Integration of climate mitigation and resilience in key sectoral strategies

Explanation

Energy

Climate change features prominently in the energy sector strategy, which was updated in 2018. It attempts to put decarbonisation at the centre of the policy with the aim of creating an energy sector that can deliver clean, secure and affordable energy for all. It focuses on scaling up renewable electricity.

The strategy states that the EBRD will not finance thermal coal mining and coal-fired electricity generation. Unfortunately, the Bank has said that it will continue to finance upstream oil and gas in rare and exceptional circumstances where the projects “reduce greenhouse gas emissions or flaring”. This cannot be considered Paris aligned. Downstream oil gas is also permitted.

Recommendation: Given that the Bank has updating its overarching Green Economy Transition 2.1 Strategy, its energy policy might need to be reviewed earlier than 2023 to be aligned with the overall objectives of the EBRD and Paris Agreement alignment.

In terms of adaptation, it states that “making domestic energy supplies climate resilient” is part of the strategy. It also highlights that support would be provided to countries in water stressed regions to diversify their energy mix if reliant on hydropower, and it would consider climate change adaptation to improve both resilience and resource efficiency.   

Recommendation: The EBRD could draw on the approach that the IDB Energy Sector Framework takes to adaptation in its next energy sector strategy review in order to strengthen this area.

Transport

The 2019 Transport sector strategy incorporates adaptation and mitigation in a balanced way. It promotes an Avoid-Shift-Improve approach. The document states that “transport is a major source of GHG emissions and climate change continues to pose a risk for transport infrastructure”.

Low-carbon transports forms form one of four pillars of the strategy, together with, connected networks, private sector participation and environmentally and socially responsive transport.

It should be noted that the EBRD’s policy in the area of aviation is as follows:

• Investment in airports terminals, particularly by the private sector, and airside infrastructure.
• Support financing of associated services such as aircraft maintenance and airport service providers. […]
• Selectively support financing of airlines and other aircraft-related investments based on the feasibility, transition gaps and sustainability of such investments.

The strategy is, however, also very detailed in terms of climate impact of the transport sector. The EBRD links greenhouse gas emissions of the transport sector with impact on climate and human health. For instance, the EBRD states that 7% and 75% of external costs in the EU in the transport sector can be attribute to aviation and road traffic, respectively. External costs from the rail sector make only up 3%. This level of transparency the on the health and environmental impact of the transport sector is unique among the MDBs.

The EBRD outlines how it intends to address the issue of GHG emissions in the transport sector across different modes of transportation, citing, for instance, biofuels, ultra-efficient engines (aviation), hydrogen powered trains, electric vehicles and low-carbon fuelling in the shipping sector.

Recommendation: In the next review of the Transport Sector Strategy, the EBRD should consider whether this position above is in line with its Green Economy Transition Strategy 2.1 and its alignment with the Paris Agreement, by providing concrete targets to tackle GHG emissions across all transport modes.

The EBRD will support “fleet scrappage and replacement”. There does not appear to be any consideration of sustainability within road infrastructure investments.

Water and Cities

The EBRD does not have a standalone water strategy/sectoral approach. The water sector is integrated in the Municipal and Environmental Sector Strategy.

In April 2019 the EBRD published a Municipal and Environmental Sector Strategy. It mentions climate change is one of the “key drivers” of EBRD activities in this area. It mentions climate adaptation as an “expanded area of operation”.

In addition, the EBRD has established the Green Cities Programme. Through Green City Action Plans (GCAP), the programme aims to strengthen the sustainability and resilience of cities in the EBRD regions, also with respect to mitigating and adapting to climate change. The integrated approach considers the entire local economy of the assessed city. The GCAP methodology lists specific indicators from mitigation and adaptation, that are considered as part of the project appraisal of the programme. Note, however, that this is a standalone programme and not integrated more widely into the EBRD’s sectoral strategies. That would be required in order for the city sector strategy to be transformational.