Jakarta – The Asian Development Bank (ADB) launched a financing program to curb climate change called Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP). The IF-CAP financing will contribute to ADB’s increased funding ambition of USD 100 billion for climate change during 2019-2030 from its own resources.
ADB is in discussions with potential partners such as bilateral and multilateral sources, the private sector, and philanthropy-including the Global Energy Alliance for People and Planet-to catalyze climate investments. IF-CAP’s initial partners are Denmark, Japan, the Republic of Korea, Sweden, the United Kingdom, and the United States.
ADB President Masatsugu Asakawa said the partners are in discussions with ADB about providing various project preparation grants as well as partial guarantees of ADB’s sovereign loan portfolio. “The reduction of risk exposure by the guarantee will allow ADB to free up capital to accelerate new lending for climate projects,” he said in a statement.
According to him, with a ‘one US dollar in, five US dollars out’ model, the initial ambition of a US$3 billion guarantee could lead to US$15 billion in new lending for much-needed climate projects across Asia and the Pacific.
“This climate finance leverage guarantee mechanism has never been adopted by a multilateral development bank,” he said.
ADB is committed to expanding renewable energy investments and will not invest in coal. Prior to IF-CAP, ADB had launched an energy transition mechanism at the UN COP 26 in the UK in 2021.
Under this mechanism, ADB last year signed a memorandum of understanding to early retire one of its coal-fired power plants, the 660-megawatt Cirebon-1 PLTU owned by Cirebon Electric Power (CEP) in West Java.
Asakawa continued, since 2000, more than 40 percent of climate-related disasters have occurred in Asia and the Pacific. More than 3.5 billion people have been affected, with nearly one million deaths. By 2050, as many as one billion more people living in urban areas will suffer from dangerous air pollution and heat stress.
In addition, developing member countries of the Asian Development Bank have suffered physical losses from disasters amounting to US$67 billion. “If we do not act, the annual increase in losses will exceed the region’s GDP growth,” he said. (Hartatik)