IN Brief

ADB and Clean Energy

Through ADB is improving its Energy its Policy, system ADB for is handling committed complaints to promoting from project-affected ways to increase people access to clean and affordable energy in its developing member countries, particularly to the poor
Rapid economic growth in the past 2 decades has brought prosperity to millions of people across Asia and the Pacific, but it has come at an environmental cost and climate change concerns. The Asian Development Bank (ADB) is seeking ways to address this by promoting the development of clean energy resources, and supporting measures for cost-effective renewable energy and energy efficiency technologies. Energy use in Asia and the Pacific, which is dominated by fossil fuels, is fueled by rapid economic growth. Energy consumption has grown 230% over the last 30 years. In 2003, Asias total primary energy supply (TPES) was 2,655 million tons of oil equivalent (MTOE), representing 25% of world total energy supply. Ten years ago, it was only 13.3% of the worlds total. This trend is neither economically nor environmentally sustainable. significant barriers to mainstreaming the application of clean energy technologies and services. These include the perceived advantages of capital investment in conventional (mainly fossil fuel-based) energy sources; monopolistic energy markets; smaller project sizes resulting in higher transaction costs of project preparation; continued regimes of low tariffs and subsidies; and a lack of institutional capacities. ADB is systematically studying these barriers to focus its interventions primarily on developing an enabling environmentpolicy, regulatory, tariff, and institutionaland to facilitate preparation and implementation of more clean energy projects. ADB is also working toward enhancing awareness of renewable energy and energy efficiency opportunities through country-based capacity-building initiatives. As part of its committed efforts in the area of clean energy, ADB has brought together funds from the Governments of Canada, Denmark, Finland, and the Netherlands under its Renewable Energy, Energy Efficiency, and Climate Change (REACH) Program to support capacity building, institutional development, and project development activities. In July 2005, ADB established the Energy Efficiency Initiative with the aim of compiling and analyzing existing knowledge and experience on energy efficiency policies,

Energy use in Asia and the Pacific, which is dominated by fossil fuels, is fueled by rapid economic growth. Energy consumption has grown 230% over the last 30 years

Renewable and Efficient Energy

ADBs Energy Policy, approved in 1995, emphasizes the acceleration of the widespread application of renewable energy and energy efficiency in its developing member countries (DMCs). This focus was strengthened in ADBs Energy Policy Review of 2000. Although many of ADBs DMCs have established country-level clean energy legislation and set targets, there are

The Carbon Market Initiative... is another concrete effort to deepen ADBs commitment to clean enery and climate change mitigation

and formulating a clean energy investment strategy with an indicative lending target of $1 billion over the next few years. The Carbon Market Initiative (CMI), approved by the Board in November 2006, is another concrete effort to deepen ADBs commitment to clean energy and climate change mitigation. It provides financial and technical support to developers and sponsors of projects with greenhouse gas mitigation benefits that can quality as an eligible Clean Development Mechanism project under the Kyoto Protocol. As part of the CMI, the Asia Pacific Carbon Fund will provide up-front funding against the purchase of an estimated 2550% of future carbon credits expected from projects. In addition, the initiative will provide grantbased technical support for preparation and implementation of eligible projects, as well as marketing support for additional carbon credits. Created as a mechanism to lower the up-front technical and financial barriers facing clean energy projects in developing countries while helping developed countries meet their commitments under the Kyoto Protocol, the CMI can be an effective tool for addressing energy security and climate changetwo of the most pressing global issues today.

of solar and wind power to 10% of the PRCs total consumption by 2010. Likewise, the Government of Pakistan created the Alternative Energy Development Board to facilitate, promote, and encourage development of renewable energy in Pakistan, with a mission to introduce alternative/renewable energy at an accelerated rate to achieve 10% share of renewable energy in the energy mix of the country. Examples of loan projects that have already been mainstreamed into the energy sector lending portfolio in recent years include the $161 million Renewable Energy Development Project in Indonesia, approved in 2002; and the $35 million Gansu Clean Energy Development Project in the PRC, approved in 2003. In addition, ADBs Private Sector Operations Department has also made equity investments in several fund targeted on clean energy, including the China Environment Fund ($10 million) in 2002 and the FE Clean Energy Sub-Fund ($20 million in 2003).

Energy for All

ADB has played an important role in supporting its developing member countries (DMCs) to increase access to modern energy services. It acknowledges the need to develop new strategic approaches to help DMCs scale up the successful interventions to increase access to modern energy services for the poor. Of special note is the need for ADB to catalyze local financing institutions and the private sector to participate in the delivery of modern forms of energy. Energy for All will specifically look at modalities, financial instruments, and mechanisms needed to catalyze and mobilize financial and private sector entities into this area. In addition, awareness needs to be raised and capacity built within DMCs so that the issue of access to energy can be part of the dialogue and country programs of the ADB energy portfolio with DMCs. The technical assistance will help ADB build on its expertise and respond to the requests from its DMCs to implement energy access projects.

Energy Strategy
In May 2006, ADB began to review its Energy Policy, with the aim to base its energy strategy on three key pillars: (i) meeting the energy demand in a sustainable way, (ii) energy access for all, and (iii) energy sector reforms and governance. ADB is committed to promoting development of clean energy resources and supporting the implementation of measures for the rapid uptake of costeffective renewable energy technologies. Some countries have committed to pursue specific in encouraging the development of renewable energy. The Peoples Republic of China (PRC) has passed a renewable energy law that is intended to increase production of energy from sustainable sources. The law seeks to increase the usage

Contact Information
Asian Development Bank 6 ADB Avenue Mandaluyong City 1550Metro Manila Philippines Tel +63 2 632 4444 Fax +63 2 636 2444 cleanenergy@adb.org www.adb.org/cleanenergy

In this publication, $ refers to US dollars.

April 2007