Speech by Masatsugu Asakawa, President, ADB, on “Financing Green Recovery for a Low-Carbon and Climate-Resilient Southeast Asia” at the 26th session of the Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC)
As I announced last month, we are raising our ambition to deliver $100 billion in cumulative climate financing between 2019 and 2030 – including $34 billion in cumulative adaptation and resilience investments. The remaining $66 billion is for mitigation.
We have also updated our energy policy to formally withdraw from financing new coal-fired power generation and support the development of sustainable and resilient energy systems, in line with the Paris Agreement.
And tomorrow, we will launch our Energy Transition Mechanism partnership, or ETM, which will use blended finance to accelerate the retirement or repurposing of existing coal-fired power plants.
The need for financing to support green recovery in ASEAN
Southeast Asia is one of the most vulnerable regions in the world to climate impacts. The changing climate has affected our communities, infrastructure, food security, and the well-being of our people.
Amid these unfortunate developments, we face a unique window of opportunity to promote a greener and more inclusive future: by investing smartly in ASEAN’s recovery from the coronavirus disease (Covid-19) pandemic..
To get us on this brighter path, we need ambitious climate projects to be scaled up – to meet Nationally Determined Contributions, or NDCs.
We also need to address the key challenge of financing. ADB estimates that developing Asia needs $1.7 trillion per year to support climate-resilient infrastructure. ASEAN countries alone need $210 billion per year, but they currently face an estimated funding gap of over $100 billion per year.
Countries also face heavy fiscal space constraints due to huge expenditures related to the pandemic.
Catalysing climate finance through the ASEAN Green Recovery Platform
To bridge this infrastructure funding gap, it is clear that private investment needs to be scaled up. Let me briefly mention how ADB is addressing this important need through the ASEAN Green Recovery Platform.
The platform brings together partners to invest alongside ADB’s own financing. With pledges of $665 million from the UK government, the Green Climate Fund, the European Union, and Cassa Depositi e Prestiti, the Green Recovery Platform will de-risk investments and catalyse $7 billion in public and private capital for green infrastructure projects. So, leverage is around 10 times.
It will also provide technical assistance to improve the bankability of investments, build a robust project pipeline for the region, and support the development of green capital markets.
The Green Recovery Platform will be linked to the ASEAN Catalytic Green Finance Facility, ACGF, under the ASEAN Infrastructure Fund, which is a regional vehicle owned by ASEAN governments and ADB, and managed by ADB.
Partnerships under this new platform will complement the $1.4 billion in co-financing that has already been pledged toward the ACGF by ASEAN governments, ADB, Agence Française de Développement, the European Investment Bank, KfW, and the Government of Korea.
Let me close by saying that ADB looks forward to working with our partner governments, the private sector, and all stakeholders as The Climate Bank for Asia and the Pacific.
