Given concerns over the environmental and health consequences of Asia’s appetite for new coal power, whether the AIIB will invest in coal has been a matter of international interest.
So far, the bank has not approved investments in coal power. However, the second draft of the energy sector strategy says that efficient and clean oil and coal-fired power plants will be considered where they replace older equipment or in regions that are unable to use alternative forms of energy.
Yang Fuqiang, a senior adviser with the National Resources Defense Council (NRDC), said this approach acknowledges the particular circumstances in Asia where developing new sources of energy can take time, and where there is little consensus in practice on how to go about phasing-out coal.
Yang pointed out that coal use in Japan is still increasing; in Germany it has not fallen significantly; and in the US there are plans to revive the country’s coal industry. While the future of coal is arguably uncertain in developed countries, in emerging and less developed economies there is an urgent need for energy, meaning coal will remain an important technology because it can meet energy demand quickly and cheaply.
But Yang also stressed that overdevelopment of coal in China has led to severe air quality issues and problems utilising solar and wind energy, significant amounts of which are being wasted.
“The challenge now is to avoid the old way of crude and inefficient use of coal, to avoid repeating China’s mistakes. Coal power investments in Asia should be tailored to the locality and spread efficient, clean and energy-saving technology,” he said.
Similarly, in the first round of consultations there was controversy over whether or not the bank should invest in hydropower. Those in favour regard hydropower as a climate-friendly, zero-emission energy source, while others worry about the impact of hydropower construction on biodiversity and local livelihoods. The long term environmental impacts of hydropower development on Asia’s rivers is a cause of increasing concern among environmentalists and civil society.
But the AIIB has consistently maintained that further hydropower development in Asia is inevitable, as two thirds of potential hydropower energy remains untapped. It is also a relatively cheap technology to develop.
Yu Xiaogang of Yunnan NGO Green Watershed said that the energy strategy draft is not cautious or comprehensive enough on hydropower. “It describes the technological and economic advantages of hydropower, but not the environmental and social disadvantages, and those could have an irreversible impact on the environment.”
The AIIB already has a joint investment with the World Bank in the Tarbela Dam expansion in Pakistan, and an investment in upgrading the Nurek Hydropower Plant in Tajikistan is being considered.
Yu is worried that large scale hydropower investments by the bank may result in significant population relocations and other social problems.
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