Asian Development Bank

Shadow carbon pricing

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 progressCarbon price is close to High Level Commission on Carbon Pricing minimum. Emission threshold could be improved, and Scope 3 emissions are not included.

The Asian Development Bank does apply a shadow carbon price, the table below provides a summary of how it is applied across bank operations.

Which projects subject to greenhouse gas (GHG) assessmentAll projects which exceed a 100,000 tonnes CO2/year absolute emission threshold. E3G understands all projects are screened in terms of their GHG emissions and more detailed analysis is conducted once a threshold is exceeded.
Which projects apply shadow carbon pricingAll projects where costs and benefits can be quantified.
Price levelBorderline on minimum price recommended by High-Level Commission on Carbon Prices (HLCCP).  ADB has the lowest carbon price in 2030.
How shadow carbon price is usedSays ‘should’ be used as basis for investment decisions. Applies the carbon price to the reduction or increase in project emissions against a baseline. Use of the carbon price as a hurdle and the broad coverage suggests good practice.
What is it compared to?The “without project” baseline scenario may not necessarily be the status quo. In comparing project alternatives, the same “without project” scenario should be used throughout.
Are scope 3 emissions included?No

The graph  below shows how the level of carbon pricing at the bank compared with those of the High-Level Commission on Carbon Prices (HLCCP). The HLCCP prices only extend to 2030.

Source: Asian Development Bank (2018) No place for “dirty energy” in ADB’s climate vision

Recommendation: ADB should apply a carbon price scenario to assess alignment with limiting warming to below 1.5°C, alongside the other MDBs.

Last Update: November 2020

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