Asian Infrastructure Investment Bank

Fossil fuel exclusion policies

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

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Paris alignmentReasoning
Unaligned No formal coal exclusion policy. Lacks downstream oil and gas policies.
 Alignment and reasoning
Coal policiesNo coal exclusion policy, but AIIB states to have no coal projects in its investment pipeline.
Upstream oil and gas policiesOil and gas extraction permitted but unlikely to be financed as it is considered ‘higher risk’. Gas considered ‘part of transition’.
Downstream oil and gas policies No evidence can be found for any downstream oil and gas exclusion policies.
Supply-side energy efficiency Focus on utility-driven energy efficiency programmes.

Explanation

Coal  

There is no official coal exclusion policy at the AIIB. 

The AIIB Energy Sector Strategy, agreed in 2017, states that “carbon efficient oil- and coal-fired power plants would be considered if they replace existing less efficient capacity or are essential to the reliability and integrity of the system, or if no viable or affordable alternative exists in specific cases”.  

However, the President of the AIIB, Jin Liqun, has stated that “there are no coal projects in our pipeline, and we will not consider any proposals if we are concerned about their environmental and reputational impact“. AIIB Vice-Presidents Joachim von Amsberg and Thierry de Longuemar have both also stated that the Bank will not fund coal. 

Most recently, in September 2020, the AIIB President said “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 continued to say that the 2020 Corporate Strategy would “set very tough conditions for the possibility of the bank to consider financing coal-firing power plants”. Unfortunately, such aspired conditions were not mentioned in the now published Corporate Strategy. Nevertheless, an AIIB spokeswoman said the Bank was “committed to implementing the sentiments expressed by President Jin”. She continued by saying that “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”. 

Recommendation: The AIIB should translate management’s position on coal into a formal exclusion policy.

Oil and gas 

On oil and gas, the Energy Sector Strategy states that “the Bank will focus on supporting and accelerating its members’ respective transitions toward a low-carbon energy mix”, and that ‘”in many countries, gas-fired power generation would form part of such a transition”. The Energy Sector Strategy states that the AIIB “will also consider development, rehabilitation and upgrading of natural gas transportation (including storage) and distribution networks, and control of gas leakage, to foster greater use of gas during the transition to a less carbon-intensive energy mix/power sector”.  

However, the AIIB does not appear to have a policy to ensure that viable climate-neutral technology alternatives are exhausted prior to providing support for gas. Paragraph 37 of the Energy Sector Strategy does say “Supported fossil fuel-based generation facilities would be expected to use commercially available least-carbon technology”. 

Upstream investments in oil or gas exploration are not mentioned, except to note that “there are ample opportunities for investments in oil and gas extraction as clients seek to improve the security of their energy supplies. However, such projects tend to involve higher risk and must be subject to thorough assessment”. 

Supply-side energy efficiency 

The AIIB’s stated practice is to (i) rehabilitate and upgrade existing generation plants and (ii) pursue aggressive loss-reduction and utility-driven energy efficiency programmes in power and gas transmission and distribution networks. Note this does not appear to consider lifecycle emissions from upgraded fossil plants due to the lifetime extension caused by this upgrade. A similar example of this is the AIIB funding the increased efficiency of the Titas gas field, in order to maximise recovery of fossil fuels. 

There is a large focus on supply-side energy efficiency for existing energy infrastructure. Indeed, 15% of energy projects in the AIIB are energy efficiency projects. 

Last Update: November 2020

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