Asian Development Bank

Integration of climate mitigation and resilience in key sectoral strategies

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
Some progressA majority of sectoral policies are Paris aligned and ADB has integrated the climate strategy into sectoral frameworks. However, key policies such as energy and resilient transport are not aligned yet.
MitigationResilience
EnergyPromotes renewables and efficiency. ADB does not officially exclude coal. The energy policy is not aligned with the climate change strategic framework.Climate adaptation is part of the decision-making process. The guidelines for climate proofing are a tool for climate risk assessment in the energy sector.
TransportThe avoid-shift-improve approach supports low-carbon transport lending. The Operational Plan for Transport is linked to the Climate Change Operational Framework.ADB only acknowledges the challenge of resilience in the transport sector.
WaterThe water-food-energy-climate nexus is acknowledged. The Climate Change Operational Framework acknowledges the role of water consumption in fossil-fuel fired power generation.Climate resilience in the water sector is considered extensively in the strategy. The water sector strategy is linked to the Climate Change Operational Framework.
CitiesThe role of cities in mitigating climate change is part of the Making cities more liveable strategy and ADB refers specifically to the Paris Agreement in the context.Climate resilience is well integrated into the city strategy and is referred to in the Climate Change Operational Framework.

Explanation

Energy

The ADB Energy Policy, which was last updated in 2009, requires the Bank to promote energy efficiency and renewable energy. In terms of adaptation, there have been guidelines for climate proofing investment in the energy sector since 2013. ADB’s energy policy also aims to integrate adaptation into its decision making, stating “it may be best to promote no-regret or low-regret adaptation strategies that deliver development benefits regardless of nature and extent of changes in climate”. It is notable that this strategy is lacking an official coal exclusion or exclusion of all segments of fossil fuel value chains. The Internal Evaluation Department reviewed the energy policy in 2020 and stated that “the ADB “cannot keep an ambiguous position on [coal investment]. It should exercise its leadership role by emphasizing its support for decarbonizing the [energy] generation mix and phase out coal power generation in [developing member countries].” The policy is set to be reviewed in 2021.

Recommendation: ADB should align its Energy Policy with its climate change operational framework and overall 2030 strategy, as well as its commitment towards Paris alignment.

Transport

ADB’s 2010 transport operational plan, the Sustainable Transport Initiative Operational Plan (STIOP) outlines how it aims to address climate change through the “avoid-shift-improve” (ASI), in order to limit greenhouse gas emissions.

The Climate Change Operational Framework 2030 refers to the Sustainable Transport Initiative Operational Plan and its importance, as well as the alignment of ADB’s transport sector lending with the strategic framework.

According to the Plan: “avoid means reducing the need to travel, for example by integrating land use and transport planning to create local clusters of economic activity that require less mobility; […] Shift means changing to more energy efficient modes or routes, such as shifting from road to rail or waterways […] Improve means using technologies that are more energy efficient, including through improving vehicle standards, inspection, and enforcement;”.

Resilience also features in the plan, as ADB has committed to developing analytical tools that ensure resilience is integrated into its transport operations. ADB acknowledges that transport investment can be vulnerable to climate change, and that the development of transport infrastructure “can inadvertently increase vulnerability to climate change effects”. 

The plan does not appear to explicitly mention the electrification of transport. However, E3G has been informed that the electrification of transport has been included in the activities under the Sustainable Transport Initiative Operational Plan through loans and technical assistance. Electric buses have been a part of many transport loan projects in China, for example. Technical assistance activities have included publications, workshops and EV scoping studies for 23 cities in the region have been completed. ADB has also launched pilot projects for e-logistics for urban delivery and e-boats in 2020.

ADB’s Independent Evaluation Department identified climate risk and resilience as a particular challenge for ADB’s transport strategy in its Approach Paper published in January 2019. In its final paper evaluating the ADB’s support to transport, it called for the ADB to strive for greater climate impact in its transport lending and makes several references to the need for electric buses. During the period it assessed, it should be noted that 33% of the investments in the non-urban road sector were in aviation.

In November 2020, the ADB announced an Asian Transport Outlook (ATO) which will support the planning and delivery of transport sector assistance by ADB, as well as transport policy and initiatives by Asian governments, in line with the Sustainable Development Goals (SDGs), Paris Agreement, and other international agreements.

Water

ADB’s 2011 Water Operational Plan recognises that there are interlinkages between water, food and energy needs, which have to be considered in the context of climate change. The plan states that ADB “has developed a range of operational interventions… in line with emerging best practice measures to respond to the potential adverse impacts of climate change and associated uncertainty”. This emphasises resilience and reducing the impact of climate change on water management but acknowledges that there is room for improvement in terms of the carbon footprint associated with water losses. ADB has been supporting the introduction of integrated water resources management as an adaptive management process in river basins. 

The ADB further detailed its strategy in the water sector in the flagship report  Asian Water Development Outlook. The outlook does not refer to the Paris Agreement, but extensively acknowledges the challenges for climate resilience in the water sector. Clarification would be welcome in how far this has redirected the water sector lending of ADB. 

The Climate Change Operational Framework 2030 links the water sector to ADB’s overall strategy to tackle climate change. It also provides further details on how integration of climate change into the water sector will look like. The CCOF does also acknowledge the risk of technologies that require water for cooling, such as fossil fuel plants.

Cities

ADB has an urban operational plan which runs to 2020 which integrates both climate risk and resilience effectively. This plan is also referred to in the Climate Change Operational Framework 2030, emphasising cities dual role in resilience and mitigation of climate change.

ADB has since updated its urban strategy under the Strategy 2030: Operational priority 4. The strategy Making Cities More Liveable, 2019-2024 emphasises the need for building cities that are green, inclusive, competitive and resilient. This new operational plan emphasises the integration of climate resilience as well as natural capital into the urban planning and design. It also focuses on energy demand via energy efficiency and increase on heating and cooling access based on renewable energy. The strategy references the Paris Agreement and explicitly mentions the role of cities in implementing article 6 of the Agreement (Carbon markets).

 


 

Last Update: November 2020

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