Energy projects of the AIIB
The public opinion solicitation of the AIIB Energy Sector Strategy by the Asian Infrastructure Investment Bank (hereinafter referred to as the AIIB) came to an end on March 6. Soon, it will be announced whether the clean, streamlined and green operating principles promised by President Jin Liqun will be fulfilled in the energy sector that has received much attention.
The popularization of "modern energy" seems to be the core of the current AIIB's work in the energy field. Currently, 4 of the 9 energy projects under its approval and review are such projects.
List of energy investment projects approved and under review by the AIIB (data from the AIIB official website, as of March 2, 2017)
Guo Shaoming, director of the green finance project of Greenpeace East Asia, believes that the AIIB’s draft energy strategy is similar to the World Bank in terms of project selection criteria, but the sustainability criteria in its Environmental and Social Framework are not as stringent as the latter.
Support coal power and hydropower "conditionally"
The environmental and public health costs brought about by the expansion of coal power in Asia are increasingly becoming the focus of attention. Therefore, the AIIB’s attitude towards coal power has also attracted considerable attention. Currently, the projects under approval and review by the AIIB do not include coal power plants. However, in the second draft, the AIIB clearly stated that it will conditionally support efficient and clean coal power and oil and gas power generation projects, provided that the project will use new technologies. Replace outdated equipment, or the region lacks the conditions to develop other forms of energy.
Yang Fuqiang, senior consultant of the Natural Resources Defense Council (NRDC), believes that this idea is in line with Asian reality. He pointed out that there is a process for energy substitution, and there is no consensus on de-coalization in practice. He gave examples: Japan's coal consumption is still rising, Germany's coal has not dropped significantly, and the new president of the United States has to increase coal. This shows that the trend of decoalization in developed countries is unclear. For emerging economies and developing countries, the urgency of energy development determines that coal will still be the main energy source.
But Yang Fuqiang also emphasized that the excessive growth of coal power has brought serious environmental problems such as smog to China, and has also exacerbated the abandonment of light and wind. He believes: "The challenge now is that we can no longer use coal in a superficial and simple way as before, and avoid the detours that China has taken. Investment in coal power in Asian countries must be tailored to local conditions, and the transmission technology should be efficient and efficient. Clean and energy-saving."
Yang Fuqiang believes that in different countries, it is necessary to adapt measures to local conditions and refer to the standards for efficient use of coal. For example, for countries with high levels of economic development such as Vietnam, Indonesia, and Thailand, the cost of exporting technology can be a little higher. Even in poorer Africa, we must choose the best technology that is affordable.
Regarding the inability of the project applicant state to make a favorable interpretation of the terms in order to obtain the AIIB’s coal power investment, Laurel Ostfield, head of the AIIB’s communications and development department, told chinadialogue that the energy strategy has not yet been formally approved by the AIIB’s board of directors. , It’s not convenient to comment at this time. However, she emphasized that projects that do not meet the environmental and social security requirements of the AIIB will certainly not be approved.
Similarly, in the first round of comments, there was a big dispute between the parties as to whether the AIIB should invest in hydropower. The proponents believe that hydropower is a zero-emission climate-friendly energy source, but the opponents believe that hydropower construction will affect biodiversity and the lives of indigenous people. In academia and civil society, the long-term environmental impact of Asian international river hydropower development is also receiving more and more attention.
However, the AIIB has always insisted that it is imperative to develop hydropower in Asia. The reason is that two-thirds of hydropower in Asia has not yet been developed, and hydropower with relatively low development costs can make good use of this potential.
Yu Xiaogang, the person in charge of Green River Basin, a non-governmental organization in Yunnan, believes that the draft energy strategy is not rigorous enough to describe hydropower and lacks comprehensiveness. “It focuses on describing the advantages of hydropower development at the technical and economic levels, but not at the environmental and social levels. To describe its negative impact, so that it may have an irreversible impact on the environment.”
At present, the Asian Infrastructure Investment Bank has approved an expansion project of the Tabela Dam in Pakistan, which is jointly funded by the World Bank, and an upgrade project of the Nurek Hydropower Station in Tajikistan is under review. In addition to the existing hydropower station upgrade projects, Yu believes that the construction of large new hydropower stations that the AIIB may support in the future may also bring about social problems such as large-scale resettlement.
Not considering nuclear power
Another focus of controversy is whether the AIIB will consider investing in nuclear power projects. At the 2016 Winter Davos sub-forum, Jin Liqun stated that the advantage of nuclear energy lies in its cleanliness. Although there are lessons from the Fukushima accident, as long as humans continue to learn, safe nuclear power can be produced.
The first draft proposes not to invest in nuclear power plants in principle, but leaves a certain degree of flexibility. It is believed that when a certain area has a reasonable demand for nuclear energy recognized by the international community, investment in nuclear power projects can be considered. The second version of the draft removes this ambiguous attitude, and only reserves the possibility of injecting funds for the safety upgrade and maintenance of existing nuclear power projects under very special circumstances.
Yang Fuqiang believes that the high investment cost of nuclear power is an important reason why it was abandoned by the Asian Infrastructure Investment Bank. He told chinadialogue that this decision is more realistic. The AIIB does not yet have so much funds to invest in nuclear power, and many Asian countries cannot afford nuclear power costs.
Expert: Planning should lay the foundation for energy transition
Regarding this seemingly conservative draft energy strategy, Li Junfeng, director of the National Development and Reform Commission's Climate Change Strategy Research and International Cooperation Center (NCSC), believes that the current world trend is energy transition, and the AIIB should be forward-looking in formulating energy plans. Sex, in line with energy trends. "The World Bank basically does not invest in coal power in China," he mentioned.
Li said that the AIIB should give priority to investment in new energy, appropriately consider coal power investment, and use cleaner technologies, especially in countries where the volume of coal power is not large and the development of renewable new energy is less resistant.
But Yang Fuqiang believes that the economic issues of project investment need to be taken into consideration. After all, the cost of renewable energy power generation is relatively high, and it can only provide the needs of daily life and small industries, and cannot fully support the needs of economic and industrial development in the Asian region. Even in China, the proportion of non-fossil energy in primary energy consumption will only increase to about 20% in 2020.
Yang Fuqiang believes that the AIIB’s energy investment must be both inclusive and forward-looking. While investing in coal power, it must export renewable energy technologies, so that when Asian countries have certain energy transition capabilities , You can expand the use of renewable energy.