is not going to finance ‘any projects that are functionally related to coal’, however has but to mirror that within the Beijing-based bank’s written insurance policies The Asian Infrastructure Funding Bank (AIIB) is promising to finish all coal financing however has but to jot down this into coverage.
The Beijing-based improvement bank describes its mission as being “lean, clean and green”. Its coverage, then again, continues to help investments in fossil fuels that “use commercially available least-carbon technology”, together with coal.
AIIB president Jin Liqun prompt earlier this week this might quickly change.
“Let me be very clear: I am not going to finance any coal-fired power plants… AIIB will not finance any projects that are functionally related to coal – for example roads leading to the plant or transmission lines serving coal power,” he informed a web based convention.
An AIIB spokeswoman mentioned the bank was “committed to implementing the sentiments expressed by President Jin”.
“AIIB has no coal-fired power generation in our pipeline and we do not think it makes sense to invest in coal or coal-related projects in our direct finance or capital markets portfolios,” she mentioned.
The remarks come because the AIIB opens a session on updates to its environmental and social framework, with no point out of coal. Observers count on local weather change to function extra prominently within the bank’s first company technique, due for publication later this 12 months.
Sonia Dunlop, who leads assume tank E3G’s work on worldwide monetary establishments, informed Local weather House Information, “it would send a huge signal” to traders if the bank enshrined the coal ban in its company technique, placing stress on different multilateral improvement banks to observe go well with.
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There was pushback towards a coal finance ban from some shareholders, Petra Kjell, campaigns supervisor at Recourse, which advocates for simply and sustainable improvement finance, informed CHN.
“I doubt it will go into writing. It is still politically too controversial. But [ending coal financing] continues to be something President Jin says in his personal capacity,” she mentioned.
“A statement is great but climate can’t be saved with words. It needs to be translated into a strong public policy,” added Lucie Pinson, director of Reclaim Finance, which campaigns for the monetary sector to help a transition to scrub vitality.
Established in 2016 with China as the biggest shareholder, the AIIB goals to align to the objectives of the Paris Settlement. Beneath the pact, international locations have vowed to chop their emissions and collectively restrict international warming “well below 2C”.
In 2019, practically 40% of the bank’s whole financing went to local weather finance. It plans to set a goal to speculate 50% of its annual direct financing into initiatives linked to local weather change mitigation by 2025.
However it has not formally dominated out finance to coal initiatives. The AIIB’s vitality sector technique states that “carbon efficient oil and coal-fired power plants would be considered” for investments “if they replace existing less efficient capacity… or if no viable or affordable alternative exists in specific cases”.
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President Jin, who was re-elected in July for a second five-year time period beginning January 2021, beforehand mentioned in 2017 “there are no coal projects in our pipeline”. Then the bank backed coal-fired cement works in Myanmar by way of a monetary middleman.
Pinson, of ReclaimFinance, mentioned any AIIB coal coverage would wish to finish all direct and oblique help to coal, together with by way of monetary intermediaries.
“Stopping direct financing to new coal projects but financing them through the backdoor would be blatant hypocrisy,” she mentioned, including that Chinese language banks are among the many greatest underwriters of firms planning new coal vegetation.
Moreover coal, the AIIB invests greater than twice as a lot in oil and gasoline as in renewable vitality, in line with Recourse, with gasoline seen as a necessary a part of the vitality transition.
Banning coal lending “should be the first step towards saying we are not going to focus on fossil fuels at all,” mentioned Dunlop. Final 12 months, the European Funding Bank prolonged its lending ban from coal to all unabated oil and gasoline initiatives.
“The AIIB has the opportunity to lead on climate change if it wanted to,” Dunlop added, saying rivalry between the AIIB and the Asian Improvement Bank (ADB) may spur a race to the highest. The ADB has additionally mentioned it was staying away from coal, however has but to mirror that in its decade-old vitality coverage, which is due for overview in 2021.
For Michael Westphal, a senior affiliate on Sustainable Finance on the World Sources Institute, a sturdy AIIB coverage on vitality lending may put stress on China to cease funding coal vegetation by way of its “belt and road” abroad funding programme.